Item 1.01 Entry into a Material Definitive Agreement.
On June 21, 2018, Oxford Square Capital
Corp. (the “Company,” “we,” “us,” or “our”) issued a press release that Oxford
Square Funding 2018, LLC (“OXSQ Funding”), a special purpose vehicle that is a wholly-owned subsidiary of the Company,
entered into a credit facility (the “Facility”) with Citibank, N.A. A copy of the press release is attached hereto
as Exhibit 99.1.
Pursuant to the terms of the credit agreement
governing the Facility, OXSQ Funding has borrowed approximately $95,200,000. No additional borrowings under the Facility are permitted.
The Facility is secured by a pool of loans sold and contributed by the Company to OXSQ Funding. The Company will act as the
collateral manager of the loans owned by OXSQ Funding and will retain a residual interest through its ownership of OXSQ Funding.
OXSQ Funding used the net proceeds of the Facility to pay fees and expenses incurred in connection with the Facility and to pay
the purchase price for the loans purchased by it from the Company.
Subject to certain exceptions, pricing under
the Facility is based on the London interbank offered rate for an interest period equal to three months plus a spread of 2.25%
per annum. Interest on the outstanding principal amount owing under the Facility is payable quarterly in arrears.
The Facility will mature, and all outstanding
principal and accrued and unpaid interest thereunder will be due and payable, on June 21, 2020, and is subject to periodic repayment
prior to such date from collections on OXSQ Funding’s loan assets and certain other mandatory payment requirements. OXSQ
Funding may elect to reduce the amount of the Facility, in whole or in part, at any time subject to payment of a prepayment fee
and certain funding breakage fees if prepayments occur prior to expiration of the relevant interest period.
In connection with the Facility, OXSQ Funding
has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other
customary requirements for similar facilities. The Facility also includes usual and customary events of default for credit facilities
of this nature.
The Company will service as collateral manager
to OXSQ Funding and in such capacity will perform certain collateral management functions, including the servicing, administration
and collection of OXSQ Funding’s assets, as well as certain administrative, supervisory and advisory functions. In its capacities
as collateral manager and equityholder of OXSQ Funding, the Company has made certain customary representations, warranties and
covenants.
As part of this transaction, the Company
entered into a sale, contribution and master participation agreement with OXSQ Funding under which the Company sold and contributed
a portfolio of loans to OXSQ Funding. The Company has made customary representations, warranties and covenants in the sale, contribution
and master participation agreement.
The Bank of New York Mellon Trust Company,
National Association serves as collateral administrator to OXSQ Funding under a collateral administration agreement. In its capacity
as collateral manager, the Company has also made customary representations, warranties and covenants in the collateral administration
agreement.
The descriptions of the documentation relating
to this transaction contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety
by reference to the forms of underlying agreements, attached hereto as Exhibits 10.1 through 10.3 and incorporated into this Current
Report on Form 8-K by reference.