Item
1.01 Entry into a Material Definitive Agreement.
Registrant
Borqs Technologies, Inc. (the “Company”) is party to a Merger Agreement (the “Merger Agreement”), dated
as of December 27, 2016, and amended May 10, 2017 and June 29, 2017, by and among the Company, PAAC Merger Subsidiary Limited,
an exempted company incorporated under the laws of the Cayman Islands with limited liability and a wholly-owned subsidiary of
the Company, Borqs International Holding Corp, an exempted company incorporated under the laws of the Cayman Islands with limited
liability (“Borqs International”), Zhengqi International Holding Limited, solely in its capacity thereunder as the
Purchaser Representative, the representative Zhengdong Zou for each of Borqs International’s shareholders immediately prior
to the closing, and for certain limited purposes thereof, Zhengqi International Holding Limited (“Zhengqi). Capitalized
terms not otherwise defined in this report have the meanings assigned to them in the Merger Agreement.
In
connection with the Merger Agreement, the Company previously entered into that certain Backstop and Subscription Agreement dated
as of May 11, 2017, by and among the Company and Zhengqi, as amended by the Partial Assignment and Amendment of Backstop and Subscription
Agreement dated as of August 16, 2017, by and among the Company, Zhengqi, EarlyBirdCapital, Inc. and Borqs International (as amended,
the “Backstop Agreement”).
On
January 10, 2018, the Company entered into a stock repurchase agreement (“Stock Repurchase Agreement”) with Zhengqi,
Borqs International, Zhengqi as Issuer Representative under the Merger Agreement, and Zhengdong Zou as Seller Representative under
the Merger Agreement. Pursuant to the Stock Repurchase Agreement, for an aggregate purchase price of $10,047,814.40, the Company
repurchased 966,136 ordinary shares (“Repurchased Shares”) originally issued and sold to Zhengqi under the Backstop
Agreement. As additional consideration for the Repurchased Shares, the Stock Repurchase Agreement provides that Zhengqi forfeited
all of its rights to 1,278,776 Guarantee Escrow Shares (as defined in the Merger Agreement), which will instead be treated as
Merger Consideration Shares under the Merger Agreement. The Stock Repurchase Agreement provides that the forfeited Guarantee Escrow
Shares will be treated in the following manner:
(a) 51,151
ordinary shares (4% of the total) will be treated as Additional Indemnity Escrow Shares and deposited in the Indemnity Escrow
Account; and
(b) 1,227,625
ordinary shares will be distributed to the former Borqs International Shareholders based on their respective Pro Rata Share.
Pursuant
to the Stock Repurchase Agreement, the Company and Zhengqi also agreed to use their best efforts to amend the Company’s
memorandum and articles of association to provide that until August 18, 2018, if any Company Directors are absent from a meeting
of the Issuer’s board of directors, then an equal number of Purchaser Directors shall also be absent or otherwise not participate
in or influence the voting of the Company’s board of directors in such meeting (with the determination of which Purchaser
Directors are first required to not participate in such meeting being based on those Purchaser Directors with the shortest terms
remaining based on their class).