Item
1.01 Entry into a Material Definitive
Agreement.
EV Fleet Purchase Agreement with Walmart Inc.
On July 11, 2022, Canoo Sales, LLC, a wholly-owned
subsidiary of Canoo Inc. (the “Company”), entered into an Electric Vehicle Fleet Purchase Agreement (such agreement, together
with any work orders, purchase orders, related agreements and amendments thereunder or thereto, collectively, the “EV Fleet Purchase
Agreement”) with Walmart Inc. (“Walmart”). Pursuant to the EV Fleet Purchase Agreement, subject to certain acceptance
and performance criteria, Walmart agreed to purchase at least 4,500 electric vehicles (“EVs”) manufactured by the Company,
with an option to purchase up to an additional 5,500 EVs, for an agreed price per unit to be determined based on the model but capped
at an agreed upon amount as set forth in the EV Fleet Purchase Agreement. The capped price will be guaranteed for the first 10,000 EVs
purchased by Walmart. The EV Fleet Purchase Agreement (excluding any work order or purchase order as a part thereof) has a five-year term,
unless earlier terminated.
Under the EV Fleet Purchase Agreement, the Company
has agreed that, for the duration of the agreement, it will not enter into any agreement for any services involving the design, manufacture,
consult, advice, lease, or sale of EVs to, or issue any equity, equity-linked or debt securities of any type, or enter into any agreement
for the purpose of transferring control of the Company to, Amazon.com, Inc., its subsidiaries, or affiliates.
Pursuant to the EV Fleet Purchase Agreement, the
Company and Walmart have agreed to specific acceptance criteria with respect to the EVs to be purchased, such as reliability measures,
warranties, vehicle design and components, delivery timeline and ordering and process terms. Walmart has the right to terminate the EV
Fleet Purchase Agreement if the Company fails to meet the acceptance criteria, subject to having provided notice regarding defects and
customary cure periods. In addition, Walmart may terminate the EV Fleet Purchase Agreement for convenience upon at least 30 days’
written notice. However, any such termination will not affect any work order or purchase order submitted to the Company prior to receiving
notice thereof. Either party may terminate the EV Fleet Purchase Agreement if the other party materially breaches certain terms of the
EV Fleet Purchase Agreement and does not cure such breach after 30 or 90 days’ written notice, as applicable. Following any termination
of the EV Fleet Purchase Agreement, the Company will no longer be bound by the exclusivity provisions set forth in the EV Fleet Purchase
Agreement with respect to Amazon.com, Inc., its subsidiaries, or affiliates.
Pursuant to the EV Fleet Purchase Agreement, the
Company shall provide Walmart written notice within 72 hours of an acquisition proposal or an authorization by the Board of Directors
of the Company to initiate or pursue an acquisition proposal that would result in change of control of the Company, without providing
specific details about the potential transaction, except for the name of the potential acquirer if such potential acquirer is one of Walmart’s
competitors listed in an exhibit of the EV Fleet Purchase Agreement.
The foregoing
description of the EV Fleet Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the EV Fleet Purchase Agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q
for the period ended June 30, 2022.
Warrant Issuance Agreement and Warrant
In connection with the EV Fleet Purchase Agreement,
the Company and Walmart entered into a Warrant Issuance Agreement (the “Warrant Agreement”) pursuant to which the Company
issued to Walmart a warrant (the “Warrant”) to purchase an aggregate of 61,160,011 shares of fully paid and non-assessable
shares of the Company’s common stock, par value of $0.0001 (the “Common Stock”), at an exercise price of $2.15 per share.
The Warrant has a term of ten years and is vested immediately with respect to 15,290,003 shares of Common Stock. Thereafter, subject to
the stockholder approval described below, if applicable, the Warrant will vest quarterly in amounts proportionate with the net revenue
realized by the Company and its affiliates from transactions with Walmart or its affiliates under the EV Fleet Purchase Agreement or enabled
by any other agreement between the Company and Walmart, and any net revenue attributable to any products or services offered by Walmart
or its affiliates related to the Company or its affiliates, until such net revenue equals $300 million, at which time the Warrant will
have vested fully.
Under the Warrant Agreement, the Company shall,
as promptly as reasonably practicable following the date of the Warrant Agreement and, in any event, no later than the Company’s
2023 annual meeting of stockholders, convene and hold a meeting of stockholders to consider and vote on the issuance of the Warrant in
respect of any shares of Common Stock in excess of 53,852,492 shares (which represents more than 20% of the Company’s outstanding
Common Stock as of the date of the Warrant Agreement), pursuant to the applicable rules of the NASDAQ Global Select Market. In the event
that stockholder approval is not obtained, in lieu of any shares which would have been issued to Walmart, the Company is required to pay
to Walmart an amount in cash equal to the product of: (i) the excess of (x) the 30-day volume weighted average price per share as of the
day immediately preceding the applicable exercise date and (y) the exercise price, times (ii) the number of shares that would have been
issued at such applicable exercise date if stockholder approval had been obtained. Following such payment, the Company will cease to have
further obligations in respect of the portion of the Warrant relating to such shares.
Pursuant to the Warrant Agreement, Walmart has
certain information rights and it or its wholly-owned subsidiaries are entitled to request that the Company register the shares of Common
Stock beneficially owned by Walmart or its wholly-owned subsidiaries, on a long-form or short-form registration statement on one or more
occasions in the future, which registrations may in certain circumstances be “shelf registrations.” Walmart or its wholly-owned
subsidiaries will also be entitled to participate in certain of the Company’s registered offerings, subject to the restrictions
in the Warrant Agreement. The Company will pay all fees and expenses in connection with Walmart’s exercise of these rights, except
for underwriting discounts and commission and transfer taxes, if any.
The Warrant includes anti-dilution protection pursuant
to which the number of shares of Common Stock to be issued upon exercise and the exercise price of the Warrant are adjusted in the event
the Company conducts certain issuances of Common Stock, subject to specific exceptions, including a qualified financing (as defined in
the Warrant), a registered public offering, and “at-the-market” offerings, including pursuant to the Company’s standby
equity purchase agreement in effect.
The foregoing
description of the Warrant Agreement and the Warrant does not purport to be complete and is qualified in its entirety by reference to
the full text of the Warrant Agreement and the Warrant, copies of which are filed with this Current Report on Form 8-K as Exhibits
4.1 and 4.2, respectively, and are incorporated herein by reference..