Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Ayman Moussa as Chief Executive Officer
On June 9, 2023, the Board of Directors of Shift Technologies, Inc.
(the “Company” or “Shift”) appointed Ayman Moussa as the Company’s Chief Executive Officer, to succeed Jeff
Clementz, in each case effective as of June 9, 2023 (the “Transition Effective Date”). Mr. Moussa was appointed to a vacant
position on the Board of Directors on the Transition Effective Date, to serve as a Class II director.
Mr. Moussa, age 42, founded and developed one of the largest automotive
multi-franchised and pre-owned dealership groups in the San Francisco Bay Area, Carnamic. Mr. Moussa has served as a director and in various
executive management roles, including Chief Executive Officer, of the Carnamic group entities in the past five years. Mr. Moussa has also
served as a senior advisor to Flux EV, Inc., dba Zevvy, an electric vehicle financing company, since June 2021. Mr. Moussa holds a Doctor
of Education in Organizational Leadership and a Master of Science in Information Systems from the University of San Francisco, and a Bachelor
of Science in Computer Science from the Lebanese American University.
There are no family relationships between Mr. Moussa and any director,
executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company. Mr. Moussa is
not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Pursuant to the employment agreement entered into between the Company
and Mr. Moussa, dated June 9, 2023 (the “Employment Agreement”), Mr. Moussa will receive an annual base salary of $500,000.
Mr. Moussa will also receive a signing bonus equal to $500,000, payable in two equal installments on the payroll dates immediately following
June 9, 2023 and December 9, 2023, respectively, and subject to continued employment with the Company through each applicable payment
date.
Also pursuant to the Employment Agreement, Mr. Moussa will be granted
an equity award (the “Employment Inducement Award”) of 1,900,000 restricted stock units (“RSUs”), subject to approval
by the Leadership Development, Compensation and Governance Committee of the Board of Directors. 950,000 RSUs will vest based on the passage
of time (“Time RSUs”) and 950,000 RSUs will vest based on the passage of time and achievement of certain performance metrics
(“Performance RSUs”), in each case subject to continued employment through the applicable vesting date. 237,500 Time RSUs
will vest on June 30, 2024 and the remaining Time RSUs will vest quarterly in equal installments over the following three years. 190,000
Performance RSUs will vest on December 31, 2023 subject to the achievement of a specified EBITDA metric. The remaining Performance RSUs
will vest over calendar years 2024 through 2027 subject to the achievement of specified stock price metrics and certain minimum periods
of service. The Company will grant the Employment Inducement Award outside of its equity incentive plans in accordance with Nasdaq Listing
Rule 5635(c)(4).
The foregoing description of the Employment Agreement does not purport
to be complete and is subject to, and qualified in its entirety by, the full text of the Employment Agreement, a copy of which is filed
hereto as Exhibit 10.1 and is incorporated herein by reference.
Jeff Clementz Transition
On the Transition Effective Date, Jeff Clementz transitioned from his
role as Chief Executive Officer of the Company to serving as a strategic advisor to Mr. Moussa, the Board of Directors and the management
team of the Company for a transition period. Also on the Transition Effective Date, Mr. Clementz resigned as a director of the Company.
Mr. Clementz’s transition is not the result of any disagreements over the Company’s business, operations, or strategic direction.
