Exhibit 1.1
EXECUTION VERSION
STELLUS
CAPITAL INVESTMENT CORPORATION
(a Maryland Corporation)
$75,000,000
7.25% Notes due 2030
UNDERWRITING AGREEMENT
March 25, 2025
Raymond James & Associates, Inc.
As representative of the several underwriters named in Exhibit A
c/o Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Ladies and Gentlemen:
Each of Stellus Capital Investment Corporation,
a Maryland corporation (the “Company”), and Stellus Capital Management, LLC, a Delaware limited liability company
(the “Adviser”) registered as an investment adviser under the Investment Advisers Act of 1940, as amended (collectively
with the rules and regulations of the Commission (as defined below) promulgated thereunder, the “Advisers Act”),
confirms its agreement with the underwriters listed in Exhibit A hereto (collectively, the “Underwriters”),
for whom Raymond James & Associates, Inc. (the “Representative”) is acting as representative, with respect
to the issuance and sale by the Company of $75,000,000 aggregate principal amount of the Company’s 7.25% notes due 2030 (the “Securities”),
and the purchase by the Underwriters, acting severally and not jointly, of the aggregate principal amount of Securities set forth opposite
their respective names in Exhibit A hereto. In the event that only one Underwriter is listed in Exhibit A hereto, any references
to the “Underwriters” shall be deemed to refer to the sole Underwriter in the singular form listed in such Exhibit A
to this Agreement.
The Company has entered into an (i) Investment
Advisory Agreement, dated as of September 24, 2012 (the “Investment Advisory Agreement”), with the Adviser,
and (ii) Administration Agreement, dated as of October 23, 2012 (the “Administration Agreement”), with the Adviser.
The Company owns (i) 100% of the limited partnership
interests in Stellus Capital SBIC, LP (the “SBIC Fund I”); (ii) 100% of the limited partnership interests
in Stellus Capital SBIC II, LP (the “SBIC Fund II” and, together with SBIC Fund I, the “SBIC Funds”);
and (iii) 100% of the equity interests of Stellus Capital SBIC GP, LLC (the “SBIC GP”). The SBIC GP, together
with the Company and the SBIC Funds, are referred to in this Agreement as the “Stellus Entities”.
Pursuant to the Securities Act of 1933, as amended
(collectively with the rules and regulations of the Commission promulgated thereunder, the “1933 Act”), the
Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a universal shelf registration
statement on Form N-2 (File No. 333-265695), which registers the offer and sale of certain securities to be issued from time to time by
the Company, including the Securities. The registration statement as amended as of its most recent effective date, including the exhibits
and schedules thereto, all documents incorporated or deemed to be incorporated in the registration
statement by reference, any information contained in a prospectus supplement relating to the Securities subsequently filed with
the Commission pursuant to Rule 424 under the 1933 Act (“Rule 424”) and deemed to be a part of the registration
statement at the time of effectiveness pursuant to Rule 430B under the 1933 Act (“Rule 430B”), any registration
statement filed pursuant to Rule 462(b) under the 1933 Act (“Rule 462(b)”), and any post-effective
amendment thereto, is hereinafter referred to as the “Registration Statement.”
The base prospectus included in the Registration
Statement as of its most recent effective date, including documents incorporated or deemed to be incorporated therein by reference, is
hereinafter referred to as the “Base Prospectus.” The preliminary prospectus supplement, dated March 25, 2025,
relating to the Securities that was used prior to the execution and delivery of this Agreement and filed pursuant to Rule 424, including
documents incorporated or deemed to be incorporated therein by reference, is herein called the “Preliminary Prospectus Supplement.”
The Base Prospectus and the Preliminary Prospectus Supplement are referred to collectively as the “Preliminary Prospectus.”
The Company will file with the Commission, in accordance with Rule 424, a final prospectus supplement, including documents incorporated
or deemed to be incorporated therein by reference (the “Final Prospectus Supplement”), supplementing the Base
Prospectus in connection with the offer and sale of the Securities. The Base Prospectus and Final Prospectus Supplement are hereinafter
referred to collectively as the “Prospectus.” Any reference herein to the Registration Statement, the Base Prospectus,
the Preliminary Prospectus Supplement, the Preliminary Prospectus, the Final Prospectus Supplement or the Prospectus shall be deemed to
refer to and include any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under
Rule 424 and prior to the termination of the offering of the Securities by the Underwriters. All references in this Agreement to financial
statements and schedules and other information which is “included” or “stated” in the Registration Statement,
the Preliminary Prospectus or the Prospectus (and all other references of like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is deemed to be incorporated by reference in or otherwise deemed to be a part
of or included in the Registration Statement, the Preliminary Prospectus, or the Prospectus, as the case may be, as of any specified date;
and all references in this Agreement to amendments or supplements to the Registration Statement, the Preliminary Prospectus, or the Prospectus,
including those made pursuant to Rule 424, shall be deemed to mean and include, without limitation, the filing of any document under
the Exchange Act (as defined below) which is or is deemed to be incorporated by reference in or otherwise deemed to be a part of or included
in the Registration Statement, the Preliminary Prospectus or the Prospectus, as the case may be, as of any specified date.
The Securities will be issued under an indenture,
dated as of May 5, 2014 (the “Base Indenture”), as supplemented by a fourth supplemental indenture (the “Fourth
Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), to be dated on
or about April 1, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The Securities will be issued to Cede & Co. (or such other name as may be requested by an authorized representative of The Depository
Trust Company (“DTC”)) as nominee of DTC pursuant to a blanket letter of representations (the “DTC
Agreement”) between the Company and DTC. The Company understands that the Underwriters propose to make a public offering
of the Securities as soon as the Underwriters deem advisable after this Agreement has been executed and delivered.
All references in this Agreement to the Registration
Statement, the Prospectus or any amendments or supplements to any of the foregoing shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
In consideration of the mutual agreements contained
herein and of the interests of the parties in the transactions contemplated hereby, the parties hereby agree as follows:
1.
Representations and Warranties by the Company. The Company represents and warrants to and agrees with each of the Underwriters,
as of the date hereof, and as of the Applicable Time and the Closing Time (as such terms are defined
in Sections 1(a) and 3(b), respectively, hereof), as follows:
(a)
A registration statement on Form N-2 (File No. 333-265695) with respect to the Securities has been prepared by the Company in conformity
with the requirements of the 1933 Act, has been filed with the Commission and was initially declared effective on August 22, 2022 and
remains effective. The Company meets the requirements of, and complies with, the conditions for the use of Form N-2 under the 1933 Act.
Copies of the Registration Statement, including
any amendments thereto, the preliminary prospectuses (meeting the requirements of the 1933 Act) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to the Representative. As of the
Applicable Time, the Preliminary Prospectus, together with the information included in Exhibit B hereto, all considered together
(collectively, the “General Disclosure Package”), did not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in
or omitted from the General Disclosure Package or the Registration Statement in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters through the Representative, specifically for use therein, it being understood
and agreed that the only such information is that information described in Section 7(a) herein. At
the time of any filing with the Commission pursuant to Rule 424(b) (solely in the case of the Prospectus and any amendment or supplement
thereto) and the Closing Time, the General Disclosure Package and the Prospectus will not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in
or omitted from the Registration Statement, the General Disclosure Package or the Prospectus in reliance upon, and in conformity with,
written information furnished by or on behalf of any Underwriters through the Representative, specifically for use therein, it being understood
and agreed that the only such information is that information described in Section 7(a) herein. As used in this subsection and
elsewhere in this Agreement, the term “Applicable Time” means 2:30 p.m. (New York time) on the date of
this Agreement or such other time as agreed to by the Company and the Representative.
The Commission has not issued an order suspending
the effectiveness of the Registration Statement or preventing or suspending the use of the Preliminary Prospectus or the Prospectus relating
to the proposed offering of the Securities, and no proceeding for that purpose has been instituted or, to the Company’s knowledge,
threatened or is pending by the Commission. The Registration Statement and Preliminary Prospectus each contains, and the Prospectus and
any amendments or supplements thereto contain and will contain, all statements which are required to be stated therein by, and conform
and will conform in all material respects to the requirements of, the 1933 Act. At the respective times the Registration Statement and
any post-effective amendments thereto became effective and as of the Applicable Time and the Closing Time, the Registration Statement
did not, and will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; provided, however, that the Company makes no representations
or warranties as to information contained in or omitted from the Registration Statement and the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriters through the
Representative, specifically for use therein, it being understood and agreed that the only such information is that information described
in Section 7(a) herein.
(b)
The Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve
or refer to any “written communication” (as defined in Rule 405 under the 1933 Act (“Rule 405”))
that constitutes an offer to sell or solicitation of an offer to buy the Securities, without the prior consent of the Representative
(which consent may not be unreasonably withheld), and which the parties agree, for the purposes of this Agreement, includes (i) any
“advertisement” as defined in Rule 482 under the 1933 Act; (ii) any document not constituting a prospectus pursuant
to Section 2(a)(10)(a) of the 1933 Act or Rule 134 under the 1933 Act; (iii) any Written Testing-the-Waters Communication (as defined
below); and (iv) any Sales Material (as defined below). Any Written Testing-the-Waters Communication
and Sales Material authorized in writing by or prepared by the Company to be used in connection with the public offering of the Securities
and approved for use by the Representative is listed on Schedule A hereto. “Testing-the-Waters Communication” means
any oral or written communication with potential investors undertaken in reliance on Rule 163B under the Act. “Written Testing-the-Waters
Communication” means any Testing-the-Waters Communication that is a written communication within the meaning
of Rule 405.
(c)
The documents (other than exhibits) incorporated by reference in each of the Registration Statement, the Preliminary Prospectus,
and the Prospectus, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (collectively with the rules and regulations of the Commission promulgated thereunder, the “Exchange
Act”), and none of such documents contained any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and any further
documents (other than exhibits) so filed and incorporated by reference in the Registration Statement, the Preliminary Prospectus Supplement,
and the Prospectus, when such documents are filed with the Commission, as the case may be, will conform in all material respects to the
requirements of the Exchange Act and will not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(d)
The consolidated financial statements of the Company and its consolidated subsidiaries, together with related notes and schedules
as set forth or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, present fairly
in all material respects the consolidated financial position and the results of operations and cash flows of the Company and its consolidated
subsidiaries, as of the indicated dates and for the indicated periods. Such financial statements and related schedules have been prepared
in conformity with accounting principles generally accepted in the United States (“GAAP”), consistently applied
throughout the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such
periods have been made. The summary and selected consolidated financial and statistical data included in the Registration Statement, the
General Disclosure Package and the Prospectus present fairly in all material respects the information shown therein, and such data have
been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. All disclosures
contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures”
(as such term is defined by the 1933 Act) comply with Regulation G under the Exchange Act, and Item 10 of Regulation S-K under the 1933
Act, to the extent applicable. The Company and its subsidiaries do not have any material liabilities or obligations, direct or contingent,
and there are no transactions, arrangements and other relationships between and/or among the Company, and/or, to the knowledge of the
Company, any of its affiliates, subsidiaries and any unconsolidated entity, including, but not limited to, any structural finance, special
purpose or limited purpose entity that would reasonably be expected to affect materially the Company’s liquidity or the availability
of or requirements for its capital resources (including any off-balance sheet obligations or any “variable interest entities”
within the meaning of the Financial Accounting Standards Board’s Accounting Standards Codification Topic 810), which are not disclosed
in the Registration Statement, the General Disclosure Package and the Prospectus. There are no financial statements (historical or pro
forma) that are required to be included in the Registration Statement or the Prospectus that are not included as required.
(e)
The Company is duly organized, validly existing as a corporation and in good standing under the laws of the State of Maryland.
The Company is duly qualified as a foreign corporation for transaction of business and in good standing under the laws of each other jurisdiction
in which its ownership or lease of property or the conduct of its businesses requires such qualification, and has all corporate power
and authority necessary to own or lease its properties and to conduct its businesses as currently carried on and described in the Registration
Statement, the General Disclosure Package and the Prospectus, and to enter into and perform its obligations under this Agreement, the
Indenture, the Securities, the DTC Agreement and the Material Agreements (as defined below), except where the failure to be so qualified
or in good standing or have such power or authority would not, individually or in the aggregate, (i) have or reasonably be expected to
have a material adverse effect on the business, operations, properties, financial condition, prospects, stockholder’s equity or
results of operations of the Company taken as a whole, or (ii) prevent or materially interfere with consummation of the transactions contemplated
hereby and under the Indenture and/or the Securities (the occurrence of any such change or any such prevention described in the foregoing
clauses (i) and (ii) being referred to as a “Company Material Adverse Effect”).
(f)
Each of the SBIC Funds is a limited partnership duly organized and validly existing as a limited partnership under the laws of
the State of Delaware and is duly qualified as a foreign limited partnership to transact business, and is in good standing in each jurisdiction
in which such qualification is required whether by reason of ownership or leasing of property or the conduct of business, with all requisite
power and authority to own or lease its properties and conduct its business as currently carried on and described in the Registration
Statement, the General Disclosure Package and the Prospectus, except where the failure to be so qualified or in good standing or have
such power or authority would not, individually or in the aggregate, have or reasonably be expected to have, a Company Material Adverse
Effect. All of the issued and outstanding partnership interests of the SBIC Funds and all of the issued and outstanding limited liability
company interests of the SBIC GP, have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the
Company, directly or indirectly, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim; and no options,
warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into ownership
interests in any of the SBIC Funds or the SBIC GP are outstanding.
(g)
The Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation
or other entity other than (i) 100% of the limited partnership interests and equity interests in the SBIC Funds and the SBIC GP, respectively,
(ii) those corporations or other entities accounted for as portfolio investments in accordance with the Commission’s rules and regulations
(each a “Portfolio Company” and collectively, the “Portfolio Companies”), and (iii)
100% of the equity interests in tax blocker corporations that hold equity interests in one or more Portfolio Companies. Except as otherwise
disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, as of the respective dates set forth therein,
none of the Stellus Entities controls (as such term is defined in Section 2(a)(9) of the Investment Company Act of 1940, as amended (collectively
with the rules and regulations of the Commission promulgated thereunder, the “1940 Act”)) any of the Portfolio
Companies.
