SHIFT TECHNOLOGIES, INC. Item 1.01. Entry into a Material Definitive Agreement
Merger Agreement
On
Consideration to CarLotz Shareholders
The Merger Agreement provides that, at the effective time of the Merger (the
"Effective Time"), each issued and outstanding share of Class A common stock,
par value
Treatment of CarLotz Equity Awards, Earnout Shares and Warrants
At the Effective Time, (i) each vested time-based and performance-based restricted stock unit award (including any such awards that vest at the Effective Time) will be 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 restricted stock unit award will be assumed 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 and warrant to purchase CarLotz common stock will be assumed and converted into an option or warrant, as the case may be, to purchase Shift common stock, in each case 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.
Additionally, each Earnout Share and Earnout Acquiror RSU (each as defined in
the SPAC Merger Agreement) outstanding as of the Effective Time will be 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; provided, however, in the event the Contemplated
Transactions constitute an Acceleration Event (as defined in the SPAC Merger
Agreement), the terms and conditions set forth in the SPAC Merger Agreement will
apply and such Earnout Shares and Earnout Acquiror RSUs will be converted into
the right to receive the Merger Consideration in respect of each underlying
share of CarLotz common stock, less applicable tax withholding. The "SPAC Merger
Agreement" means that certain Agreement and Plan of Merger dated as of
Board of Directors of Shift
Pursuant to the Merger Agreement, Shift and CarLotz have agreed that, prior to the closing of the Merger, Shift will take all necessary action so that immediately following the Effective Time (i) the size of the Shift Board will be increased by one director (to a total of ten directors) and (ii) the Shift Board will be composed of five current directors of the Shift Board designated by Shift (the "Designated Shift Directors"), three current directors of the CarLotz board designated by CarLotz (the "Designated CarLotz Directors"), the Chief Executive Officer of Shift as of the Effective Time and one independent director to be mutually agreed upon by Shift and CarLotz.
Conditions to the Merger
The consummation of the Merger is subject to the satisfaction or waiver of customary closing conditions, including: (i) a registration statement on Form S-4 to be filed in connection with the Mergers shall be effective; (ii) the receipt of the required approvals from Shift's stockholders and CarLotz's stockholders, as applicable; (iii) to the extent applicable, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iv) the absence of any court order or regulatory injunction preventing the consummation of the Merger; (v) subject to specified materiality standards, the accuracy of the representations and warranties of each party; (vi) compliance by each party in all
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material respects with its covenants; (vii) since the date of the Merger Agreement, there shall not have occurred a material adverse effect with respect to either party, as such term is defined in the Merger Agreement; (viii) the authorization for listing of shares of Shift common stock to be issued in connection with the Merger; and (ix) the receipt of a certificate from the other party certifying the satisfaction of certain closing conditions. In addition, the consummation of the Merger is subject to the satisfaction or waiver of certain minimum cash conditions, whereby immediately prior to the Effective Time each of Shift and CarLotz must have an aggregate amount of cash, cash equivalents and marketable investments, less its aggregate indebtedness outstanding pursuant to its respective floorplan arrangement and plus, with respect to CarLotz, certain other amounts to the extent paid prior to or at Closing (in each case as further detailed in the Merger Agreement) in an aggregate amount equal to or greater than the following:
Closing Date Shift Minimum Cash Amount CarLotz Minimum Cash Amount
During 2022 $(10,416,596) $58,330,299
During January 2023 $(15,416,596) $53,330,299
During February 2023 $(20,416,596) $48,330,299
During March 2023 $(25,416,596) $43,330,299
During April 2023 $(30,416,596) $38,330,299
During May 2023 $(35,416,596) $33,330,299 Each party's respective minimum cash amount would decrease by
Representations, Warranties and Covenants
The Merger Agreement contains customary representations and warranties of Shift, Merger Sub and CarLotz relating to, among other things, their respective businesses, financial statements and public filings, in each case generally subject to customary materiality qualifiers. Additionally, the Merger Agreement provides for customary covenants of Shift, Merger Sub and CarLotz, including covenants regarding the conduct of their respective businesses during the pendency of the transactions contemplated by the Merger Agreement, public disclosures and other matters. In addition, each of Shift and CarLotz is required, among other things, not to solicit an alternative acquisition proposal and, subject to certain exceptions, not to engage in discussions or negotiations regarding an alternative acquisition proposal.
