Item 1.01. Entry into a Material Definitive Agreement
General
On October 12, 2020, Replay Acquisition
Corp., a Cayman Islands exempted company (“Replay”); Finance of America Equity Capital LLC, a Delaware limited liability
company (“FoA”); Finance of America Companies Inc., a Delaware corporation and wholly owned subsidiary of Replay (“New
Pubco”); RPLY Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of New Pubco (“Replay
Merger Sub”); RPLY BLKR Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of New Pubco (“Blocker
Merger Sub”); Blackstone Tactical Opportunities Fund (Urban Feeder) – NQ L.P., a Delaware limited partnership (“Blocker”);
Blackstone Tactical Opportunities Associates – NQ L.L.C., a Delaware limited liability company (“Blocker GP”);
BTO Urban Holdings L.L.C., a Delaware limited liability company (“BTO Urban”), Blackstone Family Tactical Opportunities
Investment Partnership – NQ – ESC L.P., a Delaware limited partnership (“ESC”), Libman Family Holdings
LLC, a Connecticut limited liability company (“Family Holdings”), The Mortgage Opportunity Group LLC, a Connecticut
limited liability company (“TMO”), L and TF, LLC, a North Carolina limited liability company (“L&TF”),
UFG Management Holdings LLC, a Delaware limited liability company (“Management Holdings”), and Joe Cayre (each of BTO
Urban, ESC, Family Holdings, TMO, L&TF, Management Holdings and Joe Cayre, a “Seller” and, collectively, the “Sellers”);
and BTO Urban and Family Holdings, solely in their joint capacity as the representative of the Sellers pursuant to Section 12.18
of the Transaction Agreement (as defined below) (the “Seller Representative”), entered into a Transaction Agreement
(the “Transaction Agreement”) pursuant to which Replay agreed to combine with FoA in a transaction (the “Proposed
Transaction”) that will result in New Pubco becoming a publicly-traded company on the New York Stock Exchange (“NYSE”)
and controlling FoA in an “UP-C” structure. Subject to the qualifications below, a summary of certain of the terms
of the Transaction Agreement and other related agreements follows. Capitalized terms used in this Current Report on Form 8-K
but not otherwise defined herein have the meanings given to them in the Transaction Agreement.
Transaction Agreement
Structure of the Proposed Transaction
The Proposed Transaction encompasses a series
of transactions to effect an “UP-C” structure, pursuant to which, among other things: (i) Replay will (A) domesticate
to a Delaware limited liability company (the “Domestication”), whereby each ordinary share, par value $0.0001 per share
(“Ordinary Shares”), of Replay outstanding immediately prior to the Domestication will be converted into a limited
liability company unit (“Replay LLC Units”), and (B) subsequently merge with Replay Merger Sub (with Replay surviving
such merger as a direct wholly owned subsidiary of New Pubco), whereby each Replay LLC Unit outstanding immediately prior to such
merger will be converted into the right to receive one share of New Pubco’s Class A common stock, par value $0.0001 per share
(“Class A Common Stock”); (ii) New Pubco will acquire (A) a direct equity interest in FoA from the Sellers, (B) a
direct equity interest in FoA from Blocker GP as a contribution of such equity interest to New Pubco by Blocker GP and (C) an indirect
equity interest in FoA through the acquisition from the holders of Blocker Shares (as defined below) as of immediately prior to
the Blocker Merger Effective Time (such holders, the “Blocker Shareholders”) of a 100% interest in Blocker (which,
at the time of such acquisition, will hold an equity interest in FoA) pursuant to the merger of Blocker Merger Sub with Blocker,
with Blocker surviving the merger as a direct wholly owned subsidiary of New Pubco (the “Blocker Merger”); (iii) the
Sellers will hold limited liability company interests in FoA (“FoA Units”) that are exchangeable on a one-for-one basis
for shares of Class A Common Stock, (iv) Blocker GP and Blocker Shareholders will, directly or indirectly, hold shares of Class
A Common Stock; and (v) holders of FoA Units (including the Sellers but excluding New Pubco or any wholly owned subsidiary thereof)
will hold shares of New Pubco’s Class B common stock, par value $0.0001 per share (“Class B Common Stock”), which
will have no economic rights but will entitle each holder of at least one such share (regardless of the number of shares so held)
to a number of votes that is equal to the aggregate number of FoA Units held by such holder on all matters on which stockholders
of New Pubco are entitled to vote generally.
Consideration
The aggregate consideration payable or
issuable to the Sellers, Blocker GP and the Blocker Shareholders in connection with the Proposed Transaction will consist of,
as applicable, (a) the aggregate amount of Seller Cash Consideration (as defined below), (b) the Blocker GP Sale
Consideration (as defined below), (c) the aggregate number of Seller Class B Shares (as defined below), (d) the aggregate
amount of Blocker Merger Consideration (as defined below), and (e) the Earnout Securities (as defined below). In addition, in
exchange for the FoA Units that Blocker GP will contribute to New Pubco, New Pubco will issue to Blocker GP a number of
shares of Class A Common Stock equal to the number of FoA Units so contributed.