(h)
Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, neither the Company nor any
of the SBIC Funds is in (i) breach of the Company’s or any of its subsidiaries’ respective charters or certificates or articles
of incorporation (as amended, restated and supplemented), bylaws, certificates of formation, limited liability company agreements, certificates
of limited partnership, partnership agreements or other organizational documents; (ii) default or breach of, and no event has occurred
that, with notice or lapse of time or both, would constitute such a default or result in a Repayment Event (as defined below) under, any
of the terms or provisions of any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company
or any SBIC Fund is a party or by which any of its respective property is bound or subject, and no event has occurred that would result
in the creation or imposition of any lien, of any charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to the terms of any such indenture, mortgage, deed of trust, loan agreement or other agreement or instrument; or (iii) violation
of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having
jurisdiction over the Company or any subsidiary, except, in the case of each of clauses (ii) and (iii) above, for any such conflicts,
breaches, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(i)
Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, the execution, delivery and
performance of this Agreement, the Indenture, the Securities, the DTC Agreement and the consummation of the transactions contemplated
hereby and thereby (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described
in the Preliminary Prospectus and the Prospectus under the caption “Use of Proceeds”) and the fulfillment of the terms hereof
and thereof will not conflict with or result in a breach of (i) the Company’s charter or certificates or articles of incorporation
(as amended, restated and supplemented), bylaws, certificates of formation, or other organizational documents; (ii) any of the terms or
provisions of, or constitute a breach of or default (and no event has occurred that, with notice or lapse of time or both, would constitute
such a default) or Repayment Event (as defined below) under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company is a party or by which any of its property is bound or subject, or result in the creation or imposition
of any lien, of any charge or encumbrance upon any property or assets of the Company pursuant to the terms of any such indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument; or (iii) any law or statute or any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority having jurisdiction over the Company or any subsidiary, except, in
the case of each of clauses (ii) and (iii) above, for any such conflicts, breaches, defaults or violations that would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. As used herein, a “Repayment Event”
means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person or entity
acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries, as applicable.
(j)
Subsequent to the respective dates as of which information is given in the Registration Statement, the General Disclosure Package
and the Prospectus, there has not been (i) any Company Material Adverse Effect, (ii) other than the transactions contemplated by this
Agreement, any transaction which is material to the Company taken as a whole, (iii) any obligation or liability, direct or contingent
(including any off-balance sheet obligations), incurred by the Company which is material to the Company taken as a whole, (iv) any material
change in the capital stock or outstanding long-term indebtedness of the Company, (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company, other than in each case above (A) in the ordinary course of business, (B) as otherwise
disclosed in the Registration Statement, the General Disclosure Package and the Prospectus or (C) where such matter, item, change, or
development would not make the statements in the Registration Statement, the General Disclosure Package or the Prospectus contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein
not misleading.
(k)
The issued and outstanding shares of common stock, par value $0.001 per share, of the Company (the “Common Shares”)
have been duly authorized and validly issued and are fully paid and non-assessable. The Company has an authorized, issued and outstanding
capitalization as set forth in the Registration Statement, the General Disclosure Package and the Prospectus as of the dates referred
to therein and such authorized capital stock conforms in all material respects to the description thereof set forth in the Registration
Statement, the General Disclosure Package and the Prospectus. Except as disclosed in or contemplated by the Registration Statement, the
General Disclosure Package or the Prospectus, including pursuant to the Company’s dividend reinvestment plan, as of the date referred
to therein, the Company did not have reserved or available for issuance any Common Shares in respect of options, or any rights or warrants
to subscribe for, or any securities or obligations convertible into, or exchangeable for, or any contracts or commitments to issue or
sell, any shares of capital stock or other securities. None of the outstanding Common Shares was issued in violation of the preemptive
or other similar rights of any security holder of the Company, nor does any person or entity have any preemptive right of first refusal
or other right to acquire any of the Securities covered by this Agreement. Neither the filing of the Registration Statement nor the offering
or sale of the Securities as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied,
for or relating to the registration of any class of securities of the Company. No shares of preferred stock of the Company have been designated,
offered, sold or issued and no shares of preferred stock are currently outstanding.
(l)
The information set forth under the captions “Description of Our Debt Securities” and “Description of the Notes”
in the Registration Statement, the General Disclosure Package and the Prospectus, insofar as such statements purport to summarize certain
provisions of the 1940 Act, Maryland General Corporation Law, the Indenture and the Securities, fairly and accurately summarize such provisions
in all material respects. The Indenture and the Securities materially conform to the description thereof contained in the Registration
Statement, the General Disclosure Package and the Prospectus. The form of certificate for the Securities conforms to the requirements
of the Indenture and any requirements of the Company’s charter or bylaws.
(m)
The Company and the SBIC Funds have duly authorized, executed and delivered and currently are a party to or payee with respect
to the promissory notes and other agreements evidencing their respective investments in the Portfolio Companies (each, a “Portfolio
Company Agreement”). Except as otherwise disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, to the Company’s knowledge, each Portfolio Company is current in all material respects with all its obligations under
the applicable Portfolio Company Agreements and no event of default (or a default which with the giving of notice or the passage of time
would become an event of default) has occurred under such agreements, except to the extent that any such failure to be current in its
obligations and any such default would not reasonably be expected to result in a Company Material Adverse Effect.
(n)
Each of this Agreement and the Investment Advisory Agreement is a valid and binding obligation of the Company, enforceable against
it in accordance with its terms, except as the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally, (ii) general principles
of equity and the discretion of the court before which any proceeding therefore may be brought, and (iii), with respect to this Agreement,
any federal or state securities laws and public policy considerations limitations on the indemnification and contribution provisions of
Section 7 hereof.
(o)
The Base Indenture has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement
of the Company enforceable in accordance with its terms, except as the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding therefore may be brought.
(p)
The Fourth Supplemental Indenture has been duly authorized, and at the Closing Time, will be duly executed and delivered by the
Company and, when duly authorized, executed and delivered by the Trustee, will constitute a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except as the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding therefore may be brought.
(q)
The Securities have been duly authorized by the Company for sale to the Underwriters pursuant to this Agreement and, when executed
and delivered by the Company and authenticated by the Trustee pursuant to the provisions of the Indenture relating thereto, against payment
of the consideration set forth in this Agreement, will constitute legal, valid and binding agreements of the Company enforceable in accordance
with their terms, except as the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefore may be brought.
(r)
The DTC Agreement has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement
of the Company enforceable in accordance with its terms, except as the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding therefore may be brought.
(s)
The Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended.
(t)
No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or any governmental
or regulatory authority having jurisdiction over the Company is required for the execution, delivery and performance by the Company of
this Agreement, the Indenture, the Securities and the DTC Agreement or the consummation of transactions as contemplated hereby and thereby,
except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws or the rules of the Financial Industry Regulatory Authority (“FINRA”).
(u)
Grant Thornton LLP and Deloitte & Touche LLP, whose reports on the financial statements of the Company are filed with the Commission
as part of the Company’s most recent Annual Report on Form 10-K filed with the Commission and incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, are and, during the periods covered by their respective reports, were independent
registered public accounting firms with respect to the Company and its consolidated subsidiaries within the meaning of the 1933 Act, the
Exchange Act and the Public Company Accounting Oversight Board (United States). To the Company’s knowledge, Grant Thornton LLP and
Deloitte & Touche LLP are not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations promulgated by the Commission thereunder (collectively, the “Sarbanes-Oxley Act”)
with respect to the Company.
(v)
The Company has not, directly or indirectly, distributed and will not distribute, without the prior written consent of the Representative
(such consent not to be unreasonably withheld), any offering material in connection with the offering and sale of the Securities other
than (i) the Registration Statement, (ii) the General Disclosure Package, (iii) the Prospectus, and (iv) the Written Testing-the-Waters
Communication and Sales Material listed on Schedule A hereto.
(w)
There are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any
legal, governmental or regulatory investigations, to which any Stellus Entity is a party or to which any property of any Stellus Entity
is the subject that, individually or in the aggregate, if determined adversely to the relevant Stellus Entity, would reasonably be expected
to have a Company Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under
this Agreement (collectively, the “Actions”); to the Company’s knowledge, no such Actions are threatened
by any governmental or regulatory authority or threatened by others that, individually or in the aggregate, if determined adversely to
the relevant Stellus Entity, would reasonably be expected to have a Company Material Adverse Effect; and there are no current or pending
legal, governmental or regulatory actions, suits, proceedings or, to the Company’s knowledge, investigations that are required under
the 1933 Act to be described in the Registration Statement and the Prospectus.
(x)
There are no contracts or other documents that are required under the 1933 Act to be filed as exhibits to the Registration Statement
that are not so filed or incorporated by reference as required.
(y)
Each of the Stellus Entities possesses or has obtained, all governmental licenses, certificates, consents, orders, approvals, permits
and other authorizations necessary for the ownership or lease of its properties or the conduct of its businesses as described in the Registration
Statement, the General Disclosure Package and the Prospectus (the “Permits”), except where the failure to possess,
obtain or make the same would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, none of the Stellus Entities has
received written notice of any proceeding relating to revocation or modification of any such Permit, except where such revocation or modification
would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(z)
The terms of the Investment Advisory Agreement, including compensation terms, comply in all material respects with all applicable
provisions of the 1940 Act and the Advisers Act, and the approvals by the Company’s board of directors and the Company’s stockholders,
as applicable, of the Investment Advisory Agreement have been obtained in accordance with the requirements of Section 15 of the 1940 Act
applicable to companies that have elected to be regulated as business development companies under the 1940 Act.
(aa)
Neither the Company, nor to the Company’s knowledge, any of its directors, officers, or controlling persons, has taken, directly
or indirectly, any action designed, or that has constituted or might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the
Securities.
(bb)
Neither the Company nor any of its related entities (i) is required to register as a “broker” or “dealer”
in accordance with the provisions of the Exchange Act or (ii) directly or indirectly through one or more intermediaries, controls or is
a “person associated with a member” or “associated person of a member” (within the meaning set forth in the FINRA
Manual). To the Company’s knowledge, no officer or director of the Company is an associated person of a FINRA registered broker-dealer
firm.
(cc)
Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and the SBIC
Funds have filed all federal, state, local and foreign tax returns which have been required to be filed and paid all taxes shown thereon
through the date hereof, to the extent that such taxes have become due and are not being contested in good faith, except where failure
to do so would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except as otherwise
disclosed in or contemplated by the disclosed in or contemplated by the Registration Statement or the Prospectus, no tax deficiency has
been determined adversely to the Company which has had, or would reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty or assessment
which has been asserted or threatened against it, which would have a Company Material Adverse Effect.
(dd)
The Company and the SBIC Funds have good and marketable title to all of the personal property (excluding Intellectual Property,
which is addressed below) reflected in the consolidated financial statements herein described or described in the Registration Statement,
the General Disclosure Package or the Prospectus as being owned by the Company or the SBIC Funds, in each case free and clear of all liens,
encumbrances and claims, except for any failure to have good and valid title for any liens, encumbrances and claims that (i) do not materially
interfere with the use made of such property by the Company or the SBIC Funds, as applicable, or (ii) would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect. Neither the Company nor any SBIC Fund owns any real property.
(ee)
Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, the Company and the SBIC
Funds own, license, or possess adequate enforceable rights to use all patents, patent applications, trademarks (both registered and unregistered),
service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary information, systems or procedures) (collectively, the “Intellectual
Property”), necessary for the conduct of their respective businesses as conducted as of the date hereof, except to the extent
that the failure to own or possess adequate rights to use such Intellectual Property would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect; except as disclosed in writing to the Representative, neither the Company nor any
SBIC Fund has received any written notice of any claim of infringement or conflict which asserted Intellectual Property rights of others,
which infringement or conflict would reasonably be expected to result in a Company Material Adverse Effect; neither the Company nor any
SBIC Fund has received any written notice of any claim challenging the rights of the Company or an SBIC Fund in or to any Intellectual
Property owned, licensed or optioned by the Company or an SBIC Fund which claim would reasonably be expected to result in a Company Material
Adverse Effect.
(ff)
The Company, on a consolidated basis, maintains a system of internal control over financial
reporting (as defined under Rule 13a-15(f) and 15d-15(f) under the Exchange Act) and a system of internal accounting
controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general
or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Since the date of the latest audited financial statements of the Company included in
the Registration Statement, the General Disclosure Package and the Prospectus, there has been no change in the Company’s internal
control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting. Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus,
since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(gg)
Except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there is and has been no
failure on the part of the Company or, to the knowledge of the Company, any of the Company’s directors or officers, in their capacities
as such, to comply with any applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder. Each
of the principal executive officer and the principal financial officer of the Company (or each former principal executive officer of the
Company and each former principal financial officer of the Company as applicable) has made all certifications required by Sections 302
and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and other documents required to be filed by
it or furnished by it to the Commission. For purposes of the preceding sentence, “principal executive officer” and “principal
financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.
(hh)
The Company does not have any employees. To the knowledge of the Company, no labor disturbance by or dispute with employees of
the Adviser exists or, to the knowledge of the Company, is threatened which would reasonably be expected to result in a Company Material
Adverse Effect.
(ii)
No Stellus Entity is, or after giving effect to the offering and sale of the Securities, will be a “registered management
investment company” or an entity “controlled” by a “registered management investment company,” as such terms
are defined in the 1940 Act. The Company has elected to be regulated as a business development company under the 1940 Act and has filed
with the Commission, pursuant to Section 54(a) of the 1940 Act, a duly completed and executed Form N-54A (the “Company BDC
Election”); the Company has not filed with the Commission any notice of withdrawal of the Company BDC Election pursuant
to Section 54(c) of the 1940 Act; the Company BDC Election remains in full force and effect, and, to the Company’s actual knowledge,
no order of suspension or revocation of such election under the 1940 Act has been issued or proceedings therefore initiated or threatened
by the Commission. The operations of the Company are in compliance with the provisions of the 1940 Act applicable to business development
companies and the rules and regulations of the Commission thereunder applicable to business development companies, except where such non-compliance
would not reasonably be expected, individually or in the aggregate, to result in a Company Material Adverse Effect.
(jj)
The operations of the Stellus Entities are and have been conducted at all times in compliance with applicable financial record-keeping
and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, those of the Bank
Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable money laundering statutes of all jurisdictions in which the Stellus
Entities conduct business, and the applicable rules and regulations thereunder, and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental or regulatory agency having jurisdiction over the Stellus Entities (collectively,
the “Money Laundering Laws”), except as would not reasonably be expected to result in a Company Material Adverse
Effect, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
any of the Stellus Entities with respect to the Money Laundering Laws is pending or, to the Company’s knowledge, threatened.
(kk)
The execution and delivery of, and the performance by the Company of its obligations under, this Agreement have been duly and validly
authorized by all necessary corporate action on the part of the Company, and this Agreement has been duly executed and delivered by the
Company.
