PIHPP 1347 Property Insurance Holdings Inc

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On November 29, 2019, 1347 Property Insurance Holdings, Inc. (the “Borrower”) entered into an Amended and Restated Loan Agreement and a related Amended and Restated Commercial Note (collectively, the “Amended and Restated Loan Agreement”) with Hancock Whitney Bank (the “Lender”), which increases the existing non-revolving line of credit by an additional $10.0 million (the “Line of Credit Increase”), resulting in an amended and restated non-revolving line of credit loan in the aggregate principal amount of up to $17.0 million. Immediately prior to the closing of the Asset Sale (as defined below), the Company drew $7.0 million under the line of credit, which was repaid to the Lender as of the closing of the Asset Sale.

The line of credit will expire, and the principal amount, together with all accrued interest, will be payable in a single payment due, on the earlier of (i) the closing of the transactions contemplated by the Equity Purchase Agreement (as hereinafter defined) or (ii) December 31, 2019 (the earliest of such dates, the “Maturity Date”). The Amended and Restated Loan Agreement provides for the Line of Credit Increase to be drawn in a single advance, at any time prior to the Maturity Date. Proceeds of borrowings under the Amended and Restated Loan Agreement may be used for providing short-term working capital to the Borrower’s subsidiaries and other general corporate purposes. The line of credit is secured by a collateral assignment of the Borrower’s right to receive cash proceeds under the Equity Purchase Agreement, dated February 25, 2019 (the “Equity Purchase Agreement”), by and among FedNat Holding Company, as Purchaser (“FedNat”), the Borrower, as Seller, and Maison Managers, Inc., Maison Insurance Company, and ClaimCor, LLC, subsidiaries of the Borrower (the “Subsidiaries”), pursuant to which the Borrower has agreed to sell the Subsidiaries to FedNat (the “Asset Sale”), pursuant to the terms and conditions thereof.

Borrowings under the Amended and Restated Loan Agreement will bear interest at a rate per annum equal to one-month ICE LIBOR (rounded up to the nearest one-eighth (1/8th) of one percent or rounded up to one-eighth (1/8th) of one percent if the reported one-month ICE LIBOR is less than zero) plus a margin of 3.000%. The initial interest rate is 4.875% per annum, to be adjusted on the first day of each calendar month. The Amended and Restated Loan Agreement also includes provisions relating to the potential discontinuation of LIBOR and replacement rate.

The Amended and Restated Loan Agreement contains certain restrictive covenants and provides for customary events of default with corresponding grace periods, as described in the Company’s Current Report on Form 8-K regarding the original Loan Agreement filed with the Securities and Exchange Commission on August 23, 2019.

The foregoing description of the Amended and Restated Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Loan Agreement and related Amended and Restated Commercial Note, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.