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(a)
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Seller Cash Consideration
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Replay will purchase from each Seller a
number of FoA Units (as calculated pursuant to the terms and conditions of the Transaction Agreement), in exchange for cash in
an amount equal to the product of (such aggregate cash to be paid to a Seller, such Seller’s “Seller Cash Consideration”):
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(i)
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the gross amount of the cash paid by the PIPE Investors to Replay pursuant to the PIPE plus the amount of cash held by Replay
inside or outside of the Trust Account (as defined below), less the amount of cash to be paid from the Trust Account to
Redeeming Shareholders (as defined below) (the “Pre-Closing Purchaser Cash”), multiplied by
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(ii)
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the quotient of (x) the number of FoA Units owned by such Seller as of immediately following the Company Equity Reclassification
(as defined below), divided by (y) the total number of FoA Units outstanding immediately prior to the Closing but immediately
following the Company Equity Reclassification (“Pre-Closing Outstanding Units”).
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(b)
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Blocker GP Sale Consideration
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Replay will purchase from Blocker GP a number
of FoA Units (as calculated pursuant to the terms and conditions of the Transaction Agreement), in exchange for cash in an amount
equal to the product of (such cash, the “Blocker GP Sale Consideration”):
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(i)
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the Pre-Closing Purchaser Cash, multiplied by
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(ii)
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the quotient of (x) the number of FoA Units owned by Blocker GP as of immediately following the Company Equity Reclassification,
divided by (y) the Pre-Closing Outstanding Units.
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(c)
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Seller Class B Shares
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New Pubco will issue to each Seller 100
shares of Class B Common Stock (as to each Seller, such Seller’s “Seller Class B Shares”) in exchange for the
contribution by such Seller to New Pubco of cash equal to the par value of such Seller Class B Shares.
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(d)
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Blocker Merger Consideration
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At the Blocker Merger Effective Time, by
virtue of the Blocker Merger, each unit of limited liability company interest of Blocker (which, immediately prior to the Blocker
Merger, will have been converted from a Delaware limited partnership into a Delaware limited liability company) (each such unit,
a “Blocker Share”) that is issued and outstanding immediately prior to the Blocker Merger Effective Time will be automatically
converted into the right to receive (the “Blocker Merger Consideration”):
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(i)
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a number of validly issued, fully-paid and nonassessable shares of Class A Common Stock equal to the quotient of (x) the product
of (1) the number of FoA Units owned by Blocker as of immediately following the Company Equity Reclassification multiplied by
(2) the difference of (A) 100% minus (B) the Sale Percentage (as defined below) divided by (y) the number of Blocker
Shares issued and outstanding immediately prior to the Blocker Merger Effective Time, and
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(ii)
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an amount in cash equal to the quotient of (x) the product of (1) the Pre-Closing Purchaser Cash multiplied by (2) the
quotient of (A) the number of FoA Units owned by Blocker as of immediately following the Company Equity Reclassification divided
by (B) the Pre-Closing Outstanding Units divided by (y) the number of Blocker Shares issued and outstanding immediately
prior to the Blocker Merger Effective Time.
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“Sale Percentage” means the quotient (expressed
as a percentage) of: (i) a number of FoA Units equal to the sum of (x) the number of Ordinary Shares outstanding as of immediately
prior to the Domestication (and excluding 4,258,500 Ordinary Shares (i.e., a number of Ordinary Shares equal to 60% of the
number of Founder Shares (as defined below) held by the Sponsor (as defined below))), plus (y) the number of shares of Class
A Common Stock held by PIPE Investors as of immediately prior to the Domestication, which number of FoA Units will also be reduced
by the number of Ordinary Shares for which Redeeming Stockholders have validly requested redemption, divided by (ii) the
Equity Value Amount (as defined below).
“Founder Shares” means: (i) the 7,187,500 Ordinary
Shares that were purchased in a private placement prior to Replay’s initial public offering; and (ii) following the Purchaser
Merger, the 7,187,500 shares of Class A Common Stock into which the aggregate amount of Ordinary Shares referred to in clause (i)
will be converted pursuant to the Purchaser Merger.
“Equity Value Amount” means (i) (A) $1,912,000,000
minus (B) the Equity Value Reduction Amount (as defined below), if any, divided by (ii) $10. “Equity Value
Reduction Amount” means an amount equal to the excess, if any, of (a) the aggregate principal amount outstanding as of 12:01
a.m. on the Closing Date of any Senior Notes that were issued by FoA or any of its subsidiaries after the date of the Transaction
Agreement over (b) $350,000,000; provided, that any such excess will be reduced dollar-for-dollar by the aggregate amount of all
cash used to repay any indebtedness of FoA or its subsidiaries at, prior to or in connection with the Closing.