(ll)
Except as set forth in the Registration Statement, the General Disclosure Package and the
Prospectus, the Company maintains insurance in such amounts and covering such risks as the Company reasonably believes are adequate for
its business and customary for companies of similar size engaged in similar businesses in similar industries.
(mm)
The Company has not sent or received notice of, or otherwise communicated or received communication with respect to, termination
of any agreement filed as an exhibit to, or incorporated by reference in, the Registration Statement (each such agreement a “Material
Agreement” and collectively, the “Material Agreements”), nor has any such termination been threatened
by any person or entity.
(nn)
Except as set forth in the Registration Statement, the General Disclosure
Package or the Prospectus, (i) no relationship, direct or indirect, exists between or among the Company or, to the Company’s
knowledge, any affiliate, on the one hand, and the directors, officers and stockholders of the Company on the other hand that is
required by the 1933 Act to be described in the Registration Statement, General Disclosure Package or Prospectus that is not so
described; (ii) no relationship, direct or indirect, exists between or among the Company or any affiliate, on the one hand, and the
directors, officers, stockholders or directors of the Company, on the other hand, that is required by the rules of FINRA to be
described in the Registration Statement, General Disclosure Package or Prospectus that is not so described; (iii) there are no
material outstanding loans or advances or material guarantees of indebtedness by the Company to, or for the benefit of, any of its
officers or directors or any of the members of the families of any of them; and (iv) the Company has not offered, or caused any
Underwriter to offer, Securities to any person with the intent to influence unlawfully a trade journalist or publication to write or
publish favorable information about the Company or any of its products or services.
(oo)
The statistical, industry-related and market-related data, if any, included in the Registration Statement, the General Disclosure
Package and the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived.
(pp)
None of the Company, nor any director or officer of the Company, nor to the knowledge of the Company, any agent, employee or representative
of any of the Company, or other person or entity acting on behalf of the Company, is currently the subject or target of any sanctions
administered or enforced by the U.S. government (including, without limitation, the Office of Foreign Assets Control of the U.S. Treasury
Department or the U.S. Department of State and including the designation as a “specially designated national” or “blocked
person”), the United Nations Security Council, the European Union, His Majesty’s Treasury or other relevant sanctions authority
(collectively, “Sanctions”), nor is the Company located, organized or resident in a country or territory that
is the target of Sanctions, including without limitation Cuba, Iran, North Korea, the Crimean region, the so-called Donetsk People’s
Republic and so-called Luhansk People’s Republic regions of Ukraine, Sudan and Syria (each such country or territory that is a target
of Sanctions, a “Sanctioned Country”); and the Company will not directly or indirectly use the proceeds of the
offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity (i) to fund or facilitate any unlawful activities of or business with any person or entity that, at the time
of such funding or facilitation, is the target of Sanctions, (ii) to fund or facilitate any unlawful activities of or business in any
Sanctioned Country or (iii) in any other manner that will result in a violation by any person or entity (including any person or entity
participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Company
has not knowingly engaged in, and is not now knowingly engaged in, and the Company will not engage in, any dealings or transactions with
any person or entity that at the time of the dealing or transaction is or was the target of Sanctions or with any Sanctioned Country.
(qq)
None of the Company or, to the Company’s knowledge, any employee or agent of the Company, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign office in violation of any law, which violation is required
to be disclosed in the Registration Statement, the General Disclosure Package or the Prospectus.
(rr)
Any (i) advertising, sales literature, press releases, other promotional material (including “prospectus wrappers,”
“broker kits,” “road show slides,” “road show scripts” and “electronic road show presentations”),
(ii) “free writing prospectus” as defined in Rule 405 (other than for the information
set forth in Exhibit B hereto) (the materials set forth in clause (i) and clause (ii) authorized for use by the Company
in connection with the public offering of the Securities, collectively, “Sales Material”) and (iii) Written
Testing-the-Waters Communication authorized for use by the Company in connection with the public offering of the Securities does not and
will not conflict in any material respect with the information contained in the Registration Statement or the General Disclosure Package
and does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under which they were made not misleading. Moreover, any Sales
Material and any Written Testing-the-Waters Communication complies and will comply in all material respects with the applicable requirements
of the 1933 Act (except that this representation and warranty does not apply to statements in or omissions from the Sales Material made
in reliance upon and in conformity with information relating to the Underwriters furnished to the Company by the Underwriters expressly
for use therein).
(ss)
Subject to the Small Business Investment Act of 1958, as amended, and the regulations promulgated thereunder (the “SBA
Regulations”), and except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus
and for such prohibitions pursuant to the SBA Regulations or that would not reasonably be expected to result in a Company Material Adverse
Effect, no SBIC Fund of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary’s equity interests, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary.
(tt)
None of the Company nor any of its consolidated subsidiaries, nor any director, officer, agent, employee or affiliate of the Company
nor any director, officer, agent or affiliate of any consolidated subsidiary of the Company nor, to the knowledge of the Company, any
employee of any consolidated subsidiary of the Company is aware of or has taken any action, directly or indirectly, that would result
in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the
“FCPA”), or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, or committed an offense under any other applicable anti-bribery or anti-corruption
laws, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of any applicable anti-bribery or anti-corruption laws, and the
Adviser, the Company, the Company’s consolidated subsidiaries and their respective affiliates have conducted their businesses in
compliance with any applicable anti-bribery or anti-corruption laws and have instituted, maintained and enforced and will continue to
maintain and enforce policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance
therewith.
(uu)
The Company has elected (which election has not been revoked) to be treated, and intends to be continue to operate its business
so as to qualify, as a regulated investment company (“RIC”) under Subchapter M of the Code. The Company intends
to direct the investment of the net proceeds received by it from the sale of the Securities in the manner specified in the Registration
Statement, the General Disclosure Package and the Prospectus under the caption “Use of Proceeds” and in such a manner as to
continue to comply with the requirements of Subchapter M of the Code.
(vv)
Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus: (i) no person or entity is
serving or acting as an officer, director or investment adviser of the Company or the SBIC Funds, except in accordance with the applicable
provisions of the 1940 Act and the Advisers Act; and (ii) to the knowledge of the Company, no director of the Company is an “interested
person” (as defined in the 1940 Act) of the Company or an “affiliated person” (as defined in the 1940 Act) of any Underwriter.
(ww)
The Securities conform to the provisions of the Indenture and the relative rights, preferences, interests and powers of such Securities
are set forth in the Indenture.
(xx)
As of the date of this Agreement and on a pro forma basis, after giving effect to the issuance and sale of the Securities and the
use of proceeds therefrom, the Company will be in compliance with the applicable asset coverage requirements set forth in Sections 18
and 61 of the 1940 Act.
(yy)
This Agreement, the Indenture and the Securities comply in all material respects with all applicable provisions of the 1940 Act.
(zz)
At the time of filing the Registration Statement and any post-effective amendment thereto,
at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2)
under the 1933 Act) of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined
in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company
be considered an ineligible issuer.
(aaa)
Each of the SBIC Funds is licensed to operate as a Small Business Investment Company (“SBIC”) by the
U.S. Small Business Administration (“SBA”). Each of the SBIC Funds’ SBIC license is in good standing with,
and has not been revoked or suspended by, the SBA and no adverse regulatory findings contained in any examinations reports prepared by
the SBA regarding either of the SBIC Funds are outstanding or unresolved. Each of the SBIC Funds is conducting its business in compliance
in all material respects with the applicable requirements of the SBA. The method of operation of each of the SBIC Funds will permit it
to continue to meet the requirements for qualification as an SBIC, subject to SBA approval. Each of the SBIC Funds is eligible to sell
securities guaranteed by the SBA in the amounts and on the terms described in the General Disclosure Package and the Prospectus. Neither
of the SBIC Funds is in default under the terms of any debenture which either SBIC Fund, as applicable, has issued to the SBA for guaranty
by the SBA or any other material monetary obligation, and no event, which with the passage of time, notice or both has occurred, which
would be a default or event of default thereunder.
(bbb)
The Company (i) has adopted and implemented written policies and procedures reasonably designed to prevent violation of the
Federal Securities Laws (as that term is defined in Rule 38a-1 under the 1940 Act) by the Company; (ii) is conducting its business
in compliance with all laws, rules, regulations, decisions, directives and orders except for such failure to comply which would not reasonably
be expected to result in a Company Material Adverse Effect; and (iii) is conducting its business in compliance in all material respects
with the applicable requirements of the 1940 Act.
(ccc)
(i) The Company is not aware of any security breach or incident, unauthorized access or disclosure, or other compromise of or relating
to the Company’s information technology and computer systems, networks, hardware, software, data and databases, equipment or technology
(collectively, “IT Systems and Data”) except in each case as would not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect; and (ii) the Company has implemented appropriate controls, policies, procedures,
and technological safeguards to maintain and protect the integrity, continuous operation, redundancy and security of its IT Systems and
Data reasonably consistent with industry standards and practices, or as required by applicable regulatory standards and the Company is,
to the Company’s knowledge, presently in material compliance with all applicable laws or statutes and all judgments, orders, rules
and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating
to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation
or modification.
Any certificate signed by any officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
2.
Representations and Warranties of the Adviser. The Adviser represents and warrants to and agrees with each of the Underwriters,
as of the date hereof, and as of each of the Applicable Time and the Closing Time (as such terms
are defined in Sections 1(a) and 3(b), respectively, hereof), as follows:
(a)
Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the
Prospectus, except as otherwise stated therein, there has been no material adverse change in the condition (financial or otherwise), earnings,
assets, business affairs, operations or regulatory status of the Adviser, whether or not arising in the ordinary course of business, that
would reasonably be expected, individually or in the aggregate, to result in a Company Material Adverse Effect, or would otherwise reasonably
be expected, individually or in the aggregate, to prevent the Adviser from carrying out its obligations under the Investment Advisory
Agreement (an “Adviser Material Adverse Effect”).
(b)
The Adviser has been duly organized and is validly existing and in good standing under the laws of the State of Delaware and has
the limited liability company power and authority to own, lease and operate its properties and to conduct its business as described in
the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this
Agreement; the Adviser has the requisite limited liability company power and authority to execute and deliver and perform its obligations
under the Investment Advisory Agreement; and the Adviser is duly qualified to transact business as a foreign entity and is in good standing
in each other jurisdiction in which such qualification is required, whether by reason of ownership or leasing of its property or the conduct
of business, except, in each case, where the failure to qualify or be in good standing would not otherwise reasonably be expected, individually
or in the aggregate, to result in an Adviser Material Adverse Effect.
(c)
The Adviser is duly registered with the Commission as an investment adviser under the Advisers Act and is not prohibited by the
Advisers Act or the 1940 Act from acting under the Investment Advisory Agreement for the Company as contemplated by the Registration Statement,
the General Disclosure Package and the Prospectus. There does not exist any proceeding or, to the Adviser’s knowledge, any facts
or circumstances the existence of which could reasonably be expected, individually or in the aggregate, to lead to any proceeding, which
might adversely affect the registration of the Adviser with the Commission.
(d)
There is no action, suit, claim or proceeding or, to the knowledge of the Adviser, inquiry or investigation before or brought by
any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Adviser, threatened, against or
affecting the Adviser which is required to be disclosed in the Registration Statement, the General Disclosure Package or the Prospectus
(other than as disclosed therein), or which would reasonably be expected, individually or in the aggregate, to result in a Company Material
Adverse Effect or an Adviser Material Adverse Effect, or which would reasonably be expected, individually or in the aggregate, to materially
and adversely affect the consummation of the transactions contemplated in this Agreement or the Investment Advisory Agreement; the aggregate
of all pending legal or governmental proceedings to which the Adviser is a party or of which any of its property or assets is the subject
which are not described in the Registration Statement, the General Disclosure Package and/or the Prospectus, including ordinary routine
litigation incidental to its business, would not reasonably be expected, individually or in the aggregate, to result in a Company Material
Adverse Effect or an Adviser Material Adverse Effect.
(e)
The Adviser is not (i) in violation of its organizational or governing documents, (ii) in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Adviser is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Adviser is subject (collectively, the “Agreements and Instruments”), or (iii)
in violation of any law, statute, rule, regulation, judgment, order or decree except, in the case of clauses (ii) and (iii) only, for
such violations or defaults that would not reasonably be expected, individually or in the aggregate, to result in an Adviser Material
Adverse Effect; and the execution, delivery and performance of this Agreement and the Investment Advisory Agreement and the consummation
of the transactions contemplated herein and therein and in the Registration Statement and compliance by the Adviser with its obligations
hereunder and under the Investment Advisory Agreement do not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Adviser pursuant to the Agreements and Instruments except for such violations or defaults
that would not reasonably be expected, individually or in the aggregate, to result in an Adviser Material Adverse Effect, nor will such
action result in any violation of the provisions of the limited liability company operating agreement (as amended to date) of the Adviser;
nor will such action result in any violation of any applicable law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign, having jurisdiction over the Adviser or any of its assets, properties
or operations, except for such violations that would not reasonably be expected to result in an Adviser Material Adverse Effect.
(f)
Each of this Agreement and the Investment Advisory Agreement have been duly authorized, executed, and delivered by the Adviser
and is a valid and binding obligation of the Adviser, enforceable against it in accordance with its terms, except as the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating
to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding
therefore may be brought.
(g)
No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Adviser of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this Agreement, except such as have
been already obtained under the 1933 Act and the 1940 Act or will be obtained by the Closing Time.
(h)
The descriptions of the Adviser contained in the Registration Statement, the General Disclosure Package, the Prospectus, and any
Written Testing-the-Waters Communication and Sales Material do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
(i)
The Adviser possesses such licenses issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary
to conduct the business now operated by it (“Governmental Licenses”), except where the failure so to possess
would not reasonably be expected to, individually or in the aggregate, result in an Adviser Material Adverse Effect; the Adviser is in
compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, individually
or in the aggregate, result in an Adviser Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect
would not, individually or in the aggregate, result in an Adviser Material Adverse Effect; and the Adviser has not received any notice
of proceedings relating to the revocation or modification of any such Governmental Licenses which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would reasonably be expected, individually or in the aggregate, to result in
an Adviser Material Adverse Effect.
(j)
Neither the Adviser, nor to the Adviser’s knowledge, any of its affiliates, has taken or will take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
(k)
The Adviser (i) has adopted and implemented written policies and procedures pursuant to Rule 206(4)-7 under the Advisers
Act reasonably designed to prevent violations of the Advisers Act by the Adviser; (ii) is conducting its business in compliance with
all laws, rules, regulations, decisions, directives and orders except for such failure to comply which would not reasonably be expected
to result in an Adviser Material Adverse Effect; and (iii) is conducting its business in compliance in all material respects with
the applicable requirements of the Advisers Act.
