INNO Harbor Disruptive Innovation ETF

Item 1.01 Entry into a Material Definitive Agreement. 

On February 21, 2023, Unique Logistics International, Inc., a Nevada corporation (the “Company”) closed the acquisition (the “Closing”) of all of the share capital (the “Purchased Shares”) owned by Unique Logistics Holdings Limited, a Hong Kong corporation (the “Seller”) in each of the eight (8) subsidiaries listed in the chart below (collectively the “Subsidiaries”) pursuant to a Stock Purchase Agreement between the Company and the Seller, dated April 28, 2022 (the “SPA”) as previously reported on the Company’s Current Report on Form 8-K (the “May 2022 8-K”) filed on May 3, 2022 (such transaction being referred to herein as the “Transaction”). In addition to the acquisition of the Subsidiaries, the Company acquired two companies in the Transaction that are owned by two of the Subsidiaries: Shenzhen Unique Logistics International Limited, 70% of which is owned by Unique Logistics International (H.K.) Limited (“Unique-HK”), and Unique Logistics (Shanghai) Co., Ltd. which is owned by ULI (North & East China) Company Limited (“Unique-NEC”).

As previously reported on the Company’s Current Report on Form 8-K filed on September 19, 2022 (the “September 2022 8-K”), in connection with the Transaction, the Company entered into a separate Share Sale and Purchase Agreement with each of the Subsidiaries as follows: Unique Logistics International (India) Private Limited (“Unique-India”), Unique-NEC, Unique Logistics International Co., Ltd (“Unique-Taiwan”), TGF Unique Limited (“Unique-UK”), Unique-HK, Unique Logistics International (Vietnam) Co., Ltd. (“Unique-Vietnam”), ULI (South China) Limited (“ULI-SC”), Unique Logistics International (South China) Limited (“Unique-South China”) (collectively, each, a “Local SPA” and, collectively, the “Local SPAs”). Notwithstanding the foregoing, Unique-Taiwan and Unique Vietnam will officially close upon obtaining the requisite governmental approvals in those jurisdictions (“Governmental Approvals”). The Governmental Approval are a post Closing condition and are expected to be received within the next several months. The payment for Unique-Taiwan and Unique-Vietnam entities is further described below.

Pursuant to the SPA and Local SPAs, the amount and consideration to be paid by the Company at Closing for the Purchased Shares of each Subsidiary were as follows:

On December 17, 2022, the Company and the Seller entered into Amendment No. 1 to Stock Purchase Agreement (“Amendment No. 1”) pursuant to which the expiration date of the SPA was extended from December 1, 2022 to February 15, 2023. In addition, pursuant to Amendment No. 1, (a) a reserve of $1,000,000 was established by the Company and the Seller to provide for certain potential undisclosed liabilities relating to certain of the Subsidiaries, and (b) provision was made therein for the formation of a new company in Vietnam to accommodate the transfer of the business, operations and assets of Unique-Vietnam.

On February 21, 2023, the Company and the Seller entered into Amendment No. 2 to Stock Purchase Agreement (“Amendment No. 2”), pursuant to which the Company and the Seller agreed to restructure the initial purchase price payable by the Company at Closing of the Transaction (the “Initial Purchase Price”) under the SPA and to reallocate portions of the Initial Purchase Price payable by the Company for the Purchased Shares of Unique-Vietnam (the “Vietnam Shares”) and the Purchased Shares of Unique-South China (“the South China Shares”). The portion of the Initial Purchase Price payable by the Company for the Vietnam Shares, as reflected in the chart above, was reduced from $4,000,000 to $1,000,000, and the portion of the Initial Purchase Price payable by the Company for the South China Shares, as reflected in the chart above, was increased from $2,200,000 to $5,200,000.

