Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. The term “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the foregoing evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with polices or procedures may deteriorate.
Our management (with the supervision and participation of our Chief Executive Officer and Chief Financial Officer) conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the framework in Internal Control – Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our assessment, management concluded that, as of December 31, 2020, our internal control over financial reporting is effective based on those criteria.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
169
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.
Item 11. Executive Compensation
The information required by Item 11 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
The information required by Item 12 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.
Item 14. Principal Accountant Fees and Services
The information required by Item 14 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company’s fiscal year.
170
PART IV
Item 15. Exhibits and Financial Statement Schedules
a. Documents Filed as Part of this Report
1. Financial Statements: See "Part II, Item 8. Financial Statements and Supplementary Data" of this report for a list of financial statements.
2. Financial Statement Schedules: Schedule 12-14 Investments in and Advances to Affiliates—See "Part II, Item 8. Financial Statements and Supplementary Data—Note 11. " of this report.
3. Exhibits required to be filed by Item 601 of Regulation S-K: See Item 15b. below.
b. Exhibits
The following table lists exhibits filed as part of this report, according to the number assigned to them in Item 601 of Regulation S-K. All exhibits listed in the following table are incorporated by reference except for those exhibits denoted in the last column. Please note that the agreements included as exhibits to this Form 10-K are included to provide information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement that have been made solely for the benefit of the other parties to the applicable agreement and may not describe the actual state of affairs as of the date they were made or at any other time.
Incorporated by Reference
Exhibit
Number Description Form and SEC File No. Filing Date with SEC Filed with this 10-K
3.1 Certificate of Incorporation of OFS Capital Corporation
N-2 (333-166363) March 18, 2011
3.2 Certificate of Correction to Certificate of Incorporation of OFS Capital Corporation
10-K (814-00813) March 26, 2013
3.3 Bylaws of OFS Capital Corporation
N-2/A (333-166363) March 18, 2011
4.1 Form of Stock Certificate of OFS Capital Corporation
N-2/A (333-166363) March 18, 2011
4.2 Form of Base Indenture
N-2 (333-200376) November 19, 2014
4.3 Form of Warrant Agreement
N-2/A (333-200376) December 16, 2014
4.4 Form of Subscription Agent Agreement
N-2/A (333-200376) December 16, 2014
4.5 Form of Subscription Certificate
N-2/A (333-200376) December 16, 2014
4.6 Form of Certificate of Designation
N-2/A (333-200376) December 16, 2014
4.7 First Supplemental Indenture dated as of April 16, 2018, between OFS Capital Corporation and U.S. Bank National Association, as trustee
POS EX (333-217302) April 16, 2018
4.8 Form of 6.375% Note due 2025 (incorporated by reference to Exhibit 4.8 thereto and Exhibit A therein)
POS EX (333-217302) April 16, 2018
4.9 Second Supplemental Indenture dated as of October 16, 2018 between OFS Capital Corporation and U.S. Bank National Association, as trustee
POS EX (333-222419) October 16, 2018
171
Incorporated by Reference
Exhibit
Number Description Form and SEC File No. Filing Date with SEC Filed with this 10-K
4.10 Form of 6.50% Note due 2025 (incorporated by reference to Exhibit 4.10 thereto and Exhibit A therein)
POS EX (333-222419) October 16, 2018
4.11 Third Supplemental Indenture dated as of October 15, 2019 between OFS Capital Corporation and U.S. National Bank Association, as trustee
POS EX (333-222419) October 15, 2019
4.12 Form of 5.95% Note due 2026 (incorporated by reference to Exhibit 4.11 thereto and Exhibit A therein)
POS EX (333-222419) October 15, 2019
4.13 Fourth Supplemental Indenture dated as of September 18, 2020 between OFS Capital Corporation and U.S. National Bank Association, as trustee
Form 8-K
(333-00813) September 18, 2020
4.14 Form of 6.25% Note due 2023 (incorporated by reference to Exhibit 4.1 thereto and Exhibit A therein)
Form 8-K
(333-00813) September 18, 2020
4.15 Fifth Supplemental Indenture dated as of February 10, 2021 between OFS Capital Corporation and U.S. Bank National Association, as trustee
Form 8-K
(333-00813) February 10, 2021
4.16 Form of 4.75% Note due 2026 (incorporated by reference to Exhibit 4.1 thereto and Exhibit A therein)
Form 8-K
(333-00813) February 10, 2021
4.17 Description of Securities
*
10.1 Form of Dividend Reinvestment Plan
N-2/A (333-166363) March 18, 2011
10.2 Investment Advisory and Management Agreement between OFS Capital Corporation and OFS Capital Management, LLC