(l)
The Adviser is not aware that (i) any executive, key employee or significant group of employees of any of the Stellus Entities,
as applicable, plans to terminate employment with the respective Stellus Entity, or (ii) any such executive or key employee is subject
to any non-compete, nondisclosure, confidentiality, employment, consulting or similar agreement that would be violated by the present
or proposed business activities of the Stellus Entities except where such termination or violation would not reasonably be expected to
have an Adviser Material Adverse Effect.
(m)
(i) The Adviser is not aware of any security breach or incident, unauthorized access or disclosure, or other compromise of or relating
to the Adviser’s IT Systems and Data except in each case as would not reasonably be expected to, individually or in the aggregate,
have an Adviser Material Adverse Effect; and (ii) the Adviser has implemented appropriate controls, policies, procedures, and technological
safeguards to maintain and protect the integrity, continuous operation, redundancy and security of its IT Systems and Data reasonably
consistent with industry standards and practices, or as required by applicable regulatory standards and the Adviser is, to the Adviser’s
knowledge, presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any
court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and
security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification.
(n)
None of the Adviser, nor any director or officer of the Adviser, nor to the knowledge of the Adviser, any agent, employee or representative
of any of the Adviser, or other person or entity acting on behalf of the Adviser, is currently the subject or target of Sanctions, nor
is the Adviser located, organized or resident in a country or territory that is a Sanctioned Country; and the Adviser will not directly
or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any unlawful activities of or business with
any person or entity that, at the time of such funding or facilitation, is the target of Sanctions, (ii) to fund or facilitate any unlawful
activities of or business in any Sanctioned Country or (iii) in any other manner that will result in a violation by any person or entity
(including any person or entity participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.
The Adviser has not knowingly engaged in, and is not now knowingly engaged in, and the Adviser will not engage in, any dealings or transactions,
including on behalf of the company, with any person or entity that at the time of the dealing or transaction is or was the target of Sanctions
or with any Sanctioned Country.
(o) None of the Adviser nor any of its consolidated
subsidiaries, nor any director, officer, agent, employee or affiliate of the Adviser nor any director, officer, agent or affiliate of
any consolidated subsidiary of the Adviser nor, to the knowledge of the Adviser, any employee of any consolidated subsidiary of the Adviser
is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the FCPA, or any applicable
law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,
or committed an offense under any other applicable anti-bribery or anti-corruption laws, including making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official”
(as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office,
in contravention of any applicable anti-bribery or anti-corruption laws, and the Adviser, the Adviser, the Adviser’s consolidated
subsidiaries and their respective affiliates have conducted their businesses in compliance with any applicable anti-bribery or anti-corruption
laws and have instituted, maintained and enforced and will continue to maintain and enforce policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued compliance therewith.
Any certificate signed by any officer or other authorized person of
the Adviser and delivered to the Underwriters or to counsel for the Underwriters shall be deemed a representation and warranty by the
Adviser to each Underwriter as to the matters covered thereby.
3.
Purchase, Sale and Delivery of the Securities.
(a)
On the basis of the representations, warranties and covenants herein contained, and subject to the terms and conditions herein
set forth, the Company hereby agrees to sell to the Underwriters, severally and not jointly, the respective aggregate principal amount
of Securities set forth opposite the name of the Underwriter in Exhibit A hereto, and each Underwriter, severally and not jointly,
agrees to purchase the aggregate principal amount of Securities set forth opposite the name of such Underwriter in Exhibit A hereto,
plus any additional aggregate principal amount of Securities which such Underwriter may become obligated to purchase pursuant to the provisions
of Section 8 hereof, subject to such adjustments among the Underwriters as the Representative in its sole discretion shall
make to eliminate any sales or purchases of fractional Securities, in each case at a purchase price of 96.973% of the aggregate principal
amount (the “Purchase Price”).
(b)
Payment of the Purchase Price for, and delivery of any certificates for, the Securities shall be made at the offices of Dechert
LLP at 1900 K Street NW, Washington, D.C. 20006 or at such other place as shall be agreed upon by the Representative and the Company,
at 10:00 a.m. (New York City time) on April 1, 2025 (unless postponed in accordance with the provisions of Section 8), or
such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time
and date of payment and delivery being herein called “Closing Time”).
Payment shall be made to the Company by wire transfer
of immediately available funds to a single bank account designated by the Company against delivery to the Representative through the facilities
of DTC for the respective accounts of the Underwriters of the Securities to be purchased by them. It is understood that each Underwriter
has authorized the Representative, for its accounts, to accept delivery of, receipt for, and make payment of the Purchase Price for, the
Securities, which it has agreed to purchase. The Representative, individually and not as representative of the Underwriters, may (but
shall not be obligated to) make payment of the Purchase Price for the Securities to be purchased by any Underwriter whose funds have not
been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder.
(c)
The Securities shall be electronically transferred at the Closing Time, in such denominations and registered in such names as the
Underwriters may request in writing at least two (2) full business days before the Closing Time. The Securities purchased hereunder
shall be delivered at the Closing Time through the facilities of the DTC or another mutually agreeable facility, against payment of the
Purchase Price therefore in immediately available funds to the order of the Company.
4.
Expenses.
(a)
The Company will pay all expenses incident to the performance of its obligations under this Agreement, including relating to the
following matters: (i) the preparation, printing or reproduction and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto) and the Prospectus, and each amendment or supplement to either of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration
Statement, the General Disclosure Package, and the Prospectus, and all amendments or supplements to any of them, as may, in each case,
be reasonably requested for use in connection with the offering and sale of the Securities; (iii) the costs and expenses incurred by the
Company arising out of the marketing of the sale of the Securities to investors, including but not limited to the transportation, lodging,
graphics and other expenses of the Company and its officers related to the preparation for and participation by the Company and its officers
in any road show; (iv) the preparation, printing, authentication, issuance and delivery of the Securities and any certificates for the
Securities; (v) the printing (or reproduction) and delivery of this Agreement, any Blue Sky memorandum and all closing documents printed
(or reproduced) and delivered in connection with the offering of the Securities; (vi) any registration or qualification of the Securities
for offer and sale under the securities or Blue Sky laws of the several states (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such registration and qualification); (vii) the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters (in an amount not to exceed $7,500) in connection with, the review by FINRA of the
terms of the sale of the Securities; (viii) the fees and expenses of the Stellus Entities’ accountants, counsel and other advisors;
(ix) the fees and expenses of any transfer agent or registrar for the Securities and of the Trustee; and (x) all other reasonable costs
and expenses incurred by the Company or the Adviser incident to the performance by the Company of its obligations hereunder.
(b)
If this Agreement is terminated by the Representative in accordance with the provisions of Section 6 or Section 9(a)(i),
9(a)(ii) and 9(a)(vi) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses incurred,
including the reasonable fees and disbursements of counsel for the Underwriters.
5.
Agreements of the Company. The Company agrees with the Underwriters that:
(a)
During any period that a prospectus relating to the Securities is required to be delivered under the 1933 Act (but in any event
through the Closing Time), the Company, subject to Section 5(b) of this Agreement, will comply with the requirements of Rule 415,
Rule 430B and Rule 424(b) under the 1933 Act and will notify the Representative immediately, and confirm the notice in writing, (i) when
any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission relating to the Registration Statement, (iii)
of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary prospectus, or of any proceeding under Section 8A of the
1933 Act, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424(b)
within the time period required by Rule 424(b) and will take such steps as it deems necessary
to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such prospectus. During any period that a prospectus relating to the Securities
is required to be delivered under the 1933 Act (but in any event through the Closing Time), the Company will use its reasonable efforts
to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment.
(b)
During any period that a prospectus relating to the Securities is required to be delivered under the 1933 Act (but in any event
through the Closing Time), the Company will give the Representative notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)) or any amendment, supplement or revision to any preliminary prospectus (including any
prospectus included in the Registration Statement at the time it became effective) or to the Prospectus, will furnish the Representative
with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file
or use any such document to which the Representative or counsel for the Underwriters shall reasonably object. The Company has given the
Underwriters notice of any filings made pursuant to the Exchange Act within 48 hours prior to the Applicable Time; the Company will give
the Underwriters notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Underwriters
with copies of any such documents a reasonable amount of time prior to such proposed filing.
(c)
Upon the Representative’s written request, the Company will deliver to the Representative, without charge, conformed copies
of the Registration Statement as originally filed, and of each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by reference therein) and conformed copies of all consents and
certificates of experts, and, upon the Representative’s request, will also deliver to the Representative, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T, or as filed
with the Commission in paper form as permitted by Regulation S-T.
(d)
The Company has delivered to each Underwriter, without charge, as many copies of the Preliminary Prospectus as such Underwriter
reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments
or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e)
The Company will use its commercially reasonable efforts to comply with the 1933 Act so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act
to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered
to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of the 1933 Act, the Company will promptly prepare and file with
the Commission, subject to Section 5(b) of this Agreement, such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish
to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request.
(f)
If there occurs an event or development as a result of which the General Disclosure Package would include an untrue statement of
a material fact or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, the Company will promptly notify the Representative so that any use of the General Disclosure
Package may cease until it is amended or supplemented (at the sole cost and expense of the Company) to
eliminate or correct such untrue statement or omission.
(g)
If at any time following the distribution of any Written Testing-the-Waters Communication
there has occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included
or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading, the Company will promptly notify the
Representative so that any use of the Written Testing-the-Waters Communication may cease until it is amended or supplemented (at
the sole cost and expense of the Company) to eliminate or correct such untrue statement or omission.
(h)
The Company will use its commercially reasonable efforts, in cooperation with the Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Underwriters may designate
and to maintain such qualifications in effect so long as required for the distribution of the Securities; provided, however, that
the foregoing shall not apply to the extent that the Securities are “covered securities” that are exempt from state regulation
of securities offerings pursuant to Section 18 of the 1933 Act; and provided, further, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise
so subject.
(i)
The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to
its security holders as soon as practicable, but in any event not later than 16 months after the date hereof, an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(j)
During the period beginning from the date hereof and continuing to and including the date that is 90 days after the date of the
Prospectus, the Company will not sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or
otherwise dispose of or agree to dispose of, directly or indirectly, any debt securities issued or guaranteed by the Company that are
substantially similar to the Securities or any securities convertible into or exchangeable or exercisable for debt securities issued or
guaranteed by the Company that are substantially similar to the Securities, or file or cause to be declared effective a registration statement
under the 1933 Act with respect to any of the foregoing, without the prior written consent of the Representative, which may not be unreasonably
withheld. The foregoing sentence shall not apply to (i) the registration of the Securities and the sales to the Underwriters pursuant
to this Agreement, (ii) borrowings under the Credit Facility, (iii) the issuance of SBA-guaranteed debentures by the SBIC Funds or (iv)
the filing by the Company of a universal shelf registration statement covering various securities, including debt and equity securities
and certain purchase rights relating thereto.
(k)
The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the General Disclosure
Package and in the Prospectus under “Use of Proceeds.”
(l)
The Company will cooperate with the Representative and use its commercially reasonable efforts to permit the offered Securities
to be eligible for clearance and settlement through the facilities of DTC.
(m)
The Company will maintain a trustee, paying agent and registrar for the Securities.
(n)
The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company to facilitate the
sale or resale of the Securities, except as may be allowed by law.
(o)
The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file all documents required
to be filed with the Commission pursuant to the 1933 Act, the Exchange Act and the 1940 Act within the time periods required by such act,
rule or regulation. To the extent the distribution of Securities has been completed, the Company will not be required to provide the Underwriters
with reports it is required to file with the Commission under the Exchange Act.
(p)
The Company, during a period of at least 12 months from the Closing Time, will use its commercially reasonable efforts to maintain
its status as a business development company.
(q)
The Company will use its commercially reasonable efforts to maintain its qualification as
a RIC under Subchapter M of the Code for each full fiscal year during which it is a business development company under the 1940 Act.
(r)
The Company shall use its best efforts to cause each of the SBIC Funds to continue to comply with the requirements for qualification
as an SBIC and to meet its obligations as an SBIC licensed by the SBA.
(s)
The Company will use its commercially reasonable efforts to maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (A) material information relating to the Company and the assets of the Company managed by the Adviser is promptly
made known to the officers responsible for establishing and maintaining the system of internal accounting controls; and (B) any significant
deficiencies or weaknesses in the design or operation of internal accounting controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data, and any fraud whether or not material that involves management or other
employees who have a significant role in internal controls, are adequately and promptly disclosed to the Company’s independent auditors
and the audit committee of the Company’s board of directors.
6.
Conditions to the Underwriters’ Obligations. The obligations of the Underwriters to purchase the Securities on the
Closing Time are subject to the accuracy, as of the Applicable Time or the Closing Time, as the case may be, of the representations and
warranties of the Company and the Adviser contained herein, and to the performance by the Company of its covenants and obligations hereunder
and to the following additional conditions:
(a)
The Registration Statement and all post-effective amendments thereto, including any filing under Rule 462(b), shall have become
effective, the final prospectus containing the information that was omitted from such registration statement at the time it became effective
but that is deemed to be part of such registration statement pursuant to Rule 430B shall have been filed with the Commission in accordance
with Rule 424(b), and any request of the Commission for additional information (to be included in the Registration Statement or otherwise)
shall have been disclosed to the Representative and complied with to its reasonable satisfaction. No stop order suspending the effectiveness
of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been
taken or, to the knowledge of the Company, shall be contemplated or threatened by the Commission and no injunction, restraining order
or order of any nature by a Federal or state court of competent jurisdiction shall have been issued as of the Closing Time which would
prevent the issuance of the Securities.
(b)
The Representative shall have received from Eversheds Sutherland (US) LLP, counsel for the Company and the Adviser (“Company
Counsel”), opinions and a negative assurance letter, each dated the Closing Time, addressed to the Representative in form
and substance reasonably satisfactory to the Representative.
(c)
[Reserved].
(d)
The Representative shall have received from Dechert LLP, counsel to Underwriters (“Underwriters’ Counsel”),
an opinion and negative assurance letter dated the Closing Time, addressed to the Underwriters, in form and substance reasonably satisfactory
to the Representative.