Following the Closing, New Pubco and FoA
collectively will issue up to an aggregate of 18,000,000 Earnout Securities to the Blocker Shareholders (in the case of issuances
by New Pubco) and to Blocker GP and the Sellers (in the case of issuances by FoA) as follows:
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9,000,000 Earnout Securities, in the aggregate, in the event that the average trading price of the Class A Common Stock
is $12.50 or greater for any 20 trading days within a period of 30 consecutive trading days prior to the sixth anniversary of the
Closing (the date when the foregoing is first satisfied, the “First Earnout Achievement Date”); and
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9,000,000 Earnout Securities, in the aggregate, in the event that the average trading price of the Class A Common Stock
is $15.00 or greater for any 20 trading days within a period of 30 consecutive trading days prior to the sixth anniversary of the
Closing (the date when the foregoing is first satisfied, the “Second Earnout Achievement Date”).
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Such Earnout Securities will also become issuable under certain
circumstances if an agreement with respect to a sale of New Pubco (a “New Pubco Sale”) is entered into prior to the
sixth anniversary of the Closing. “Earnout Securities” means (i) in the case of an issuance by New Pubco to the Blocker
Shareholders, shares of Class A Common Stock and (ii) in the case of an issuance by FoA to Blocker GP and the Sellers, FoA Units.
Conduct of Business Covenants
During the period from the date of the Transaction
Agreement through the earlier of the Closing and the termination of the Transaction Agreement in accordance with its terms (the
“Interim Period”), subject to certain exceptions (including in response to COVID-19), FoA must use commercially reasonable
efforts to (i) conduct its business in the ordinary course of business consistent with past practice in all material respects,
(ii) keep intact its business in all material respects and (iii) preserve relationships with material customers and suppliers in
all material respects, and will be subject to certain additional customary prohibitions on its conduct of business. During the
Interim Period, FoA and its subsidiaries may declare and pay dividends or other distributions to their equityholders, and may redeem
or repurchase equity securities of FoA and its subsidiaries, so long as, after giving effect to such dividends, distributions,
redemptions and repurchases but before giving effect to the payment of any transaction expenses of FoA or Replay, the cash held
by FoA and its subsidiaries as of the last day of the month in which the Closing is expected to occur would reasonably be expected
to be equal to at least $250.0 million.
During the Interim Period, Replay must
operate in the ordinary course of business as a blank check company and not engage in any operations or practices other than
in connection with its status as a blank check company or the Proposed Transaction, and will be subject to certain additional
customary prohibitions on the conduct of its business.
Reasonable Best Efforts; Regulatory Approvals
During the Interim Period, each of the parties
must use its reasonable best efforts to take all necessary actions to consummate the Proposed Transaction as promptly as practicable,
including providing any notices to any Person required in connection with the consummation of the Proposed Transaction and obtaining
any licenses, consents, waivers, approvals, authorizations, qualifications and Governmental Orders necessary to consummate the
Proposed Transaction, including approvals from government-sponsored enterprises and state mortgage regulators.
Proxy Statement/Prospectus and Stockholder Meeting
As promptly as practicable after the date
of the Transaction Agreement (and in any event within 30 days), subject to the receipt of certain required historical audited financial
statements of FoA, New Pubco will prepare and file with the Securities and Exchange Commission (the “SEC”) a registration
statement on Form S-4 (the “Registration Statement”), in connection with the registration under the Securities Act
of 1933, as amended (the “Securities Act”), of certain of the shares of Class A Common Stock issuable in connection
with the Proposed Transaction. Such Registration Statement will include a proxy statement/prospectus (as amended or supplemented
from time to time, the “Proxy Statement/Prospectus”) to be sent to the shareholders of Replay for the purpose of soliciting
proxies for the matters to be acted upon at a special meeting of Replay’s shareholders (the “Shareholder Meeting”),
and providing Replay’s shareholders (other than the Sponsor Persons (as defined below)) an opportunity, in accordance with
Replay’s amended and restated memorandum and articles of association, to have their Ordinary Shares redeemed (the “Redemption”),
in conjunction with the shareholder vote on the proposals set forth in the Proxy Statement/Prospectus.
Replay shall, through its board of directors,
recommend to its stockholders that they approve each of the proposals to be voted on at the Shareholder Meeting (the “Replay
Board Recommendation”) and shall include the Replay Board Recommendation in the Proxy Statement/Prospectus. The Replay board
of directors shall not (and no committee or subgroup thereof shall) change, withdraw, withhold, qualify or modify, or publicly
propose to change, withdraw, withhold, qualify or modify, the Replay Board Recommendation.
Exclusivity
During the Interim Period, each of Replay
and FoA shall not, and shall cause its Affiliates and Representatives not to, solicit, initiate, continue, engage in or facilitate
discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide any information to or commence
due diligence with respect to, any Person (other than the applicable parties to the Transaction Agreement (and their respective
Representatives) as contemplated by the Transaction Agreement) concerning, relating to or which is intended or could reasonably
be likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral, relating to any
merger, asset acquisition, stock purchase, reorganization or similar business combination.