Termination
The Merger Agreement may be terminated and the Merger and the other Contemplated
Transactions may be abandoned at any time before the Closing by mutual written
consent of Shift and CarLotz. In addition, either Shift or CarLotz may terminate
the Merger Agreement if: (i) the consummation of the Merger does not occur on or
before
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Appointment of
On
On
The Third Clementz Amendment amends
The Third Clementz Amendment provides that subject to the Shift Board's
determination in its sole discretion,
The Third Clementz Amendment also provides that subject to
Under the 2023 Promotion Equity Grant, a prorated number of unvested Time RSUs
(less Time RSUs previously vested) shall be accelerated and become vested if the
Company terminates
The foregoing descriptions of the Third Clementz Amendment are not complete and
are qualified in their entirety by reference to the full text of such agreement,
a copy of which was filed as Exhibit 10.4 to Shift's Amendment No. 1 to the
Quarterly Report on Form 10-Q/A for the period ended
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
2.1 Agreement and Plan of Merger dated August 9, 2022, by and among Shift
Technologies, Inc., Shift Remarketing Operations, Inc. and CarLotz, Inc.
(Incorporated by reference to Exhibit 2.2 to the Company's Form
10-Q /A filed August 1 1 , 2022) †
10.1 Amended and Restated Sponsor Letter Agreement, dated August 9,2022, by and
among Shift Technologies, Inc., Carlotz Inc. and Acamar Partners Sponsor I LLC
(Incorporated by reference to Exhibit 10.13 to the Company's Form 10-Q/A filed
August 11, 2022)
10.2 Form of Voting and Support Agreement by and among Shift Technologies, Inc.,
Carlotz, Inc., and certain shareholders of Shift Technologies, Inc.
(Incorporated by reference to Exhibit 10.9 to the Company's Form 10-Q/A filed
August 11, 2022)
10.3 Form of Voting and Support Agreement by and among Shift Technologies, Inc.,
Carlotz, Inc., and certain shareholders of CarLotz, Inc. (Incorporated by
reference to Exhibit 10.10 to the Company's Form 10-Q/A filed August 11,
2022)
10.4 Letter Agreement by and between Shift Technologies, Inc. and Acamar
Partners Sponsor I LLC (Incorporated by reference to Exhibit 10.11 to the
Company's Form 10-Q/A filed August 1 1 , 2022)
10.5 Letter Agreement by and between Shift Technologies, Inc. and TRP Capital
Partners, LP (Incorporated by reference to Exhibit 10.12 to the Company's
Form 10-Q/A filed August 1 1 , 2022)
10.6 Third Amendment to the Employment Agreement by and between Shift Platform,
Inc. and Jeffrey Clementz (Incorporated by reference to Exhibit 10.4 to the
Company's Form 10-Q/A filed August 11, 2022).*
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101)
† Schedules and similar attachments have been omitted pursuant to Item 601(a)(5)
of Regulation S-K. Shift agrees to furnish a supplemental copy of any omitted
schedule or attachment to the SEC upon request.
* Indicates management contract or compensatory plan or arrangement.
Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as "forecast," "intend," "seek," "target," "anticipate,"
"believe," "expect," "estimate," "plan," "outlook," and "project" and other
similar expressions that predict or indicate future events or trends or that are
not statements of historical matters. Such forward-looking statements, including
those regarding the timing and consummation of the transactions described
herein, involve risks and uncertainties. Shift's and CarLotz's experience and
results may differ materially from the experience and results anticipated in
such statements. A number of factors could cause actual results or outcomes to
differ materially from those indicated by such forward-looking statements. These
factors include, but are not limited to: (1) the risk that the conditions to the
closing of the transaction are not satisfied, including the risk that required
approvals from the stockholders of Shift or CarLotz for the transaction are not
obtained; (2) litigation relating to the transaction; (3) uncertainties as to
the timing of the consummation of the transaction and the ability of each party
to consummate the transaction; (4) risks that the proposed transaction disrupts
the current plans and operations of Shift or CarLotz; (5) the ability of Shift
and CarLotz to retain and hire key personnel; (6) competitive responses to the
proposed transaction; (7) unexpected costs, charges or expenses resulting from
the transaction; (8) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the transaction;
(9) the combined companies' ability to achieve the synergies expected from the
transaction, as well as delays, challenges and expenses associated with
integrating the combined companies' existing businesses; and (10) legislative,
regulatory and economic developments. Other factors that might cause such a
difference include those discussed in Shift's and CarLotz's filings with the
Important Additional Information
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In connection with the proposed transaction, Shift intends to file a
registration statement on Form S-4 with the
The documents filed by Shift with the
Participants in the Solicitation
Shift, CarLotz and certain of their directors, executive officers and employees
may be deemed participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding the persons who may, under the rules
of the
No Offer or Solicitation This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
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