(e)
The Representative shall have received, on each of the date hereof and the Closing Time, letters from Grant Thornton LLP and Deloitte
& Touche LLP dated the date hereof or the Closing Time, as the case may be, in form and substance reasonably satisfactory to the Representative,
containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters,
delivered in accordance with Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the financial statements
and certain financial and statistical information contained in the Registration Statement, the General Disclosure Package and the Prospectus.
(f)
The Representative shall have received, on each of the date hereof and the Closing Time, a certificate of the Chief Financial Officer
of the Company, in form and substance reasonably satisfactory to the Representative and as agreed upon prior to the date hereof, covering
certain financial matters of the Company.
(g)
Each of the Company and the Adviser shall have furnished to the Representative, on the Closing Time, a certificate substantially
in the form of Exhibit 6(g).
(h)
The Company and the Trustee shall have executed and delivered each of the Base Indenture, the Fourth Supplemental Indenture and
the Securities and, at or prior to the Closing Time, the Indenture shall be in full force and effect.
(i)
Each of the Company and the Adviser shall have furnished to the Representative such further certificates and documents as the Representative
may reasonably require for the purpose of enabling the Underwriters to pass upon the issuance and sale of the Securities as herein contemplated.
(j)
At the Closing Time, the Company shall have caused the Securities to be rated at least BBB by DBRS, Inc. and since the execution
of this Agreement, there shall not have been any decrease in the rating of any debt or preferred stock of the Company or any consolidated
subsidiary by any “nationally recognized statistical rating organization” (as defined in Section 3(a)(62) of the Exchange
Act), or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change, and no such organization shall have publicly announced it has under surveillance or
review any such rating.
If any of the conditions hereinabove provided for in this Section
6 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder
may be terminated by the Representative by notifying the Company of such termination in writing at or prior to the Closing Time. In such
event, the Company and the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections
4, 7 and 10 hereof).
7.
Indemnification and Contribution.
(a)
The Company and the Adviser, jointly and severally, agree to indemnify and hold harmless the Underwriters, the partners, directors,
officers, employees and agents of the Underwriters and each person or entity that controls the Underwriters within the meaning of either
Section 15 of the 1933 Act or Section 20 of the Exchange Act:
(i)
against any and all loss, liability, claim, damage and expense whatsoever, arising out of any untrue or alleged untrue statement
of a material fact contained in the Registration Statement for the Securities as originally filed or in any amendment thereof (and including
any post-effective amendment), the General Disclosure Package or the Prospectus or in any Written Testing-the-Waters Communication or
Sales Material (or any amendment or supplement to any of the foregoing), or arising out of or based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading;
(ii)
against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that
any such settlement is effected with the written consent of the Company; and
(iii)
against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representative),
reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid under Section 7(a)(i) or (a)(ii) above;
provided,
however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative expressly for use in the Registration Statement (or any amendment
thereto), or the General Disclosure Package, any Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), it
being understood and agreed that the only such information furnished by or on behalf of any Underwriter for inclusion in the Prospectus
consists of the following information in the Prospectus: (x) the concession figure appearing under the caption “Underwriting—Commissions
and Discounts” in the Prospectus, (y) the information in the first two paragraphs under the caption “Underwriting—Stabilization”
in the Prospectus, and (z) the list of Underwriters and their respective participation in the sale of the Securities, which
is set forth in the first paragraph under the caption “Underwriting” in the Prospectus.
Moreover, the Company will not be liable to any Underwriter with respect
to the Prospectus to the extent that (i) any such loss, claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the Registration Statement (or any amendment thereto), or the General
Disclosure Package, the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto), (ii) the Company has informed
the Underwriters of such untrue statement or alleged untrue statement or omission or alleged omission in writing at least twenty-four
(24) hours prior to the Applicable Time, (iii) the Company has filed an amended Prospectus with the Commission correcting such untrue
statement or alleged untrue statement or omission or alleged omission prior to the Applicable Time, (iv) the Company has provided to the
Underwriters an amended Prospectus correcting such untrue statement or alleged untrue statement or omission or alleged omission at least
twenty-four (24) hours prior to the Applicable Time and requested in writing that the Underwriters deliver such amended Prospectus to
the persons to whom the Underwriters are selling the Securities, and (v) the Company proves that such loss, claim, damage or liability
results from the fact that such Underwriter has sold Securities to a person to whom such Underwriter has failed to deliver such amended
Prospectus.
(b)
Each Underwriter severally agrees to indemnify and hold harmless the Company and the Adviser, each of their respective directors,
managers, and officers, and each person who controls the Company and the Adviser within the meaning of either Section 15 of the 1933 Act
or Section 20 of the Exchange Act, to the same extent as the indemnity from the Company and the Adviser to the Underwriters set forth
in Section 7(a)(i) and the proviso thereto, but only with reference to written information relating to the Underwriters furnished
to the Company by or on behalf of the Underwriters specifically for inclusion in the documents referred to in the foregoing indemnity.
The Underwriters agree to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any loss, claim, damage, liability or action to which they are entitled to indemnification
pursuant to this Section 7(b). This indemnity agreement will be in addition to any liability which the Underwriters may otherwise
have.
(c)
In case any proceeding (including any governmental investigation) shall be instituted involving any person or entity in respect
of which indemnity may be sought pursuant to Section 7, such person or entity (the “indemnified party”) shall
promptly notify the person or entity against whom such indemnity may be sought (the “indemnifying party”) in writing. No indemnification
provided for in Section 7 shall be available to any party who shall fail to give notice as provided in this Section 7(c)
if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 7.
In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as
incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any
such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying
party shall have failed to assume the defense and employ counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. Such firm shall be designated in writing by the Representative in the case of parties indemnified
pursuant to Section 7(a) and by the Company in the case of parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment. In addition, the indemnifying party will not, without the prior written consent
of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding
of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding and does not include any statement as to or any admission of fault, culpability
or a failure to act by or on behalf of any indemnified party.
(d)
To the extent the indemnification provided for in Section 7 is unavailable to or insufficient to hold harmless an indemnified
party under Section 7(a) or (b) above in respect of any losses, liabilities, claims, damages or expenses (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company and the Adviser, on the one hand, and the Underwriters, on
the other, from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted
by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion
as is appropriate to reflect not only such relative benefits but also the relative fault of the Company or the Adviser, on the one hand,
and the Underwriters, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received
by the Company and the Adviser, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the
aggregate initial public offering price of the Securities as set forth on the cover of the Prospectus. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company, the Adviser and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this Section 7(d) were determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7(d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 7(d)
shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this Section 7(d), (i) no Underwriter shall be required
to contribute any amount in excess of the underwriting discounts and commissions applicable to the Securities purchased by such Underwriter
and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(e)
For purposes of this Section 7, each person or entity, if any, who controls an Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the Exchange Act and each Underwriter’s affiliates, partners, directors, officers, and selling
agents shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company,
and each person or entity, if any, who controls the Company or Adviser within the meaning of Section 15 of the 1933 Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company or the Adviser, as the case may be. The Underwriters’
respective obligations to contribute pursuant to this Section 7 are several in proportion to the aggregate principal amount of
Securities set forth opposite their respective names in Exhibit A hereto and not joint.
(f)
Notwithstanding any other provision of this Section 7, no party shall be entitled to indemnification or contribution under
this Agreement in violation of Section 17(i) of the 1940 Act.
8.
Default by One or More Underwriters. If one or more of the Underwriters shall fail on the Closing Time to purchase the Securities
which it or they are obligated to purchase under this Agreement (the “Defaulted Securities”), the Representative
shall use commercially reasonable efforts, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters,
or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period,
then:
(a)
if the aggregate principal amount of Defaulted Securities does not exceed 10% of the aggregate principal amount of Securities to
be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters; or
(b)
if the aggregate principal amount of Defaulted Securities exceeds 10% of the aggregate principal amount of Securities to be purchased
on such date, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 8 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, the Representative shall have the right to postpone the Closing Time for a period not exceeding seven days in order
to effect any required changes in the Registration Statement, the General Disclosure Package or Prospectus or in any other documents or
arrangements. As used herein, the term “Underwriter” includes any person substituted for an Underwriter under
this Section 8.
9.
Termination.
(a)
This Agreement may be terminated by the Representative by notice to the Company (a) at any time prior to the Closing Time if any
of the following has occurred: (i) since the time of execution of this Agreement or since the respective dates as of which information
is given in the Registration Statement, the General Disclosure Package and the Prospectus, any Company Material Adverse Effect or any
development that is reasonably likely to result in a Company Material Adverse Effect, (ii) since the time of execution of this Agreement
or since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus,
any Adviser Material Adverse Effect, or any development that is reasonably likely to result in an Adviser Material Adverse Effect; (iii)
any outbreak or escalation of hostilities or declaration of war or national emergency or other national or international calamity, or
crisis (including, without limitation, an act of terrorism) or change in economic or political conditions, if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis, change on the financial markets of the United States would, in the judgment of the
Representative, materially impair the investment quality of the Securities, (iv) suspension of trading in securities generally on the
NYSE or Nasdaq or limitation on prices (other than limitations on hours or numbers of days of trading), (v) the declaration of a banking
moratorium by United States or New York State authorities, (vi) the suspension of trading of any security of the Company by the NYSE,
the Commission or any other governmental authority or (vii) the taking of any action by any governmental body or agency in respect of
its monetary or fiscal affairs which in the opinion of the Representative has a material adverse effect on the securities markets in the
United States; or (b) as provided in Section 6 of this Agreement.
(b)
If this Agreement is terminated pursuant to this Section 9, such termination shall be without liability of
any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 2, 7,
10, 11, 12, 13, 15 and 16 shall survive such termination and remain in full force and effect.
10.
Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other
statements of the Company and the Adviser, or their respective officers, and of the Underwriters set forth in or made pursuant to this
Agreement (including as may be made in certificates of officers of the Company and the Adviser submitted pursuant hereto) will remain
in full force and effect, regardless of any investigation made by or on behalf of the Underwriters or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for
the Securities. The provisions of Section 4, Section 7, Section 10, Section 11, Section 12, Section
13, Section 15 and Section 16 shall survive the termination or cancellation of this Agreement.
11.
Notices. All communications hereunder will be in writing and effective only on receipt, and will be mailed (postage prepaid,
certified or registered mail, return receipt requested), delivered or transmitted by any standard form of telecommunication or electronic
communication:
(a)
if to the Underwriters:
Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Larry M. Herman, Managing Director / Financial
Services Investment Banking
E-mail: [email protected]
Telephone: (901) 531-3237
Facsimile: (901) 579-4891
Attention: Daniel R. Palmadesso, General Counsel –
Investment Banking
E-mail: [email protected]
Telephone: (727) 567-5367
Facsimile: (727) 567-8750
with an additional copy to:
Dechert
LLP
1900 K Street, NW
Washington, D.C. 20006
Facsimile: (202) 261-3333
E-mail: [email protected]
Attention:
Harry S. Pangas, Esq. (which copy shall not constitute notice)
(b)
if to the Company or the Adviser:
c/o Stellus Capital Management, LLC
4400 Post Oak Parkway, Suite 2200
Houston, Texas 77027
Facsimile: (713) 292-5450
E-mail: [email protected]
Attention: W. Todd Huskinson
with an additional copy to:
Eversheds Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, D.C. 20001
Facsimile: (202) 637-3593
E-mail: [email protected]
Attention: Stephani M. Hildebrandt,
Esq. (which copy shall not constitute notice)
Any party hereto may change the address for receipt of communications
by giving written notice to the other parties hereto.
12.
Successors. This Agreement has been and is made solely for the benefit of the Underwriters, the Company, the Adviser and
their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred
to herein, and no other person will have any right or obligation hereunder. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13.
No Fiduciary Duty. The Company and the Adviser hereby acknowledge and agree that (a) the purchase and sale of any Securities
pursuant to this Agreement, including the determination of the public offering price of the Securities and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the Underwriters of such Securities, and any
affiliate through which an Underwriter may be acting, on the other hand, (b) in connection with the public offering of the Securities
and the process leading to such transaction the Underwriters will act solely as principals and independent contractors, and not as agents
or fiduciaries of the Company or its stockholders, creditors, employees or any other party or in any other capacity, (c) the Underwriters
will not assume an advisory or fiduciary responsibility in favor of the Company with respect to the offering of Securities contemplated
hereby or the process leading thereto (irrespective of whether the Underwriters have advised or are currently advising the Company on
other matters) and the Underwriters will not have any obligation to the Company with respect to the offering except the obligations expressly
set forth herein, (d) the Underwriters and their affiliates may be engaged in a broad range of transactions that involve interests that
differ from those of the Company, and (e) the Underwriters have not provided and will not provide any legal, accounting, regulatory or
tax advice with respect to the offering of the Securities and the Company has consulted and will consult its own legal, accounting, regulatory
and tax advisors to the extent it deemed appropriate.
14.
Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company
and the Underwriters with respect to the subject matter hereof.
15.
Applicable Law. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED THERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
16.
Waiver of Jury Trial. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
17.
Counterparts. This Agreement may be signed in two or more counterparts, each of which shall constitute an original and all
of which together shall constitute one and the same agreement. Counterparts may be delivered via electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart
so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
18.
Headings. The section headings used herein are for convenience only and shall not affect the construction hereof.
19.
Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
20.
Recognition of the U.S. Special Resolution Regimes.
(a)
In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime,
the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to
the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and
obligation, were governed by the laws of the United States or a state of the United States.
(b)
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding
under a U.S. Special Resolution Regime, Default Rights (as such terms are defined below) under this Agreement that may be exercised against
such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
(c)
As used in this Section 20, the following terms have the respective meanings set forth below:
(i)
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted
in accordance with, 12 U.S.C. § 1841(k).
(ii)
“Covered Entity” means any of the following: (x) a “covered entity” as that term is defined
in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (y) a “covered bank” as that term is defined in, and interpreted
in accordance with, 12 C.F.R. § 47.3(b), or (z) a “covered FSI” as that term is defined in, and interpreted in accordance
with, 12 C.F.R. § 382.2(b).
(iii)
“Default Rights” has the meaning assigned to that term in, and shall be interpreted in accordance with,
12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
(iv)
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act of 1950, as amended,
and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
as amended, and the regulations promulgated thereunder.
