Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On April 21, 2020, Luby’s Inc. (the “Company”) entered into a promissory note (the “Promissory Note”) with Texas Capital Bank, N.A., effective as of April 12, 2020, that provides for a loan in the amount of $10 million (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan matures on April 12, 2022 and bears interest at a rate of 1.0% per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement. The Promissory Note contains events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company intends to apply for forgiveness of a portion of the loan in accordance with the terms of the CARES Act to the extent applicable.
Additionally, on April 21, 2020, the Company entered into the Third Amendment to Credit Agreement, dated as of April 21, 2020, among the Company, the guarantors party thereto, the lenders party thereto and MSD PCOF Partners VI, LLC (the “Amendment”). The Amendment, amends the Credit Agreement, dated as of December 13, 2018, among the Company, the lenders party thereto and MSD PCOF Partners VI, LLC, as amended from time to time, to permit the company to incur indebtedness in the form of the PPP Loan and to terminate the $5 million undrawn portion of the delayed draw term loan upon receipt of the PPP Loan.
The foregoing descriptions of the Promissory Note and the Amendment are not complete and are qualified in their entirety by reference to the full text of the Promissory Note and of the Amendment, copies of which are filed herewith as Exhibit 10.1 and 10.2, respectively, and to this Current Report on Form 8-K and are incorporated herein by reference.