Item 1.01 Entry into a Material Definitive Agreement
On May 12, 2023 (the “Closing Date”), Mondee Holdings, Inc., a Delaware corporation ( “Mondee”), and its wholly-owned subsidiary, Mondee Brazil LLC, a Delaware limited liability company (together with Mondee, the “Buyer”), entered into that certain Share Purchase and Sale Agreement, dated May 12, 2023 (the “Purchase Agreement”), with Diana Krepinsky Rodrigues, and Cynthia Sherry Ann Krepinsky Rodrigues, (together, the “Sellers”), and Interep Representações Viagens e Turismo S.A., a Brazilian corporation (the “Target”). Pursuant to the Purchase Agreement, the Sellers sold to Buyer, and Buyer purchased from Sellers, all of the issued and outstanding shares of the Target (the “Target Securities”), upon the terms and subject to the conditions of the Purchase Agreement (such purchase and sale, together with the other transactions contemplated by the Purchase Agreement, the “Acquisition”).
In exchange for the Target Securities, Buyer agreed to pay Sellers total consideration of (i) $8,880,000, comprised of (a) a cash component equal to $4,000,000, which was paid to Sellers on the Closing Date, (b) an amount of $720,000, payable in thirty-six (36) monthly installments, and (c) a stock component equal to $4,160,000, in the form of 416,000 shares of Class A common stock of Mondee, par value $0.0001 per share (the “Shares”) and (ii) an earn-out component of up to an aggregate of $3,000,000 in the event certain adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) targets are met for the fiscal years ending December 31, 2023, December 31, 2024, and December 31, 2025, payable in three installments by March 30, 2024, March 30, 2025, and March 30, 2026, respectively. In accordance with the Purchase Agreement, the Shares shall be deposited into an escrow account within 60 days of the Closing Date, and the Shares shall be released from escrow 24 months from the Closing Date.
The Purchase Agreement contains representations, warranties and covenants of the parties customary for a transaction of this nature. In addition, the Buyer, on the one hand, and the Sellers, on the other hand, agreed to indemnify the other party/parties and their respective affiliates, partners, members, officers, directors, employees, consultants and other representatives for certain losses, including, among other things, breaches of representations, warranties and covenants, subject to certain negotiated limitations, thresholds and survival periods set forth in the Purchase Agreement.
The foregoing description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K (this “Current Report”) and is incorporated herein by reference.
This summary of the principal terms of the Purchase Agreement and the copy of the Purchase Agreement filed as Exhibit 2.1 have been included to provide investors with information regarding its terms, and is not intended to provide any other factual information about Mondee, the Sellers, the Target or any of their respective subsidiaries or affiliates (collectively, the “Parties”). In particular, the assertions embodied in the representations and warranties contained in the Purchase Agreement are qualified by information in confidential disclosure schedules provided by the parties in connection with the signing of the Purchase Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties and certain covenants set forth in the Purchase Agreement. Moreover, the representations, warranties and covenants in the Purchase Agreement were made as of specific dates, were made solely for the Purchase Agreement and for the purposes of allocating risk between the Parties, rather than establishing matters as facts, are solely for the benefit of such Parties, may be subject to qualifications or limitations agreed upon by such Parties and may be subject to standards of materiality applicable to such Parties that differ from those generally applicable to investors and reports and documents filed with the U.S. Securities and Exchange Commission. Accordingly, investors are not third-party beneficiaries under the Purchase Agreement and the representations, warranties and covenants in the Purchase Agreement, and any descriptions thereof, should not be relied on as characterizations of the actual state of facts or circumstances of Parties. Moreover, information concerning the subject matter of such representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in Mondee’s public disclosures.