[Remainder of Page Intentionally Blank]
If the foregoing is in accordance with your understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument, along with all counterparts, will become
a binding agreement among the Company, the Adviser and the Underwriters, in accordance with its terms.
| |
Very truly yours, |
| |
|
| |
STELLUS CAPITAL INVESTMENT CORPORATION |
| |
|
| |
By: |
/s/ W. Todd Huskinson |
| |
|
Name: |
W. Todd Huskinson |
| |
|
Title: |
Chief Financial Officer, Chief Compliance Officer and Secretary |
| |
|
| |
STELLUS CAPITAL MANAGEMENT, LLC |
| |
|
| |
By: |
Stellus Capital Management Holdings, L.P., |
| |
|
the Managing Member of |
| |
|
Stellus Capital Management, LLC |
| |
|
| |
By: |
SCM Holdings GP, LLC, |
| |
|
General Partner of |
| |
|
Stellus Capital Management Holdings, L.P. |
| |
|
| |
By: |
/s/ W. Todd Huskinson |
| |
|
Name: |
W. Todd Huskinson |
| |
|
Title: |
Authorized Signatory |
[Signature Page to Underwriting
Agreement]
The foregoing Agreement is hereby confirmed and accepted as of the
date first-written above.
| Raymond James & Associates,
Inc. |
|
| |
|
| By: |
/s/ Larry Herman |
|
| Name: |
Larry Herman |
|
| Title: |
Managing Director |
|
For itself and as Representative of the Underwriters named in Exhibit
A hereto
[Signature Page to Underwriting
Agreement]
EXHIBIT
A
| Name of Underwriter | |
Aggregate
Principal
Amount of
Securities | |
| Raymond James & Associates, Inc. | |
$ | 48,750,000 | |
| Goldman Sachs & Co. LLC | |
| 13,125,000 | |
| Keefe, Bruyette & Woods, Inc. | |
| 13,125,000 | |
| Total | |
$ | 75,000,000 | |
Exhibit A
EXHIBIT
B
PRICE-RELATED INFORMATION
See attached
Exhibit B
STELLUS CAPITAL INVESTMENT CORPORATION
$75,000,000
7.25% Notes due 2030
PRICING TERM SHEET
March 25, 2025
| Issuer |
|
Stellus Capital Investment Corporation (the “Company”) |
| |
|
| Security |
|
7.250% Notes due 2030 |
| |
|
| Expected Rating* |
|
Morningstar DBRS: BBBL/Stable |
| |
|
| Aggregate Principal Amount Offered |
|
$75,000,000 |
| |
|
| Maturity |
|
April 1, 2030 |
| |
|
| Trade Date |
|
March 25, 2025 |
| |
|
| Settlement Date** |
|
April 1, 2025 (T+5) |
| |
|
| Use of Proceeds |
|
To repay a portion of the outstanding borrowings under the Company’s senior secured revolving credit facility. |
| |
|
| Price to Public (Issue Price) |
|
98.973% of the aggregate principal amount |
| |
|
| Coupon (Interest Rate) |
|
7.250% |
| |
|
| Yield to Maturity |
|
7.500% |
| |
|
| Spread to Benchmark Treasury |
|
+344 basis points |
| |
|
| Benchmark Treasury |
|
4.00% due February 28, 2030 |
| |
|
| Benchmark Treasury Yield |
|
4.058% |
| |
|
| Interest Payment Dates |
|
April 1 and October 1, beginning October 1, 2025 |
| |
|
|
| Offer to Repurchase upon a Change of Control Repurchase Event |
|
If a Change of Control Repurchase Event (as defined in the Preliminary Prospectus) occurs prior to maturity, holders will have the right, at their option, to require the Company to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. |
| Optional Redemption |
|
Prior to October 1, 2029 (six months prior to the maturity date of the Notes) (the “Par Call Date”), the Company may redeem the Notes at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of the principal amount and rounded to three decimal places) equal to the greater of:
· (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of redemption; and
· 100% of the principal amount of the Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to the redemption date.
On or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. |
| |
|
| Denomination |
|
$2,000 and integral multiples of $1,000 in excess thereof |
| |
|
| CUSIP |
|
858568 AC2 |
| |
|
| ISIN |
|
US858568AC27 |
| |
|
| Underwriting Discount |
|
2.00% |
| |
|
| Book-Running Manager |
|
Raymond James & Associates, Inc. |
| |
|
| Passive Book-Running Managers |
|
Goldman Sachs & Co. LLC
Keefe, Bruyette & Woods, Inc. |
| * |
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. |
| ** |
Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes on any date prior to the business day before delivery thereof will be required, by virtue of the fact that the Notes initially will settle T+5, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes prior to their date of delivery hereunder should consult their own advisors. |
Investors are advised to carefully consider
the investment objective, risks, charges and expenses of the Company before investing. The Preliminary Prospectus, which has been
filed with the U.S. Securities and Exchange Commission (“SEC”), contains this and other information about the Company and
should be read carefully before investing.
The information in the Preliminary Prospectus and in this pricing term
sheet is not complete and may be changed. The Preliminary Prospectus and this pricing term sheet are not offers to sell any securities
of the Company and are not soliciting an offer to buy such securities in any jurisdiction where such offer and sale is not permitted.
A shelf registration statement relating to these securities is on
file with and has been declared effective by the SEC. Before you invest, you should read the Preliminary Prospectus, the accompanying
prospectus, and other documents the Company has filed with the SEC for more complete information about the Company and this offering.
You may obtain these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, the Company, any underwriter
or any dealer participating in the offering will arrange to send you the Preliminary Prospectus and the accompanying prospectus if you
request it from Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716, email: [email protected],
tel: 800-248-8863.
Exhibit 6(g) – Officer Certificates
COMPANY OFFICERS’
CERTIFICATE
April 1, 2025
The undersigned, the duly
qualified and elected Chief Executive Officer and Chief Financial Officer of Stellus Capital Investment Corporation, a Maryland corporation
(the “Company”), do hereby certify in such respective capacity and on behalf of the Company, pursuant to Section 6(g)
of the Underwriting Agreement dated March 25, 2025 (the “Underwriting Agreement”) among the Company, Stellus
Capital Management, LLC, a Delaware limited liability company, and Raymond James & Associates, Inc., as representative of the several
underwriters named in Exhibit A thereto (collectively, the “Underwriters”), providing for the offer and
sale by the Company to the Underwriters of $75,000,000 aggregate principal amount of the Company’s 7.25% notes due 2030, that they
are authorized to execute this Officers’ Certificate in the name of and on behalf of the Company. Each of the undersigned also hereby
certifies, on behalf of the Company in his respective capacity as Chief Executive Officer or Chief Financial Officer, as applicable, that:
| (i) | the representations and warranties of the Company in the Underwriting Agreement are true and correct in
all material respects (provided that if any representation or warranty is by its terms qualified by concepts of materiality, such representation
and warranty is true and correct in all respects) with the same force and effect as though expressly made at and as of the date hereof; |
| (ii) | the Company has complied with all agreements and satisfied all conditions on its part to be performed
or satisfied at or prior to the date hereof under or pursuant to the Underwriting Agreement; |
| (iii) | no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or, to his knowledge, are contemplated by the Commission; and |
| (iv) | there has not been, since March 25, 2025 or since the respective dates as of which information is given
in the Registration Statement, the General Disclosure Package and the Prospectus (in each case exclusive of any amendments or supplements
thereto subsequent to March 25, 2025) any Company Material Adverse Effect or any development involving a prospective Company Material
Adverse Effect. |
Each of Eversheds Sutherland
(US) LLP and Dechert LLP is entitled to rely upon this Officers’ Certificate in connection with the respective opinions given by
such firms pursuant to the Underwriting Agreement.
Capitalized terms used but
not defined herein shall have the meanings ascribed to such terms in the Underwriting Agreement.
The undersigned have executed this Officers’ Certificate on behalf of the Company as of the date first set forth above.
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
ADVISER OFFICER’S
CERTIFICATE
April 1, 2025
The undersigned, the duly
qualified and elected Chief Executive Officer of Stellus Capital Management, LLC, a Delaware limited liability company registered as an
investment adviser (the “Adviser”) under the Investment Advisers Act of 1940, as amended, does hereby certify
in such capacity and on behalf of the Adviser, pursuant to Section 6(g) of the Underwriting Agreement dated March 25, 2025 (the
“Underwriting Agreement”) among the Adviser, Stellus Capital Investment Corporation, a Maryland corporation,
and Raymond James & Associates, Inc., as representative of the several underwriters named in Exhibit A thereto (collectively,
the “Underwriters”), providing for the offer and sale by the Company to the Underwriters of $75,000,000 aggregate
principal amount of the Company’s 7.25% notes due 2030, that he is authorized to execute this Officer’s Certificate in the
name and on behalf of the Adviser. The undersigned also hereby certifies, on behalf of the Adviser in his capacity as Chief Executive
Officer of the Adviser, that:
| (i) | the representations and warranties of the Adviser in Section 2 of the Underwriting Agreement are
true and correct in all material respects (provided that if any representation or warranty is by its terms qualified by concepts of materiality,
such representation and warranty is true and correct in all respects) on and as of the date hereof, with the same force and effect as
if expressly made on and as of the date hereof; |
| (ii) | the Adviser has complied with all agreements and satisfied all conditions on its part to be performed
or satisfied pursuant to the Underwriting Agreement at or prior to the date hereof; |
| (iii) | there has not been, since March 25, 2025 or since the respective dates as of which information is given
in the Registration Statement, the General Disclosure Package and the Prospectus (in each case exclusive of any amendments or supplements
thereto subsequent to March 25, 2025) any Adviser Material Adverse Effect, whether or not arising in the ordinary course of business. |
Each of Eversheds Sutherland
(US) LLP and Dechert LLP is entitled to rely upon this Officer’s Certificate in connection with the respective opinions given by
such firms pursuant to the Underwriting Agreement.
Capitalized terms used but
not defined herein shall have the meanings ascribed to such terms in the Underwriting Agreement.
The undersigned has executed this Officer’s
Certificate on behalf of the Adviser as of the date first set forth above.
SCHEDULE
A
| 1. | Stellus Capital Investment Corporation Investor Presentation Q4 2024, dated March 19, 2025 |
| 2. | Pricing Press Release filed with the Commission on March 25, 2025 pursuant to Rule 497(a) (as
a Rule 482ad) |
| 3. | Bloomberg “New Issue Announcement,” filed with the Commission on March 25, 2025 pursuant to
Rule 497(a) (as a Rule 482ad) |
| 4. | Final Term Sheet dated March 25, 2025, substantially in the form attached hereto as Exhibit B,
containing the terms of the Securities, filed with the Commission on March 25, 2025 pursuant to Rule 433 under the 1933 Act |
Exhibit 4.1
FOURTH SUPPLEMENTAL INDENTURE
between
STELLUS CAPITAL INVESTMENT CORPORATION
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of April 1, 2025
THIS FOURTH SUPPLEMENTAL INDENTURE
(this “Fourth Supplemental Indenture”), dated as of April 1, 2025, is between Stellus Capital Investment Corporation, a Maryland
corporation (the “Company”), and U.S. Bank Trust Company, National Association (as successor-in-interest to U.S. Bank National
Association), as trustee (the “Trustee”). All capitalized terms used herein shall have the meaning set forth in the Base Indenture
(as defined below).
RECITALS
OF THE COMPANY
The Company and the Trustee
executed and delivered an Indenture, dated as of May 5, 2014 (the “Base Indenture” and, as supplemented by this Fourth Supplemental
Indenture, the “Indenture”), to provide for the issuance by the Company from time to time of the Company’s unsecured
debentures, notes or other evidences of indebtedness (the “Securities”), to be issued in one or more series as provided in
the Indenture.
The Company desires to issue
and sell $75,000,000 aggregate principal amount of the Company’s 7.250% Notes due 2030 (the “Notes”).
The Company previously entered
into the First Supplemental Indenture, dated as of May 5, 2014 (the “First Supplemental Indenture”), the Second Supplemental
Indenture, dated as of August 21, 2017 (the “Second Supplemental Indenture”), and the Third Supplemental Indenture, dated
as of January 14, 2021 (the “Third Supplemental Indenture”), each of which amended and supplemented the Base Indenture. The
First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture are not applicable to the Notes.
Sections 901(4) and 901(6)
of the Base Indenture provide that without the consent of Holders of the Securities of any series issued under the Indenture, the Company,
when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental to the Base Indenture in form reasonably satisfactory to the Trustee to (i) change or eliminate any of the provisions of
the Indenture when there is no Security Outstanding of any series created prior to the execution of the supplemental indenture that is
entitled to the benefit of such provision and (ii) establish the form or terms of Securities of any series as permitted by Section 201
and Section 301 of the Base Indenture.
The Company desires to establish
the form and terms of the Notes and to modify, alter, supplement and change certain provisions of the Base Indenture for the benefit of
the Holders of the Notes (except as may be provided in a future supplemental indenture to the Indenture (each, a “Future Supplemental
Indenture”)).
The Company has duly authorized
the execution and delivery of this Fourth Supplemental Indenture to provide for the issuance of the Notes and all acts and things necessary
to make this Fourth Supplemental Indenture a valid, binding, and legal obligation of the Company and to constitute a valid agreement of
the Company, in accordance with its terms, have been done and performed.
NOW, THEREFORE, for and in
consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE
I
TERMS OF THE NOTES
Section 1.01. Terms
of the Notes. The following terms relating to the Notes are hereby established:
(a) The Notes shall constitute
a series of Senior Securities having the title “7.250% Notes due 2030.” The Notes shall bear a CUSIP number of 858568 AC2
and an ISIN number of US858568AC27, as may be supplemented or replaced from time to time.
(b) The aggregate principal
amount of the Notes that may be initially authenticated and delivered under the Indenture (except for Notes authenticated and delivered
upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906, 1107 or 1305
of the Base Indenture, and except for any Securities that, pursuant to Section 303 of the Base Indenture, are deemed never to have been
authenticated and delivered under the Indenture) shall be $75,000,000. Under a Board Resolution, Officers’ Certificate pursuant
to Board Resolutions or an indenture supplement, the Company may from time to time, without the consent of the Holders of Notes, issue
additional Notes (in any such case “Additional Notes”) having the same ranking and the same interest rate, maturity and other
terms as the Notes; provided that, if such Additional Notes are not fungible with the Notes (or any other tranche of Additional
Notes) for U.S. federal income tax purposes, then such Additional Notes will have different CUSIP and ISIN numbers from the Notes (and
any such other tranche of Additional Notes). Any Additional Notes and the existing Notes will constitute a single series under the Indenture
and all references to the relevant Notes herein shall include the Additional Notes unless the context otherwise requires.
(c) The entire outstanding principal
of the Notes shall be payable on April 1, 2030, unless earlier redeemed or repurchased in accordance with the provisions of this Fourth
Supplemental Indenture.