10-Q (814-00813) November 7, 2014
10.3 Form of Custody Agreement
N-2/A (333-166363) March 18, 2011
10.4 Administration Agreement between OFS Capital Corporation and OFS Capital Services, LLC
N-2/A (333-166363) March 18, 2011
10.5 License Agreement between OFS Capital Corporation and Orchard First Source Asset Management, LLC
N-2/A (333-166363) March 18, 2011
10.6 Form of Indemnification Agreement between OFS Capital Corporation and each of its directors and executive officers
N-2/A (333-166363) March 18, 2011
10.7 Form of Registration Rights Agreement between OFS Capital Corporation and Orchard First Source Asset Management, LLC
N-2/A (333-166363) July 24, 2012
10.9 Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated March 7, 2018
10-K (814-00813) March 12, 2018
10.10 Promissory Note between OFS Capital Corporation and Pacific Western Bank dated November 5, 2015
10-Q (814-00813) November 6, 2015
172
Incorporated by Reference
Exhibit
Number Description Form and SEC File No. Filing Date with SEC Filed with this 10-K
10.11 Change in terms to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated March 7, 2018
10-K (814-00813) March 12, 2018
10.13 Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank, dated April 10, 2019
Form 8-K
(333-00813) April 15, 2019
10.14 Change in terms to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank, dated April 10, 2019
Form 8-K
(333-00813) April 15, 2019
10.15 Commercial Guaranty Agreement between OFS Capital Corporation and Pacific Western Bank, dated April 10, 2019
Form 8-K
(333-00813) April 15, 2019
10.16 Amendment One to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated June 26, 2020
Form 8-K
(333-00813) July 2, 2020
10.17 Amendment Two to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated July 29, 2020
Form 10-Q
(333-00813) July 31, 2020
10.18 Amendment Three to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated October 7, 2020
Form 8-K
(333-00813) October 9, 2020
10.19 Commercial Guaranty Agreement between among OFS Capital Corporation, OFSCC-MB, Inc., and Pacific Western Bank, dated April 10, 2019
Form 8-K
(333-00813) April 15, 2019
10.20 Amendment Four to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated February 17, 2021
Form 8-K
(333-00813) February 19, 2021
10.21 Change in Terms to the Business Loan Agreement between OFS Capital Corporation and Pacific Western Bank dated February 17, 2021
Form 8-K
(333-00813) February 19, 2021
10.22 Revolving Credit and Security Agreement by and among OFSCC-FS, LLC, as borrower, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings LLC, as equityholder, OFS Capital Corporation, LLC, as servicer, and Citibank, N.A., as collateral agent, dated June 20, 2019.
Form 8-K
(814-00813) June 24, 2019
10.23 Securities Account Control Agreement by and among OFSCC-FS, LLC, as pledgor, BNP Paribas, as administrative agent, and Citibank, N.A., as secured party and securities intermediary, dated June 20, 2019.
Form 8-K
(814-00813) June 24, 2019
10.24 Custodian and Loan Administration Agreement by and among OFSCC-FS, LLC, Citibank, N.A., as custodian, and Virtus Group, LP, as collateral administrator, dated June 20, 2019.
Form 8-K
(814-00813) June 24, 2019
10.25 Loan Sale and Contribution Agreement by and between OFSCC-FS, LLC, as the buyer, and OFSCC-FS Holdings, LLC, as the seller, dated June 20, 2019.
Form 8-K
(814-00813) June 24, 2019
11.1 Computation of Per Share Earnings +
14.1 Joint Code of Ethics of OFS Capital Corporation and OFS Advisor
*
173
Incorporated by Reference
Exhibit
Number Description Form and SEC File No. Filing Date with SEC Filed with this 10-K
21.1 List of Subsidiaries
*
23.1 Consent from KPMG LLP
*
23.2 Consent from BDO USA, LLP
*
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
*
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended
*
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
†
32.2 Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
†
99.1 Report of Independent Registered Public Accounting Firm
*
99.2 Report of Independent Registered Public Accounting Firm
*
* Filed herewith.
+ Included in the notes to the financial statements contained in this report
† Furnished herewith
Item 16. Form 10-K Summary
None.
174
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OFS Capital Corporation
Date: March 5, 2021 /s/ Bilal Rashid
Bilal Rashid
Chief Executive Officer and Chairman of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
Date: March 5, 2021 /s/ Bilal Rashid
Bilal Rashid, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
Date: March 5, 2021 /s/ Marc Abrams
Marc Abrams, Director
Date: March 5, 2021 /s/ Romita Shetty
Romita Shetty, Director
Date: March 5, 2021 /s/ Elaine E. Healy
Elaine E. Healy, Director
Date: March 5, 2021 /s/ Jeffrey A. Cerny
Jeffrey A. Cerny, Chief Financial Officer, Treasurer (Principal Financial Officer) and Director
Date: March 5, 2021 /s/ Jeffery S. Owen
Jeffery S. Owen, Chief Accounting Officer (Principal Accounting Officer)
175