Warrant Offer
At the sole election of FoA, during the
period prior to the Closing, Replay shall commence a tender offer (the “Warrant Offer”) for the outstanding warrants
issued as part of the units sold in Replay’s initial public offering (the “Public Warrants”), with the price
per Public Warrant, the aggregate amount of warrants subject to the Warrant Offer, and the other terms and conditions of the Warrant
Offer to be determined by FoA in its sole discretion. In the event FoA elects to have Replay commence the Warrant Offer, Replay
will use its reasonable best efforts to launch the Warrant Offer as soon as practicable, and the Warrant Offer will be consummated
concurrently with the Closing, with any payment for the Public Warrants in connection with the Warrant Offer to be made from the
cash of the combined companies after the release of funds from Replay’s trust account established in connection with its
initial public offering (the “Trust Account”).
Pre-Closing Governance Covenants
Among other customary pre-Closing governance
covenants, New Pubco must elect or otherwise cause the entire board of directors of New Pubco (the “New Pubco Board”),
effective upon the Closing, to be comprised of persons designated by FoA (provided, that the New Pubco Board as so constituted
must comply with applicable rules concerning director independence required by the SEC and the rules and listing standards of the
NYSE).
Representations and Warranties
The Transaction Agreement contains customary
representations and warranties that each of the parties have made to each other relating to, among other matters, their respective
businesses, their ability to enter into the Transaction Agreement and their outstanding capitalization and, in the case of Replay,
its public filings. The representations and warranties in the Transaction Agreement and in any certificate, statement or instrument
delivered pursuant to the Transaction Agreement will terminate effective as of, and will not survive, the Closing.
Conditions to the Closing of the Proposed Transaction
The respective obligations of the parties
to consummate the Proposed Transaction are subject to the satisfaction of the following conditions: (i) Replay’s shareholders
having approved, among other things, the transactions contemplated by the Transaction Agreement; (ii) the absence of any Governmental
Order that would prohibit the Proposed Transaction; (iii) the termination or expiration of all required waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iv) all applicable required governmental consents, notices
and approvals to or from any Governmental Entities having been made or obtained; (v) Replay having at least $5,000,001 of net tangible
assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the Closing; and (vi) the Registration
Statement having been declared effective by the SEC and no stop order suspending the effectiveness of the Registration Statement
having been issued and not withdrawn and no proceedings for that purpose having been initiated or threatened and not withdrawn
by the SEC or any other Governmental Entity.
The respective obligations of Replay, New
Pubco, Purchaser Merger Sub and Blocker Merger Sub (collectively, the “Purchaser-Side Parties”) to consummate the Proposed
Transaction are subject to the satisfaction or waiver of the following conditions: (i) the representations and warranties of FoA
and the other Seller-Side Parties being true and correct, subject to the materiality standards set forth in the Transaction Agreement;
(ii) FoA and each other Seller-Side Party having performed in all material respects all of its covenants and agreements required
to be performed on or prior to the Closing Date (the conditions in clauses (i) and (ii) being the “Seller-Side Party Rep
& Covenant Conditions”); (iii) Replay having received a certificate of each Seller-Side Party certifying to the satisfaction
of the Seller-Side Party Rep & Covenant Conditions applicable to such Seller-Side Party; and (iv) the Pre-Closing Reorganization
(including any permitted modifications thereto) having been completed.
The respective obligations of FoA, the Sellers,
Blocker and Blocker GP (collectively, the “Seller-Side Parties”) to consummate the Proposed Transaction are subject
to the satisfaction or waiver of the following conditions: (i) the representations and warranties of Replay and the other Purchaser-Side
Parties being true and correct, subject to the materiality standards set forth in the Transaction Agreement; (ii) Replay and each
other Purchaser-Side Party having performed in all material respects all of its covenants and agreements required to be performed
on or prior to the Closing Date (the conditions in clauses (i) and (ii) being the “Purchaser-Side Party Rep & Covenant
Conditions”); (iii) the Seller Representative having received a certificate of each Purchaser-Side Party certifying to the
satisfaction of the Purchaser-Side Party Rep & Covenant Conditions applicable to such Purchaser-Side Party; (iv) the Pre-Closing
Purchaser Cash being equal to or greater than $400,000,000 (excluding payment of any deferred underwriting fees and certain permitted
transaction expenses of each of FoA and Replay); (v) Replay having delivered to the Seller Representative executed copies of certain
ancillary agreements; (vi) the New Pubco Board being constituted with the persons designated by FoA (subject to a majority of the
New Pubco Board being independent as required by the SEC and NYSE); (vii) all aspects of the Domestication having been completed;
(viii) Replay having complied in all respects with its pre-closing governance covenants; (ix) the pre-Closing transactions contemplated
by the Sponsor Agreement (as defined below) having been completed; and (x) to the extent elected by FoA, Replay having commenced
prior to the Closing, and having consummated concurrently with the Closing, the Warrant Offer.