(d) The rate at which the Notes
shall bear interest shall be 7.250% per annum. The date from which interest shall accrue on the Notes shall be April 1, 2025, or the most
recent Interest Payment Date to which interest has been paid or provided for; the Interest Payment Dates for the Notes shall be April
1 and October 1 of each year, commencing October 1, 2025 (if an Interest Payment Date falls on a day that is not a Business Day, then
the applicable interest payment will be made on the next succeeding Business Day and no additional interest will accrue as a result of
such delayed payment); the initial interest period will be the period from and including April 1, 2025, to, but excluding, the initial
Interest Payment Date, and the subsequent interest periods will be the periods from and including an Interest Payment Date to, but excluding,
the next Interest Payment Date or the Stated Maturity, as the case may be; the interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date, will be paid to the Person in whose name the Note (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which shall be March 17 and September 16 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Payment of principal of (and premium, if any, on) and any such interest
on the Notes will be made at the Corporate Trust Office of the Trustee located at 111 Fillmore Avenue, St. Paul, MN 55107, Attention:
Stellus Capital Investment Corporation (7.250% Notes Due 2030) and at such other address as designated by the Trustee, in such coin or
currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided,
however, if the holder of the Notes requests the Company to do so, the Company will pay any amount that becomes due on the Notes
by wire transfer of immediately available funds to an account at a bank in New York, New York (upon not less than 15 Business Days’
notice prior to the time of payment); provided, further, however, that so long as the Notes are registered to Cede
& Co., such payment will be made by wire transfer in accordance with the procedures established by The Depository Trust Company and
the Trustee. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months.
(e) The Notes shall be initially
issuable in global form (each such Note, a “Global Note”). The Global Notes and the Trustee’s certificate of authentication
thereon shall be substantially in the form of Exhibit A to this Fourth Supplemental Indenture. Each Global Note shall represent the aggregate
amount of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding
Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount
of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Security Registrar,
in accordance with Sections 203 and 305 of the Base Indenture.
(f) The depositary for such
Global Notes (the “Depository”) shall be The Depository Trust Company, New York, New York. The Security Registrar with respect
to the Global Notes shall be the Trustee.
(g) The Notes shall be defeasible
pursuant to Section 1402 or Section 1403 of the Base Indenture. Covenant defeasance contained in Section 1403 of the Base Indenture shall
apply to the covenants contained in Sections 1007, 1008 and 1009 of the Indenture. For the avoidance of doubt, Article Four of the Base
Indenture also applies to the Notes.
(h) The Notes shall be redeemable
pursuant to Section 1101 of the Base Indenture and as follows:
(i) Prior to October 1, 2029
(six months prior to the maturity date of the Notes) (the “Par Call Date”), the Company may redeem the Notes at its option,
in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded
to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal
and interest thereon discounted to the redemption date (assuming the Notes matured on the Par Call Date) on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of
redemption, or (2) 100% of the principal amount of the Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon
to the redemption date.
(ii) On or after the Par Call
Date, the Company may redeem the Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of
the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to the redemption date.
(iii) “Treasury Rate”
means, with respect to any redemption date, the yield determined by the Company in accordance with the following two paragraphs.
(iv) The Treasury Rate shall
be determined by the Company after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted
daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the
yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the
Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) — H.15” (or any successor
designation or publication) (“H.15”) under the caption “U.S. government securities — Treasury constant maturities
— Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, the Company shall
select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to
the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H. 15 exactly equal to
the Remaining Life, the two yields — one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than
and one yield corresponding to the Treasury constant maturity on H. 15 immediately longer than the Remaining Life — and shall interpolate
to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal
places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the
single Treasury constant maturity on H. 15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant
maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable,
of such Treasury constant maturity from the redemption date.
(v) If on the third business
day preceding the redemption date H.15 TCM or any successor designation or publication is no longer published, the Company shall calculate
the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time,
on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that
is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the Par Call Date but there
are two or more United States Treasury securities with a maturity date equally distant from the Par Call Date, one with a maturity date
preceding the Par Call Date and one with a maturity date following the Par Call Date, the Company shall select the United States Treasury
security with a maturity date preceding the Par Call Date. If there are two or more United States Treasury securities maturing on the
Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Company shall select
from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based
upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining
the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury
security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New
York City time, of such United States Treasury security, and rounded to three decimal places.
(vi) The Trustee shall have
no duty or obligation to calculate or verify the redemption price. The Company’s actions and determinations in determining the redemption
price shall be conclusive and binding for all purposes, absent manifest error.
(vii) Notice of redemption
shall be given in writing and mailed, first-class postage prepaid, by overnight courier guaranteeing next-day delivery, to each Holder
of the Notes to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the redemption date, at the Holder’s
address, facsimile number or email address appearing in the Security Register. All notices of redemption shall contain the information
set forth in Section 1104 of the Base Indenture.
(viii) Any exercise of the
Company’s option to redeem the Notes will be done in compliance with the Indenture and the Investment Company Act, to the extent
applicable.
(ix) If the Company elects
to redeem only a portion of the Notes, the Trustee or, with respect to the Global Notes, the Depository will determine the method for
selecting the particular Notes to be redeemed, in accordance with Section 1103 of the Indenture and the Investment Company Act and the
rules of any national securities exchange or quotation system on which the Notes are listed, in each case to the extent applicable; provided,
however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than $2,000.
(x) Unless the Company defaults
in payment of the Redemption Price, on and after the redemption date, interest will cease to accrue on the Notes called for redemption
hereunder.
(i) The Notes shall not be subject
to any sinking fund pursuant to Section 1201 of the Base Indenture.
(j) The Notes shall be issuable
in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
(k) Holders of the Notes will
not have the option to have the Notes repaid prior to the Stated Maturity other than in accordance with Article Thirteen of the Indenture.
(l) The Notes are hereby designated
as “Senior Securities” under the Indenture.
ARTICLE
II
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 2.01. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Article One of the Base Indenture shall be amended by adding the following
defined terms to Section 101 in appropriate alphabetical sequence, as follows:
“‘Below Investment
Grade Rating Event’ means the Notes are downgraded below Investment Grade by the Rating Agency on any date from the date of
the public notice of an arrangement that results in a Change of Control until the end of the 60-day period following public notice of
the occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration
for possible downgrade by the Rating Agency); provided that a Below Investment Grade Rating Event otherwise arising by virtue of
a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not
be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the
Rating Agency making the reduction in rating to which this definition would otherwise apply does not announce or publicly confirm or inform
the Trustee in writing at the Company’s request (acting at the direction of holders of a majority in Principal amount of the Notes)
that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect
of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment
Grade Rating Event).”
“‘Change of
Control’ means the occurrence of any of the following:
(i) the direct or indirect
sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation) in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Controlled Subsidiaries taken as a whole to any “person”
or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act), other than to any Permitted Holders; provided
that, for the avoidance of doubt, a pledge of assets pursuant to any secured debt instrument of the Company or its Controlled Subsidiaries
shall not be deemed to be any such sale, lease, transfer, conveyance or disposition;
(ii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group”
(as those terms are used in Section 13(d)(3) of the Exchange Act) (other than any Permitted Holders) becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly, of more than 50% of the outstanding
Voting Stock of the Company, measured by voting power rather than number of shares; or
(iii) the approval by the
Company’s stockholders of any plan or proposal relating to the liquidation or dissolution of the Company.”
“‘Change of
Control Repurchase Event’ means the occurrence of a Change of Control and a Below Investment Grade Rating Event.”
“‘Controlled
Subsidiary’ means any Subsidiary of the Company, 50% or more of the outstanding equity interests of which are owned by the Company
and its direct or indirect Subsidiaries and of which the Company possesses, directly or indirectly, the power to direct or cause the direction
of the management or policies, whether through the ownership of voting equity interests, by agreement or otherwise.”
“‘Corporate
Trust Office’ means the principal designated office of the Trustee at which at any time its corporate trust business shall be
administered, which office at the date hereof is (i) solely for purposes of surrender for registration of transfer or exchange or for
presentation for payment or repurchase or for conversion is located at 111 Fillmore Avenue, St. Paul, MN 55107, Attention: Stellus Capital
Investment Corporation, and (ii) for all other purposes is located as One Federal Street, 3rd Floor, Boston, MA 02110, Attention: Stellus
Capital Investment Corporation, or such other address as the Trustee may designate from time to time by notice to the Holders and the
Company, or the principal designated corporate trust office of any successor Trustee (or such other address as such successor Trustee
may designate from time to time by notice to the Holders and the Company).”
“‘DBRS’
means DBRS, Inc. or any successor thereto.”
“‘Exchange
Act’ means the Securities Exchange Act of 1934, as amended, and any statute successor thereto.”
“‘GAAP’
means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight
Board and the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity
as have been approved by a significant segment of the accounting profession in the United States, which are in effect from time to time.”
“‘Investment
Company Act’ means the Investment Company Act of 1940, as amended, and the rules, regulations and interpretations promulgated
thereunder, to the extent applicable, and any statute successor thereto.”
“‘Investment
Grade’ means a rating of BBB or better by DBRS (or, in any case, its equivalent under any successor rating categories of DBRS)
(or, if such Rating Agency ceases to rate the Notes for reasons outside of the Company’s control, the equivalent investment grade
credit rating from any Rating Agency selected by the Company as a replacement Rating Agency).”
“‘Permitted
Holders’ means (i) the Company, (ii) one or more of the Company’s Controlled Subsidiaries or (iii) Stellus Capital Management,
LLC, any affiliate of Stellus Capital Management, LLC or any entity that is managed or advised by Stellus Capital Management, LLC or any
of their affiliates.”
“‘Rating Agency’
means:
(1) DBRS; and
(2) if DBRS ceases to rate
the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally
recognized statistical rating organization” as defined in Section 3(a)(62) of the Exchange Act selected by the Company as a replacement
agency for DBRS.”
“‘Significant
Subsidiary’ means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X under the Exchange Act, as such regulation is in effect on the date of this Indenture (but excluding any Subsidiary which
is (a) a non-recourse or limited recourse Subsidiary, (b) a bankruptcy remote special purpose vehicle or (c) is not consolidated with
the Company for purposes of GAAP).”
“‘Voting Stock’
as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated)
in such person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such person, other
than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.”
Section 2.02. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Article One of the Base Indenture shall be amended by amending the definition
of “Subsidiary” in Section 101 to add the following sentence at the end of such definition:
“In addition, for purposes
of this definition, ‘Subsidiary’ shall exclude any investments held by the Company in the ordinary course of business which
are not, under GAAP, consolidated on the financial statements of the Company and its Subsidiaries.”
Section 2.03. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Section 104 of the Base Indenture shall be amended by replacing clause
(d) with the following:
“(d)
If the Company shall solicit from the Holders of Registered Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, in or pursuant to a Board Resolution, fix in advance a record date for the determination
of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall
have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in
connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided
that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after the record date.”
ARTICLE
III
REMEDIES
Section 3.01. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Section 501 of the Base Indenture shall be amended by replacing clauses
(2) and (6) with the following clauses (2) and (6):
“(2)
default in the payment of the principal of (or premium, if any, on) the Notes when it becomes due and payable at their Maturity;”
“(6)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
| (A) | is for relief against the Company in an involuntary case or proceeding, or |
| (B) | adjudges the Company bankrupt or insolvent, or approves as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company, or |
| (C) | appoints a Custodian of the Company or for all or substantially all of its property, or |
| (D) | orders the winding up or liquidation of the Company, |
and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days;”
Section 3.02. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Section 502 of the Base Indenture shall be amended by replacing the first
paragraph thereof with the following:
“If an Event of Default
(other than an Event of Default under Section 501(5) or Section 501(6)) with respect to the Notes at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes may
(and the Trustee shall at the written request of such Holders) declare the principal of all the Notes to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration such principal or specified
portion thereof shall become immediately due and payable, but does not entitle any Holder to any redemption payout or redemption premium.
If an Event of Default with respect to the Notes under Section 501(5) or Section 501(6) occurs, the entire principal amount of all the
Notes will automatically become due and immediately payable.”
ARTICLE
IV
COVEnANTS
Section 4.01. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Article Ten of the Base Indenture shall be amended by adding the following
new Sections 1007, 1008 and 1009 thereto, each as set forth below:
“Section 1007. Section
18(a)(1)(A) of the Investment Company Act.
The Company hereby agrees
that for the period of time during which the Notes are Outstanding, the Company will not violate Section 18(a)(1)(A) as modified by Section
61(a)(2) of the Investment Company Act or any successor provisions thereto, whether or not the Company continues to be subject to such
provisions of the Investment Company Act, but giving effect, in either case, to any exemptive relief granted to the Company by the Commission.”
“Section 1008. Section
18(a)(1)(B) of the Investment Company Act.
The Company hereby agrees
that, for the period of time during which the Notes are Outstanding, the Company will not violate Section 18(a)(1)(B) as modified by Section
61(a)(2) of the Investment Company Act or any successor provisions thereto, and after giving effect to any exemptive relief granted to
the Company by the Commission, except that the Company may declare a cash dividend or distribution, notwithstanding the prohibition contained
in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the Investment Company Act or any successor provisions thereto, but only up
to such amount as is necessary in order for the Company to maintain its status as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended; provided, however, that the prohibition in this Section 1008 shall not apply until
such time as the Company’s asset coverage has been below the minimum asset coverage required pursuant to Section 18(a)(1)(B) as
modified by Section 61(a)(2) of the Investment Company Act or any successor provisions thereto (after giving effect to any exemptive relief
granted to the Company by the Commission) for more than six (6) consecutive months.”
“Section 1009. Commission
Reports and Reports to Holders.
If, at any time, the Company
is not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the Commission,
the Company agrees to furnish to the Holders of the Notes and the Trustee for the period of time during which the Notes are Outstanding:
(i) within 90 days after the end of the each fiscal year of the Company, audited annual consolidated financial statements of the Company
and (ii) within 45 days after the end of each fiscal quarter of the Company (other than the Company’s fourth fiscal quarter), unaudited
interim consolidated financial statements of the Company. All such financial statements shall be prepared, in all material respects, in
accordance with applicable GAAP.”
