option, include Company shares to be sold by the Company for its own account and will also include registrable shares to be sold by holders that exercise their related piggyback rights in accordance with the Registration Rights Agreement. Within 90 days after receipt of a demand for such registration, the Company will be required to use its reasonable best efforts to file a registration statement relating to such demand. In certain circumstances, Principal Stockholders will be entitled to piggyback registration rights in connection with the demand of a non-shelf registered offering.
In addition, the Registration Rights Agreement entitles the Principal Stockholders to demand and be included in a shelf registration when the Company is eligible to sell its Company shares in a secondary offering on a delayed or continuous basis in accordance with Rule 415 of the Securities Act. Within 45 days (in the case of a shelf registration on Form S-1) or 30 days (in the case of a shelf registration on Form S-3) after receipt of a demand for such registration, the Company will be required to use its reasonable best efforts to file a registration statement relating to such demand. Moreover, upon the demand of a Principal Stockholder, the Company will be required to facilitate in the manner described in the Registration Rights Agreement a “takedown” off of an effective shelf registration statement of registrable shares requested by such Principal Stockholder.
The Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and indemnify the registration rights holders against (or make contributions in respect of) certain liabilities which may arise under the Securities Act of 1933.
American Advisors Group Transaction
On March 31, 2023, through Finance of America Reverse LLC (“FAR”), an indirect subsidiary of the Company, the Company acquired a majority of the assets and certain of the liabilities of American Advisors Group, a California corporation (“AAG/Bloom,” NKA Bloom Retirement Holdings Inc.), including, among other things, AAG/Bloom’s retail loan originations platform, certain residential reverse mortgage loans and the right to service certain mortgage loans originated pursuant to the Federal Housing Administration’s Home Equity Conversion Mortgage program, pursuant to (i) an Asset Purchase Agreement, dated as of December 6, 2022, by and between the Company, FOA Equity, FAR, AAG/Bloom and, for the limited purposes described therein, Reza Jahangiri, an individual residing in the State of California (the “AAG Principal”), (ii) a Servicing Rights Purchase and Sale Agreement, dated as of December 6, 2022, by and between FAR and AAG/Bloom and (iii) a Loan Sale Agreement, dated as of December 6, 2022, by and between FAR and AAG/Bloom (the foregoing agreements, as amended by the Amendment Agreement, dated as of March 31, 2023, by and among FOA Equity, FAR, AAG/Bloom and AAG Principal, the “AAG Agreements” and such acquisition, the “AAG Transaction”).
Pursuant to the AAG Agreements, in consideration for the assets acquired thereunder, on March 31, 2023, (i) FAR paid to AAG/Bloom $5.5 million in cash less cash on hand and issued to AAG/Bloom a promissory note with an aggregate principal amount of $4.5 million (which was paid in July 2023 in accordance with its terms), (ii) FAR paid off, retired or assumed specified liabilities, (iii) the Company issued to AAG/Bloom one share of Class B Common Stock and (iv) FOA Equity issued to AAG/Bloom 1,969,299 Class A LLC Units (accounting for adjustment for the Company’s 10:1 reverse stock split effective on July 25, 2024). The AAG Agreements provide that FOA Equity may issue to AAG/Bloom up to 1,420,067 additional Class A LLC Units (the “Additional Class A LLC Units”) (accounting for adjustment for the Company’s 10:1 reverse stock split effective on July 25, 2024) upon the occurrence of certain events, subject to reduction based upon certain offset rights.
As of December 31, 2024, 705,841 of the Additional Class A LLC Units had been issued to AAG/Bloom. The remaining 714,226 Additional Class A LLC Units represent indemnity holdback units (the “Indemnity Holdback Units”). The Indemnity Holdback Units are issuable to AAG/Bloom in certain increments on the second and third anniversary of the closing date of the AAG Transactions and, until such time, are subject to offset in the event of a claim for indemnification by the Company pursuant to the terms of the AAG Agreements (“Buyer Indemnification Claims”). As of December 31, 2024, the Indemnity Holdback Units had been reduced by 14,288 FOA Units to offset the Company’s losses incurred in connection with certain Buyer Indemnification Claims. On March 31, 2025, accounting for reductions to offset the Company’s losses incurred in connection with certain Buyer Indemnification Claims, 102,611 Indemnity Holdback Units were issued to AAG/Bloom. As of December 31, 2025 and as of the Record Date, accounting for further reductions to offset the Company’s losses incurred in connection with certain Buyer Indemnification Claims, 357,113 Indemnity Holdback Units remained issuable to AAG/Bloom on the third anniversary of the closing date of the AAG Transactions.