In addition to the foregoing, under Amendment No. 2, the Company and the Seller agreed, among other things, to: (a) restructure the form of payment of the Initial Purchase Price due by the Company at Closing; (b) eliminate the requirement of using escrows (under the SPA & Local SPAs); (c) reconfigure the timing of certain deliverables relating to the Company’s acquisition of the Purchased Shares of each of Unique-Taiwan and Unique-Vietnam; and (d) add certain negative covenants applicable to the Company, as shareholder of the Subsidiaries, relating to voting on declaration of dividends by the Subsidiaries, which action is prohibited other than for payment of amounts outstanding under certain promissory notes in favor of the Seller (described further below) and subject to the requirement that the Company not be in default with respect to its obligations under its existing or contemplated financing facilities.

In addition to Amendment No. 2, the Company and the Seller entered into an amendment of each of the Local SPAs to be consistent with revisions to the Transaction provided for in Amendments Nos. 1 and 2 (collectively, the “Local SPA Amendments”).

Under the SPA, payment of the Initial Purchase Price was to be made by the Company’s delivery of $21,000,000 in cash and issuance by the Company of a promissory note in favor of the Seller in the principal amount of $1,000,000 (the “Original Note”). As part of the Company and the Seller’s agreement to restructure the Transaction under Amendment No. 2, the Company and the Seller agreed to the following: (a) the Company would, as contemplated under the SPA, issue the Original Note; (b) reduce the cash portion of the Initial Purchase Price payable at Closing from $21,000,000 (the “Initial Cash Portion”) to $3,500,000; and (c) in lieu of payment in cash of the balance of the Initial Cash Portion, equal to $17,500,000, the Company would issue certain additional promissory notes consisting of the following:

At Closing, the Company issued two additional promissory notes, in lieu of cash, as payment of certain milestones set forth in the SPA that were already achieved, (these additional promissory notes, together with the aforementioned promissory notes, collectively, the “Promissory Notes”):

As a result of consummation of the Transaction, the Company became a party to certain agreements with the remaining shareholders of each of Unique–UK, Unique-NEC, and ULI-SC (the “Shareholder Agreements”). Each of the Shareholder Agreements contains standard restrictive negative covenants favoring the protection of the minority shareholders who are party thereto. The Shareholder Agreements require unanimous consent in order to, among other things, (i) adopt a business plan or materially change the Subsidiary’s business; (ii) amend its name or organizational/governing documents; (iii) issue or create any new shares; alter the rights associated with any class of equity; consolidate, sub-divide or convert any of the equity or capital of the Subsidiary or issue securities exercisable for or convertible into shares of the Subsidiary; (iv) enter into a merger, business combination or transaction of a similar nature; acquire ownership interests in any equity or capital of any other company or undertaking or enter into any partnership or profit-sharing agreement other than in ordinary course of business; and (v) wind up, dissolve or otherwise terminate the existence of the Subsidiary.

Simultaneously with Closing, pursuant to a separate Stock Purchase Agreement, the Company entered into a related-party transaction with Frangipani Trade Services, Inc. (“FTS”) (the “FTS Purchase Agreement”). FTS is owned by the Chief Executive Officer of the Company. Pursuant to the FTS Purchase Agreement, the Company purchased the remaining 458,370 shares of Unique-India owned by FTS, which resulted in the Company owning all of the share capital of Unique-India. In consideration for the 458,370 shares of Unique-India, the Company issued a promissory note to FTS in the principal amount of $500,000, bearing no interest with a maturity date of February 21, 2025 (the “FTS Promissory Note”).

Item 1.01 hereof contains only a brief description of the material terms of and does not purport to be a complete description of the rights and obligations of the parties to the SPA, the Local SPAs, the Amendments, the Promissory Notes, the Shareholder Agreements, the FTS Agreement or the FTS Promissory Note. The description of each of the SPA and the Local SPAs, is qualified in its entirety by reference to the May 2022 8-K and the September 2022 8-K, respectively, the full text of the Exhibits filed therewith, which were filed as Exhibits 10.1 through 10.9 to the May 2022 8-K and Exhibits 10.1 through 10.9 to the September 2022 8-K. The description of each of the Amendments, the Promissory Notes, the Shareholder Agreements, the FTS Purchase Agreement and the FTS Promissory Note is qualified in its entirety by reference to the full text of the Exhibits filed herewith and are incorporated herein by reference.