Item 8.01 Other Events.
On September 28, 2022, CarLotz, Inc. (the "Company") received notice (the
"Notice") from the Lender (as defined below) pursuant to the Inventory Financing
and Security Agreement, dated March 10, 2021 (as amended and supplemented from
time to time, the "Ally Facility") by and among the Company, Ally Bank, a Utah
chartered state bank ("Ally Bank"), and Ally Financial Inc., a Delaware
corporation ("Ally" and, together with Ally Bank, the "Lender") that, effective
October 1, 2022, the maximum available credit line under the Ally Facility would
be reduced from $40 million to $25 million.
The Lender also provided notice that the current financial covenant under the
Ally Facility that requires the Company to maintain at least 10% of the maximum
available credit line in cash and cash equivalents and at least 10% of the
maximum available credit line on deposit with Ally Bank would be revised to
replace 10% of the maximum available credit line with $4 million, so long as the
amount borrowed under the Ally Facility remains under $20 million, with such
minimum amount to be increased to $5 million if the amount borrowed under the
Ally Facility at any time exceeds $20 million. The Notice stated that a revised
agreement with respect to the revisions discussed in this paragraph would be
forthcoming from the Lender in the coming days for the Company to execute. As of
September 28, 2022, we had total outstanding debt of $5.2 million under the Ally
Facility.
The Notice further stated the Lender's understanding that the Company's
previously announced business combination with Shift Technologies, Inc. is
expected to close in late 2022 and that, should the business combination not
occur by December 31, 2022, the Lender asks that the Company provide a business
plan to Lender, no later than January 10, 2023, or within 10 days of the
announced dissolution of business combination discussions, at which time the
Lender will revisit the facility arrangement and communicate additional go
forward plans at that time.
Notwithstanding the foregoing, the Ally Facility is expressly subject to the
terms of the agreements under which they were extended and may be modified,
suspended or terminated at the Lender's election, as set forth in the
agreements, which are filed as Exhibits 10.22 , 10.22.1 and 10.23 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2021.
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