ARTICLE
V
REDEMPTION OF SECURITIES
Section 5.01. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Section 1103 of the Base Indenture shall be amended by replacing the first
paragraph thereof with the following:
“If less than all the
Securities of any series issued on the same day with the same terms are to be redeemed, the particular Securities to be redeemed shall
be selected by the Trustee, or by the Depository in the case of global Securities, in compliance with the requirements of DTC, from the
Outstanding Securities of such series issued on such date with the same terms not previously called for redemption, in compliance with
the requirements of the principal national securities exchange on which the Securities are listed (if the Securities are listed on any
national securities exchange), or if the Securities are not held through DTC or listed on any national securities exchange, or DTC prescribed
no method of selection, by such method as the Trustee shall deem fair and appropriate and subject to and otherwise in accordance with
the procedures of the applicable Depository; provided that such method complies with the rules of any national securities exchange
or quotation system on which the Securities are listed (which rules shall be certificated to the Trustee by the Company or such national
securities exchange at the Trustee’s request), and may provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum authorized denomination for Securities of that series; provided, however, that
no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than the minimum authorized
denomination for Securities of such series.”
ARTICLE
VI
REPAYMENT AT THE OPTION OF HOLDERS
Section 6.01. Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities under
the Indenture, whether now or hereafter issued and Outstanding, Article Thirteen of the Base Indenture shall be amended by replacing Sections
1301 to 1305 with the following:
“Section 1301. Change of Control Repurchase
Event.
If a Change of Control Repurchase
Event occurs, unless the Company shall have exercised its right to redeem the Notes in full, the Company shall make an offer to each Holder
of Notes to repurchase all or any part (in minimum denominations of $2,000 and integral multiples of $1,000 principal amount in excess
thereof) of that Holder’s Notes at a repurchase price in cash equal to 100% of the aggregate principal amount of Notes repurchased
plus any accrued and unpaid interest on the Notes repurchased to, but excluding, the date of repurchase. Within 30 days following any
Change of Control Repurchase Event or, at the Company’s option, prior to any Change of Control, but after the public announcement
of the Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute or
may constitute the Change of Control Repurchase Event and offering to repurchase Notes on the payment date specified in the notice, which
date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior
to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Repurchase
Event occurring on or prior to the payment date specified in the notice. The Company shall comply with the requirements of Rule 14e-1
promulgated under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that the
provisions of any securities laws or regulations conflict with this Section 1301, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations under this Section 1301 by virtue of such conflict.
On the Change of Control Repurchase
Event payment date, subject to extension if necessary to comply with the provisions of the Investment Company Act, the Company will, to
the extent lawful:
(a) accept for payment all
Notes or portions of Notes properly tendered pursuant to its offer;
(b) deposit with the Paying
Agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes properly tendered; and
(c) deliver or cause to be
delivered to the Trustee the Notes properly accepted, together with an Officers’ Certificate stating the aggregate principal amount
of Notes being purchased by the Company.
The Paying Agent will promptly
remit to each holder of Notes properly tendered the purchase price for the Notes, and upon receipt of a Company Order, the Trustee will
promptly authenticate, upon receipt of a Company order, and mail (or cause to be transferred by book-entry) to each holder a new Note
equal in principal amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in a minimum
principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.
If any Repayment Date upon
a Change of Control Repurchase Event falls on a day that is not a Business Day, then the required payment will be made on the next succeeding
Business Day and no additional interest will accrue as a result of such delayed payment.
The Company will not be required
to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if a third party makes an offer in respect of the Notes
in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases
all Notes properly tendered and not withdrawn under its offer.”
ARTICLE
VII
MISCELLANEOUS
Section 7.01. This
Fourth Supplemental Indenture and the Notes shall be governed by and construed in accordance with the law of the State of New York, without
regard to principles of conflicts of laws. This Fourth Supplemental Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of the Indenture and shall, to the extent applicable, be governed by such provisions.
Section 7.02. In case
any provision in this Fourth Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 7.03. This
Fourth Supplemental Indenture may be executed in counterparts, each of which will be an original, but such counterparts will together
constitute but one and the same Fourth Supplemental Indenture. The exchange of copies of this Fourth Supplemental Indenture and of signature
pages by facsimile, .pdf transmission, email or other electronic means shall constitute effective execution and delivery of this Fourth
Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, .pdf transmission, email or other
electronic means shall be deemed to be their original signatures for all purposes. For the avoidance of doubt, all notices, approvals,
consents, requests and any communications hereunder or with respect to this Fourth Supplemental Indenture must be in writing (provided
that any communication sent to Trustee hereunder must be in the form of a document that is signed manually or by way of a digital signature
provided by DocuSign or Adobe (or such other digital signature provider as specified in writing to Trustee by the authorized representative)),
in English. The Company agrees to assume all risks arising out of the use of using digital signatures and electronic methods to submit
communications to Trustee, including without limitation the risk of Trustee acting on unauthorized instructions, and the risk of interception
and misuse by third parties.
Section 7.04. The Base
Indenture, as supplemented and amended by this Fourth Supplemental Indenture, is in all respects ratified and confirmed, and the Base
Indenture and this Fourth Supplemental Indenture shall be read, taken and construed as one and the same instrument with respect to the
Notes. All provisions included in this Fourth Supplemental Indenture supersede any conflicting provisions included in the Base Indenture
with respect to the Notes, unless not permitted by law. The Trustee accepts the trusts created by the Base Indenture, as supplemented
by this Fourth Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Base Indenture, as supplemented
by this Fourth Supplemental Indenture.
Section 7.05. The provisions
of this Fourth Supplemental Indenture shall become effective as of the date hereof.
Section 7.06. Notwithstanding
anything else to the contrary herein, the terms and provisions of this Fourth Supplemental Indenture shall apply only to the Notes and
shall not apply to any other series of Securities under the Indenture and this Fourth Supplemental Indenture shall not and does not otherwise
affect, modify, alter, supplement or change the terms and provisions of any other series of Securities under the Indenture, whether now
or hereafter issued and Outstanding.
Section 7.07. The recitals
contained herein and in the Notes shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or sufficiency of this Fourth Supplemental Indenture, the Notes or
any Additional Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Fourth Supplemental Indenture,
authenticate the Notes and any Additional Notes and perform its obligations hereunder. The Trustee shall not be accountable for the use
or application by the Company of the Notes or any Additional Notes or the proceeds thereof. All of the provisions contained in the Indenture
in respect of the rights, privileges, immunities, powers, indemnities, and duties of the Trustee shall be applicable in respect of this
Fourth Supplemental Indenture as fully and with like force and effect as though fully set forth in full herein.
IN WITNESS WHEREOF, the parties
hereto have caused this Fourth Supplemental Indenture to be duly executed as of the date first above written.
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STELLUS CAPITAL INVESTMENT CORPORATION |
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By: |
/s/ Robert T. Ladd |
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Name: |
Robert T. Ladd |
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Title: |
Chief Executive Officer and President |
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U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee |
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By: |
/s/ David J. Ganss |
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Name: |
David J. Ganss |
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Title: |
Authorized Signatory |
[Signature page to Fourth Supplemental Indenture]
Exhibit A – Form of Global Note
This Security is a Global Note within the meaning
of the Indenture hereinafter referred to and is registered in the name of The Depository Trust Company or a nominee thereof. This Security
may not be exchanged in whole or in part for a Security registered, and no transfer of this Security in whole or in part may be registered,
in the name of any Person other than The Depository Trust Company or a nominee thereof, except in the limited circumstances described
in the Indenture.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment and such certificate
issued in exchange for this certificate is registered in the name of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company, any transfer, pledge or other use hereof for value or otherwise by or to any person is
wrongful, as the registered owner hereof, Cede & Co., has an interest herein.
Stellus Capital Investment Corporation
| No. |
$ |
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CUSIP No. 858568 AC2 |
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ISIN No. US858568AC27 |
7.250% Notes due 2030
Stellus Capital Investment
Corporation, a corporation duly organized and existing under the laws of Maryland (herein called the “Company,” which term
includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co.,
or registered assigns, the principal sum of (U.S. $ ) on April 1, 2030, and to pay interest thereon from April 1, 2025 or from
the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 1 and October 1 in
each year, commencing October 1, 2025, at the rate of 7.250% per annum, until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security is registered at the close of business on the Regular Record Date for such interest, which
shall be March 17 and September 16 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any
such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security is registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment, and notice whereof shall be given to Holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. This Security may be issued as part of a series.
Payment of the principal of
(and premium, if any, on) and any such interest on this Security will be made at the Corporate Trust Office of the Trustee located at
111 Fillmore Avenue, St. Paul, MN 55107, Attention: Stellus Capital Investment Corporation (7.250% Notes Due 2030) and at such other address
as designated by the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, if the Holder of the Notes requests the Company to do so, the Company will pay
any amount that becomes due on the Notes by wire transfer of immediately available funds to an account at a bank in New York, New York
(upon not less than 15 Business Days’ notice prior to the time of payment); provided, further, however, that so long as this
Security is registered to Cede & Co., such payment will be made by wire transfer in accordance with the procedures established by
The Depository Trust Company and the Trustee.
Reference is hereby made to
the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
Dated:
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STELLUS CAPITAL INVESTMENT CORPORATION |
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By: |
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Name: |
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Title: |
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This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
Dated:
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U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee |
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By: |
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Authorized Signatory |
Stellus Capital Investment Corporation
7.250% Notes due 2030
This Security is one of a
duly authorized issue of Senior Securities of the Company (herein called the “Securities”), issued and to be issued in one
or more series under an Indenture, dated as of May 5, 2014 (herein called the “Base Indenture”, which term shall have the
meaning assigned to it in such instrument), between the Company and U.S. Bank Trust Company, National Association (as successor-in-interest
to U.S. Bank National Association), as Trustee (herein called the “Trustee”, which term includes any successor trustee under
the Base Indenture), and reference is hereby made to the Base Indenture for a statement of the respective rights, limitations of rights,
duties, indemnities and immunities thereunder of the Company, the Trustee, and the Holders of the Securities and of the terms upon which
the Securities are, and are to be, authenticated and delivered, as supplemented by the Fourth Supplemental Indenture relating to the Securities,
dated April 1, 2025, by and between the Company and the Trustee (herein called the “Fourth Supplemental Indenture”; the Fourth
Supplemental Indenture and together with the Base Indenture, collectively are herein called the “Indenture”). In the event
of any conflict between the Base Indenture and the Fourth Supplemental Indenture, the Fourth Supplemental Indenture shall govern and control.
Prior to October 1, 2029 (six
months prior to the maturity date of the Securities) (the “Par Call Date”), the Company may redeem the Securities at its option,
in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded
to three decimal places) equal to the greater of: (1) (a) the sum of the present values of the remaining scheduled payments of principal
and interest thereon discounted to the redemption date (assuming the Securities matured on the Par Call Date) on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points less (b) interest accrued to the date of
redemption, or (2) 100% of the principal amount of the Securities to be redeemed, plus, in either case, accrued and unpaid interest thereon
to the redemption date.
On or after the Par Call Date,
the Company may redeem the Securities, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of
the principal amount of the Securities being redeemed plus accrued and unpaid interest thereon to the redemption date.
“Treasury Rate”
means, with respect to any redemption date, the yield determined by the Company in accordance with the following two paragraphs.
The Treasury Rate shall be
determined by the Company after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily
by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield
or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board
of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) — H.15” (or any successor
designation or publication) (“H.15”) under the caption “U.S. government securities — Treasury constant maturities
— Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, the Company shall
select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to
the Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H. 15 exactly equal to
the Remaining Life, the two yields — one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than
and one yield corresponding to the Treasury constant maturity on H. 15 immediately longer than the Remaining Life — and shall interpolate
to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal
places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the
single Treasury constant maturity on H. 15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant
maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable,
of such Treasury constant maturity from the redemption date.
If on the third business day
preceding the redemption date H.15 TCM or any successor designation or publication is no longer published, the Company shall calculate
the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time,
on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that
is closest to, the Par Call Date, as applicable. If there is no United States Treasury security maturing on the Par Call Date but there
are two or more United States Treasury securities with a maturity date equally distant from the Par Call Date, one with a maturity date
preceding the Par Call Date and one with a maturity date following the Par Call Date, the Company shall select the United States Treasury
security with a maturity date preceding the Par Call Date. If there are two or more United States Treasury securities maturing on the
Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Company shall select
from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based
upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining
the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury
security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New
York City time, of such United States Treasury security, and rounded to three decimal places.
The Trustee shall have no
duty or obligation to calculate or verify the redemption price. The Company’s actions and determinations in determining the redemption
price shall be conclusive and binding for all purposes, absent manifest error.
Notice of redemption shall
be given in writing and mailed, first-class postage prepaid or by overnight courier guaranteeing next-day delivery, to each Holder of
the Securities to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the redemption date, at the Holder’s
address appearing in the Security Register. All notices of redemption shall contain the information set forth in Section 1104 of the Base
Indenture.
Any exercise of the Company’s
option to redeem the Securities will be done in compliance with the Indenture and the Investment Company Act, to the extent applicable.
If the Company elects to redeem
only a portion of the Securities, the Trustee or, with respect to the global Securities, the Depository will determine the method for
selecting the particular Securities to be redeemed, in accordance with Section 1.01 of the Fourth Supplemental Indenture and Section 1103
of the Base Indenture. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like
tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
Unless the Company defaults
in payment of the Redemption Price, on and after the redemption date, interest will cease to accrue on the Securities called for redemption.
Holders will have the right to require the Company to repurchase their Securities upon the occurrence of a Change of Control Repurchase
Event as set forth in the Indenture.
The Indenture contains provisions
for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect
to this Security, in each case upon compliance with certain conditions set forth in the Indenture.
If an Event of Default with
respect to the Securities of this series shall occur and be continuing (other than Events of Default under Section 501(5) or Section 501(6)
of the Base Indenture), the principal of the Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture. If an Event of Default with respect to the Securities under Section 501(5) or Section 501(6) of the Base Indenture
occurs the entire principal amount of the Securities of this series will automatically become due and immediately payable.
The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the
rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series to
be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities
of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
As provided in and subject
to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the
Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less
than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered the Trustee security, indemnity, or both, satisfactory
to the Trustee, against the costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not
have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent
with such request, and shall have failed to institute any such proceeding, for sixty (60) days after receipt of such notice, request and
offer of indemnity and/or security. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the
Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender
of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium
and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Securities of this series
are issuable only in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested
by the Holder surrendering the same.
No service charge shall be
made for any such registration of transfer or exchange of Securities, but the Company or the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of
this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person
in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and none of the
Company, the Trustee or any agent thereof shall be affected by notice to the contrary.
All terms used in this Security
which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
To the extent any provision
of this Security conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.
The Indenture and this Security
shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of
laws.