Termination of the Transaction Agreement
The Transaction Agreement may be terminated
prior to the Closing, whether before or after approval of the Transaction Agreement by the shareholders of Replay, as follows:
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by the mutual written consent of the Seller Representative and Replay;
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by either the Seller Representative or Replay, if: (i) the Closing does not occur prior to April 8, 2021 (or, if Replay
stockholders approve an extension of the date by which Replay must consummate a Business Combination to October 8, 2021 (or, under
certain circumstances, such other date as may be designated by FoA), prior to October 8, 2021 or such later applicable date) (as
applicable, the “Outside Date”); provided, however, that neither the Seller Representative nor Replay may so terminate
if a Seller-Side Party (in the case of a purported termination by the Seller Representative) or a Purchaser-Side Party (in the
case of a purported termination by FoA), at the time of such purported termination, has breached any of its obligations under the
Transaction Agreement in any material respect and such breach causes, or results in, either (A) the failure to satisfy the conditions
to the obligations of the non-terminating party to consummate the Proposed Transaction prior to the Outside Date, or (B) the failure
of the Closing to have occurred prior to the Outside Date;
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by either the
Seller Representative or Replay, if there shall be in effect a final, nonappealable Governmental
Order of a Governmental Entity having competent jurisdiction over FoA’s business
(other than any portion thereof that is not material) prohibiting the consummation of
the Proposed Transaction; provided, however, that the right to so terminate will not
be available to the party seeking to terminate if a Seller-Side Party (in the case of
a purported termination by the Seller Representative) or a Purchaser-Side Party (in the
case of a purported termination by Replay) has breached any of its representations, warranties,
covenants or other agreements under the Transaction Agreement and such breach or breaches
would result in a failure of a condition to the obligations of the non-terminating party
to consummate the Proposed Transaction;
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by Replay, if: (i) none of the Purchaser-Side Parties has breached any of their respective representations, warranties,
covenants or other agreements in the Transaction Agreement in any material respect and (ii) a Seller-Side Party has breached any
of its representations, warranties, covenants or other agreements in the Transaction Agreement in any material respect and such
breach or breaches would render any of the Seller-Side Party Rep & Covenant Conditions not to be satisfied, and such breach
is either (A) not capable of being cured prior to the Outside Date or (B) if curable, is not cured within the earlier of (x) 20
business days after the giving of written notice by Replay to the Seller Representative and (y) two business days prior to the
Outside Date;
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by the Seller Representative, if (i) none of the Seller-Side Parties has breached any of their respective representations,
warranties, covenants or other agreements in any material respect and (ii) a Seller-Side Party has breached any of its representations,
warranties, covenants or other agreements in the Transaction Agreement in any material respect and such breach or breaches would
render any of the Purchaser-Side Party Rep & Covenant Conditions not to be satisfied, and such breach is either (A) not capable
of being cured prior to the Outside Date or (B) if curable, is not cured within the earlier of (x) 20 business days after the giving
of written notice by the Seller Representative to Replay and (y) two business days prior to the Outside Date; or
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by Replay, if FoA has not delivered certain historical audited financial statements of FoA to Replay by January 31, 2021.
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Upon termination of the Transaction Agreement,
the Transaction Agreement will become void and have no further effect (other than certain customary provisions that will survive
a termination), without any liability to the parties thereto (other than liability for any willful breach of the Transaction Agreement
by a party occurring prior to the termination of the Transaction Agreement).
A copy of the Transaction Agreement is filed
with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference. The foregoing description
of the Transaction Agreement is qualified in its entirety by reference to the full text of the Transaction Agreement filed with
this Current Report on Form 8-K. The Transaction Agreement is included to provide investors and security holders with information
regarding its terms. It is not intended to provide any other factual information about FoA, Replay, New Pubco or the other parties
thereto or any Affiliates thereof. In particular, the assertions embodied in representations and warranties by FoA, Replay, New
Pubco, the Sellers, Blocker, Blocker GP and the other parties to the Transaction Agreement contained in the Transaction Agreement
are qualified by materiality and knowledge qualifiers and by information in the disclosure schedules provided by the parties in
connection with the signing of the Transaction Agreement. These disclosure schedules contain information that modifies, qualifies
and creates exceptions to the representations and warranties set forth in the Transaction Agreement. Moreover, certain representations
and warranties in the Transaction Agreement were used for the purpose of allocating risk between the parties, rather than establishing
matters as facts. Accordingly, investors and security holders should not rely on the representations and warranties in the Transaction
Agreement as characterizations of the actual state of facts about FoA, Replay, New Pubco, the Sellers, the Blocker, Blocker GP
or the other parties to the Transaction Agreement.
Sponsor Agreement
Contemporaneously with the execution of
the Transaction Agreement, Replay Sponsor, LLC (the “Sponsor”) and Replay’s directors and officers (together
with the Sponsor, the “Sponsor Persons”) entered into an amendment and restatement of the existing Sponsor Agreement
(as amended and restated, the “Sponsor Agreement”) with New Pubco, Replay and FoA, pursuant to which, among other things,
(i) immediately prior to the Domestication, all of the private placement warrants owned by the Sponsor will be exchanged for Ordinary
Shares (the “Warrant Exchange”) and (ii) excluding the Founder Shares held by Daniel Marx, Mariano Bosch or Russell
Colaco (unless transferred to any other Sponsor Person or permitted transferee thereof), 40% of the Founder Shares held by the
Sponsor will be vested and wholly owned by the Sponsor as of the Closing and 60% of the Founder Shares held by the Sponsor will
be subject to vesting and forfeiture in accordance with the following terms and conditions:
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Upon the First Earnout Achievement Date (should it occur), 35% of the unvested Founder Shares beneficially owned by each Sponsor
Person (or affiliate thereof) as of immediately prior to the Closing will vest; and
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Upon the Second Earnout Achievement Date (should it occur), 25% of the unvested Founder Shares beneficially owned by each Sponsor
Person (or affiliate thereof) as of immediately prior to the Closing will vest.
