Item 2.01 Completion of Acquisition or Disposition
of Assets.
On December 9, 2022, Shift Technologies, Inc.,
a Delaware corporation (the “Company,” “Shift,” “we” or “us”),
completed the previously announced acquisition of CarLotz, Inc., a Delaware corporation (“CarLotz”), pursuant to the
Agreement and Plan of Merger dated as of August 9, 2022 (the “Merger Agreement”), by and among Shift, Shift Remarketing
Operations, Inc., a Delaware corporation and direct wholly owned subsidiary of Shift (“Merger Sub”), and CarLotz. Pursuant
to the Merger Agreement, Merger Sub merged with and into CarLotz, with CarLotz continuing as the surviving corporation and a wholly owned
subsidiary of Shift (the “Merger”).
Merger Consideration
Pursuant to the Merger Agreement, each outstanding
share of Class A common stock, par value $0.0001 per share, of CarLotz (“CarLotz Common Stock”) (other than CarLotz
Common Stock owned or held in treasury by CarLotz, which was cancelled for no consideration) was converted into the right to receive 0.705241
(the “Exchange Ratio”) of a share of Class A common stock, par value $0.0001 per share, of Shift (“Shift Common
Stock”), rounded up to the nearest whole share for any fractional shares of Shift Common Stock that would have been issued to
any stockholder resulting from the calculation (the “Merger Consideration”).
Treatment of CarLotz Equity Awards, Earnout
Shares, Earnout Acquiror RSUs and Warrants
At the effective time of the Merger (the “Effective
Time”), (i) each vested time-based and performance-based CarLotz restricted stock unit award (including any such awards that
vested at the Effective Time) was converted into the right to receive the Merger Consideration in respect of each underlying share of
CarLotz Common Stock, less applicable tax withholding, and (ii) each other CarLotz restricted stock unit award was assumed by Shift and
converted into an award relating to Shift Common Stock, with appropriate adjustments to the numbers of shares and share price thresholds
to reflect the Exchange Ratio, in each case in accordance with the terms set forth the Merger Agreement. In addition, at the Effective
Time, each option to purchase CarLotz Common Stock was assumed by Shift and converted into an option to purchase Shift Common Stock, with
appropriate adjustments to the numbers of shares and exercise prices to reflect the Exchange Ratio, in accordance with the terms set forth
in the Merger Agreement.
Also at the Effective Time, each outstanding warrant
(the “Warrants”) to purchase shares of CarLotz Common Stock was assumed by Shift and converted into a warrant to purchase
Shift Common Stock, with appropriate adjustments to the warrant shares and exercise price to reflect the Exchange Ratio, in accordance
with the terms set forth in the Merger Agreement. In connection with such conversion of the Warrants, on December 9, 2022, the Company,
American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (“AST”), CarLotz and Continental
Stock Transfer & Trust Company, a New York corporation (“CST”), entered into a Warrant Assumption and Amendment
Agreement (the “Warrant Amendment”), pursuant to which among other things, (i) the Company assumed all of CarLotz’s
rights, interests and obligations under that certain Warrant Agreement dated as of February 21, 2019, between CarLotz and AST, as Warrant
agent; (ii) each of the issued and outstanding Warrants will no longer be exercisable for shares of CarLotz Common Stock but instead will
be exercisable for shares of Shift Common Stock; (iii) the Warrants will be adjusted such that the number of shares of Shift Common Stock
issuable upon exercise of such Warrants shall be equal to the product (rounded to the nearest whole number) of (x) the number of shares
of CarLotz Common Stock issuable upon exercise of such Warrant immediately prior to the Effective Time multiplied by (y) the Exchange
Ratio, and the exercise price of each such Warrant shall be equal to the quotient (rounded to the nearest whole cent) of (1) the per share
exercise price of such Warrant immediately prior to the Effective Time divided by (2) the Exchange Ratio; and (iv) CST replaced AST as
Warrant agent.
Additionally, each Earnout Share and Earnout Acquiror
RSU (each as defined in the SPAC Merger Agreement) outstanding as of the Effective Time was assumed and converted into a right to acquire
shares of Shift Common Stock, with appropriate adjustments to the number of shares and share price thresholds to reflect the Exchange
Ratio. The “SPAC Merger Agreement” means that certain Agreement and Plan of Merger dated as of October 21, 2020, by
and among CarLotz, Inc. (f/k/a Acamar Partners Acquisition Corp.), Acamar Partners Sub, Inc. and CarLotz Group, Inc. (f/k/a CarLotz, Inc.),
as amended.
Board of Directors of Shift
Pursuant to the Merger Agreement, on December
9, 2022, the Board of Directors (the “Board”) of Shift, by unanimous written consent, increased the size of the Board
to ten (10) members and elected (i) Kimberly H. Sheehy to serve as a Class I director of Shift, (ii) Luis Solorzano to serve as a Class
II director of Shift and (iii) James E. Skinner to serve as a Class III director of Shift. Ms. Sheehy and Messrs. Solorzano and Skinner
served on the board of directors of CarLotz prior to the closing of the Merger. After giving effect to the foregoing director appointments
and the resignations of Messrs. Krikorian and Patel from the Board discussed below under Item 5.02— “Director Resignations”,
the Board consists of 9 members.
The foregoing description of the Merger Agreement
and the Merger is only a summary and does not purport to be complete and is qualified in its entirety by reference to the full text of
the Merger Agreement, a copy of which was filed as Exhibit 2.2 to Shift’s Amendment No. 1 to the Quarterly Report on Form 10-Q/A
for the period ended June 30, 2022 and is incorporated into this Item 2.01 by reference.