Item 1.01 Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On March 14, 2022, Shift Technologies, Inc. (the “Company”)
entered into an asset purchase agreement (the “Purchase Agreement”) with Fair Financial Corp., a Delaware corporation
(“Fair”), and certain of Fair’s affiliates (the “Sellers”), and Cayman Project 2 Limited,
a Cayman entity (“Softbank”), pursuant to which the Company or one of its affiliates agreed to acquire certain automotive
dealer marketplace assets (the “Assets”) from the Sellers, subject to the terms and conditions of the Purchase Agreement.
The consideration for the Assets will consist of cash in the amount of $15,000,000 and an amount of shares of the Company’s Class
A common stock (the “Class A common stock”) equal to 2.5% of the issued and outstanding shares of the Company’s
Class A common stock as of immediately prior to the closing of the transactions contemplated by the Purchase Agreement. The Company plans
to finance the acquisition through the issuance of new debt financing that has already been committed, as described below. The Company’s
obligation to fund the purchase price of the acquisition is not subject to a financing contingency or condition.
The Purchase Agreement includes customary representations and warranties,
as well as certain covenants, including, among other things, that: (i) Sellers will operate the business in the ordinary course of business
consistent with past practice, (ii) Sellers will abide by certain exclusivity and non-competition covenants, and (iii) each party will
use commercially reasonable efforts to cause the closing of the transactions contemplated by the Purchase Agreement.
The consummation of the transactions contemplated by the Purchase Agreement
(the “Closing”) is subject to certain conditions, including, among other things, closing conditions, such as the accuracy
of representations and warranties, material performance of covenants and no occurrence of a material adverse effect. The Purchase Agreement
contains indemnification rights for each of the Company, the Sellers and SoftBank for breaches of representations, warranties and covenants,
as well as certain other matters, subject to customary deductibles, caps and other limitations.
The Purchase Agreement has been approved by the Boards of Directors
of the Company and Fair. The acquisition is expected to close during the second quarter of 2022, subject to the satisfaction or waiver
of the applicable closing conditions.
The foregoing description of the Purchase Agreement set forth herein
is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, a copy of which is attached as
Exhibit 2.1 hereto and is incorporated by reference herein.
Commitment Letter
On March 14, 2022, in connection with the acquisition, the Company
entered into a commitment letter (the “Commitment Letter”) with SoftBank Group Corp. (“SoftBank Group”),
pursuant to which SoftBank Group has committed to purchase in a private placement $20 million notional value of senior unsecured notes
(the “Notes” and the provisions of such Notes as set forth in the Commitment Letter, the “Financing”)
on the terms and subject to the conditions set forth in the Commitment Letter, and any definitive Financing documentation, consisting
principally of a note purchase agreement. The Financing will serve to (a) finance the cash consideration agreed upon in the Purchase Agreement,
(b) pay certain associated costs and expenses and (c) provide for certain working capital needs and general corporate purposes, including
investing in improvements of the assets acquired pursuant to the Purchase Agreement.
The Notes will accrue interest payable quarterly in arrears at a rate
of 6.00% per year. The Notes will mature three (3) years from the date of issuance, unless earlier redeemed or repurchased by the Company.
The Notes will be the senior unsecured indebtedness of the Company, ranking (i) effectively junior to the Company’s obligations
pursuant to that certain Inventory Financing and Security Agreement by and among Ally Bank, Ally Financial Inc., Shift Operations LLC
and the Company, dated as of December 9, 2021, (ii) pari passu to the Company’s outstanding 4.75% Convertible Senior Notes due 2026
issued pursuant to that certain Indenture dated as of May 27, 2021 by and between the Company and U.S. Bank National Association, as trustee,
and (iii) senior to any subordinated indebtedness of the Company.
The foregoing description of the Commitment Letter does not purport
to be complete and is qualified in its entirety by reference to the full text of the Commitment Letter, which is attached as Exhibit 10.1
to this Current Report on Form 8-K and is incorporated herein by reference.