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Such Founder Shares will also vest under certain circumstances
if an agreement with respect to a New Pubco Sale is entered into prior to the sixth anniversary of the Closing. If the First Earnout
Achievement Date or the Second Earnout Achievement Date, as applicable, or a New Pubco Sale that results in vesting of such Founder
Shares has not occurred prior to the sixth anniversary of the Closing, the applicable Founder Shares that were eligible to vest
pursuant to the Sponsor Agreement will not vest and will be forfeited.
Pursuant to the Sponsor Agreement, the Sponsor
Persons have agreed to (i) vote or cause to be voted at the Shareholder Meeting all of their Founder Shares and all other equity
securities that they hold in Replay in favor of each proposal in connection with the Proposed Transaction and the Transaction Agreement
and any other matters reasonably necessary for consummation of the Proposed Transaction, (ii) use reasonable best efforts to cause
to be done all reasonably necessary, proper or advisable actions to consummate the Proposed Transaction, (iii) waive all redemption
rights and certain other rights in connection with the Proposed Transaction and (iv) be bound by the same exclusivity obligations
that bind the Purchaser-Side Parties in the Transaction Agreement.
The Sponsor Agreement also provides for
(i) a one-year post-Closing lock-up period applicable to the transfer of a Sponsor Person’s New Pubco securities, other than
any securities of Replay issued in Replay’s initial public offering or purchased on the open market, pursuant to the PIPE
or acquired through the Warrant Exchange (collectively, the “Excluded Securities”) and (ii) a 180-day post-Closing
lock-up period applicable to the transfer of a Sponsor Person’s Excluded Shares, other than any Excluded Shares purchased
in connection with the PIPE or on the open market after the date of the Sponsor Agreement.
The foregoing description of the Sponsor
Agreement is qualified in its entirety by reference to the full text of the Sponsor Agreement, a copy of which is included as Exhibit
10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Stockholders Agreement
In connection with the Proposed Transaction,
concurrently with the Closing, New Pubco and certain pre-Closing equityholders of FoA will enter into a Stockholders Agreement
(the “Stockholders Agreement”). Pursuant to the Stockholders Agreement, each of (i) certain funds affiliated with The
Blackstone Group Inc. (“Blackstone”, and such funds, the “Blackstone Investors”) and (ii) Brian Libman
and certain entities controlled by him (the “BL Investors” and, together with the Blackstone Investors, the “Principal
Stockholders”) will be entitled to nominate a certain number of directors to the New Pubco Board, based on each such holder’s
ownership of the voting securities of New Pubco. The nomination rights of each Principal Stockholder are substantially identical
and subject to the same terms, conditions and requirements. The number of directors that each of the Blackstone Investors and the
BL Investors will separately be entitled to designate to the New Pubco Board increases and/or decreases on a sliding scale such
that, for example, if the Blackstone Investors or the BL Investors, as the case may be, hold more than 40% of the outstanding shares
of Class A Common Stock, assuming a full exchange of all FoA Units for the publicly traded Class A Common Stock, such applicable
investors will be entitled to designate the lowest whole number of directors that is greater than 40% of the members of the New
Pubco Board; if the Blackstone Investors or the BL Investors, as the case may be, hold between 30% and 40% of such outstanding
shares, such applicable investors will be entitled to designate the lowest whole number of directors that is greater than 30% of
the members of the New Pubco Board; if the Blackstone Investors or the BL Investors, as the case may be, hold between 20% and 30%
of such outstanding shares, such applicable investors will be entitled to designate the lowest whole number of directors that is
greater than 20% of the members of the New Pubco Board; and if the Blackstone Investors or the BL Investors, as the case may be,
hold between 5% and 20% of such outstanding shares, such applicable investors will be entitled to designate the lowest whole number
of directors that is greater than 10% of the members of the New Pubco Board).
Furthermore, pursuant to the Stockholders
Agreement and subject to certain exceptions as set forth therein, for a period of 180 days following the Closing, each Principal
Stockholder will not, and will cause any other holder of record of any of such Principal Stockholder’s New Pubco securities,
not to, transfer any of such Principal Stockholder’s New Pubco securities, other than any such securities purchased in the
PIPE or on the open market.
The Stockholders Agreement will also provide
each Principal Stockholder with basic information and management rights, as well as detailed venture capital operating company
covenants. In addition, the Stockholders Agreement will permit New Pubco’s Principal Stockholders to assign their rights
and obligations under the agreement, in whole or in part, without New Pubco’s prior written consent. Furthermore, the Stockholders
Agreement also requires New Pubco to cooperate with the Principal Stockholders in connection with certain future pledges, hypothecations,
grants of security interest in or transfers (including to third party investors) of any or all of the FoA Units held by the Principal
Stockholders, including to banks or financial institutions as collateral or security for loans, advances or extensions of credit.
The preceding summary of certain terms and
conditions of the Stockholders Agreement is qualified in its entirety by reference to the form of Stockholders Agreement, a copy
of which is included as Exhibit B to the Transaction Agreement which is included as Exhibit 2.1 to this Current Report
on Form 8-K and incorporated herein by reference.
Registration Rights Agreement
In connection with the Proposed
Transaction, concurrently with the Closing, New Pubco and the Principal Stockholders will enter into a Registration Rights
Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, upon the demand
of any Principal Stockholder, New Pubco will be required to facilitate a non-shelf registered offering of the New Pubco
shares requested by such Principal Stockholder to be included in such offering. Any demanded non-shelf registered offering
may, at New Pubco’s option, include New Pubco Shares to be sold by New Pubco 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, New Pubco 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
will entitle the Principal Stockholders to demand and be included in a shelf registration when New Pubco is eligible to sell its
New Pubco 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, New Pubco 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, New Pubco 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 New Pubco 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.
The preceding summary of certain terms and
conditions of the Registration Rights Agreement is qualified in its entirety by reference to the form of Registration Rights Agreement,
a copy of which is included as Exhibit C to the Transaction Agreement which is included as Exhibit 2.1 to this Current
Report on Form 8-K and incorporated herein by reference.
Amended and Restated Limited Liability Company Agreement
In connection with the Transaction, immediately
prior to the Closing, FoA will adopt an Amended and Restated Limited Liability Company Agreement (the “A&R LLC Agreement”).
In connection with the adoption of the A&R LLC Agreement, all equity interests of FoA as of immediately prior to the Closing
will be reclassified into a single class of unitized equity interests designated as FoA Units (the “Company Equity Reclassification”).
Pursuant to the A&R LLC Agreement, New
Pubco will have the sole right to appoint all of the managers of FoA. Accordingly, New Pubco will have the right to determine when
distributions will be made to the members of FoA and the amount of any such distributions. If New Pubco authorizes a distribution,
such distribution will be made to the holders of FoA Units pro rata in accordance with the percentages of their respective FoA
Units held. The A&R LLC Agreement will provide for tax distributions to the holders of FoA Units if New Pubco determines that
a holder, by reason of holding FoA Units, incurs an income tax liability.
The A&R LLC Agreement will also provide
that substantially all expenses incurred by or attributable to New Pubco, but not including obligations incurred under the tax
receivable agreements by New Pubco, income tax expenses of New Pubco and payments on indebtedness incurred by New Pubco, will be
borne by FoA.
The preceding summary of certain terms and
conditions of the A&R LLC Agreement is qualified in its entirety by reference to the form of A&R LLC Agreement, a copy
of which is included as Exhibit D to the Transaction Agreement which is included as Exhibit 2.1 to this Current Report
on Form 8-K and incorporated herein by reference.
Exchange Agreement
In connection with the Proposed
Transaction, concurrently with the Closing, New Pubco, FoA and holders of FoA Units will enter into an Exchange Agreement
(the “Exchange Agreement”). The Exchange Agreement will set forth the terms and conditions upon which holders of
FoA Units may exchange their FoA Units for shares of Class A Common Stock on a one-for-one basis, subject to customary
conversion rate adjustments for stock splits, stock dividends and reclassifications. Each holder of FoA Units (other than New
Pubco and its subsidiaries), and certain permitted transferees thereof, may on a quarterly basis (subject to the terms of the
Exchange Agreement) exchange their FoA Units for shares of Class A Common Stock. In addition, subject to certain
requirements, the Blackstone Investors and the BL Investors will generally be permitted to exchange FoA Units for shares of
Class A Common Stock from and after the Closing provided that the number of FoA Units surrendered in such exchanges during
any 30 calendar day period represent, in the aggregate, greater than 2% of total interests in partnership capital or profits.
Any Class A Common Stock received by the Blackstone Investors or the BL Investors in any such exchange during the applicable
restricted periods would be subject to the lock-up agreements entered into in connection with the Proposed Transaction. New
Pubco may impose restrictions on exchange that it determines to be necessary or advisable so that New Pubco is not treated as
a “publicly traded partnership” for U.S. federal income tax purposes. As a holder exchanges FoA Units for shares
of Class A Common Stock, the number of FoA Units held by New Pubco is correspondingly increased as it acquires the exchanged
FoA Units.
The preceding summary of certain terms and
conditions of the Exchange Agreement is qualified in its entirety by reference to the form of Exchange Agreement, a copy of which
is included as Exhibit G to the Agreement which is included as Exhibit 2.1 to this Current Report on Form 8-K and
incorporated herein by reference.
Tax Receivable Agreements
In connection with the Proposed Transaction,
concurrently with the Closing, New Pubco will enter into a Tax Receivable Agreement with certain funds affiliated with Blackstone
(the “Blackstone Tax Receivable Agreement”) and a Tax Receivable Agreement with certain other members of FoA (the “FoA
Tax Receivable Agreement,” and collectively with the Blackstone Tax Receivable Agreement, the “Tax Receivable Agreements”).
The Tax Receivable Agreements generally provide for the payment by New Pubco to certain owners of FoA prior to the Proposed Transaction
(the “TRA Parties”) of 85% of the cash tax benefits, if any, that New Pubco is deemed to realize (calculated using
certain simplifying assumptions) as a result of (i) tax basis adjustments as a result of sales and exchanges of units in connection
with or following the Proposed Transaction and certain distributions with respect to units, (ii) New Pubco’s utilization
of certain tax attributes attributable to Blocker or the owners of Blocker prior to the Proposed Transaction, and (iii) certain
other tax benefits related to entering into the Tax Receivable Agreements, including tax benefits attributable to making payments
under the Tax Receivable Agreements. New Pubco will generally retain the benefit of the remaining 15% of these cash tax benefits.
Estimating the amount of payments that may be made under the Tax Receivable Agreements is by its nature imprecise, insofar as the
calculation of amounts payable depends on a variety of factors. The anticipated tax basis adjustments, as well as the amount and
timing of any payments under the Tax Receivable Agreements, will vary depending upon a number of factors, including the timing
of exchanges, the price of shares of New Pubco’s Class A Common Stock at the time of the exchange, the extent to which such
exchanges are taxable, the amount of tax attributes and the amount and timing of New Pubco’s income.
If New Pubco exercises its right to terminate
the Tax Receivable Agreements or in the case of a change in control of New Pubco or a material breach of New Pubco’s obligations
under either the Blackstone Tax Receivable Agreement or the FoA Tax Receivable Agreement, all obligations under the Tax Receivable
Agreements will be accelerated and New Pubco will be required to make a payment to the TRA Parties in an amount equal to the present
value of future payments under the Tax Receivable Agreements, which payment would be based on certain assumptions, including those
relating to New Pubco’s future taxable income.
As a result of the size of the anticipated
tax basis adjustment of the tangible and intangible assets of New Pubco and New Pubco’s possible utilization of certain tax
attributes, the payments that New Pubco may make under the Tax Receivable Agreements are expected to be substantial. The payments
under the Tax Receivable Agreements are not conditioned upon continued ownership of New Pubco or FOA by the holders of FoA Units.
The preceding summary of certain terms and
conditions of the Tax Receivable Agreements is qualified in its entirety by reference to the form of Tax Receivable Agreements,
copies of which are included as Exhibit H to the Transaction Agreement which is included as Exhibit 2.1 to this Current Report
on Form 8-K and incorporated herein by reference.
PIPE Subscription Agreements
In connection with the execution of
the Transaction Agreement, effective as of October 12, 2020, New Pubco and Replay (except as otherwise described below)
entered into separate subscription agreements (each, a “Subscription Agreement”) with a number of investors,
including certain entities affiliated with the Principal Stockholders or the Sponsor (each a “Subscriber”),
pursuant to which the Subscribers agreed to purchase, and New Pubco and Replay (except as otherwise described below) agreed
to sell to the Subscribers, (i) Ordinary Shares of Replay, which will be converted into shares of Class A Common Stock in
connection with the Closing, or (ii) in the case of the Subscribers affiliated with the Principal Stockholders, shares of
Class A Common Stock (collectively, the “PIPE Shares”), for a purchase price of $10.00 per share, in a private
placement (the “PIPE”). In the aggregate, the Subscribers have committed to purchase $250.0 million of PIPE
Shares, including $10.0 million of PIPE Shares to be purchased by an affiliate of the Sponsor. Certain offering related
expenses are payable by New Pubco, including customary fees payable to the placement agents, Morgan Stanley & Co. LLC,
Goldman Sachs & Co., LLC and Credit Suisse Group AG and capital markets advisors, including Blackstone Securities
Partners L.P. The Subscription Agreements are in the same form, except that Replay is not a party to the Subscription
Agreements with the Subscribers affiliated with the Principal Stockholders (and certain conforming changes were made to such
Subscription Agreements to reflect that Replay is not a party thereto). The closing of the sale of the PIPE Shares pursuant
to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent
consummation of the Proposed Transaction. The purpose of the sale of the PIPE Shares is to raise additional capital for use
in connection with the Proposed Transaction and to meet the minimum cash requirements provided in the Agreement.
Pursuant
to the Subscription Agreements, New Pubco agreed that, within 45 calendar days after the Closing, New Pubco will file with the
SEC (at New Pubco’s sole cost and expense) a registration statement registering the resale of the PIPE Shares (the “Resale
Registration Statement”), and New Pubco will use its commercially reasonable efforts to have the Resale Registration Statement
declared effective as soon as practicable after the filing thereof, subject to certain conditions. Each Subscription Agreement
will terminate upon the earlier to occur of (i) such date and time as the Transaction Agreement is terminated in accordance with
its terms, and (ii) upon the mutual written agreement of each of the parties to the Subscription Agreement.
The foregoing description of the Subscription
Agreements is qualified in its entirety by reference to the full text of the form of the Subscription Agreement, a copy of which
is included as Exhibit 10.2 to this Current Report on Form 8-K, and incorporated herein by reference.