UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2019

 

Commission File Number 001-37593

 

  BORQS TECHNOLOGIES, INC.  
  (Translation of registrant's name into English)  

 

 

Building B23-A,

Universal Business Park

No. 10 Jiuxianqiao Road

Chaoyang District, Beijing, China

 
  (Address of principal executive offices)  

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒       Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐.

 

Note : Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐.

 

Note : Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

 

As previously reported by Borqs Technologies, Inc. (the “Company”), BORQS Hong Kong Limited (“BORQS HK”) an indirect, wholly owned subsidiary of the Company, entered into a loan agreement (the “Original Loan Agreement”) with Partners For Growth V, L.P. (“PFG5”), effective April 30, 2018, for a term loan in the maximum amount of $3 million at an interest rate of 8.0% per annum with a maturity date of April 30, 2021 (the “Original Loan”). As also previously reported on a Current Report on Form 8-K of the Company, on December 17, 2018, the Company, BORQS International Holding Corp. (“BORQS International”), a wholly owned subsidiary of the Company, and BORQS HK entered into a Waiver and Modification No. 1 to Loan and Security Agreement with PFG5 to amend the Original Loan Agreement (the “Amended Loan Agreement”) to include a convertible term loan pursuant to which BORQS HK issued a senior secured convertible note to PFG5 (the “Note”) in the principal amount of $1 million, at an interest rate of 12% per annum with a maturity date of December 17, 2023 (the “Convertible Loan”, together with the Original Loan, the “Prior PFG5 Loans”). The Note is convertible into ordinary shares of the Company at the option of PFG5 at a conversion price of $4.79, for a total of 208,768 ordinary shares (subject to certain customary adjustments). On December 17, 2018, PFG5 funded the Note, minus a $15,000 commitment fee.

 

On March 8, 2019 (the “Closing Date”), BORQS HK, BORQS Technologies (HK) Limited, an indirect wholly owned subsidiary of the Company (“BORQS Tech HK”, together with BORQS HK, the “Borrower”), the Company and BORQS International as guarantors of the Borrower entered into an Amended and Restated Loan and Security Agreement with PFG5 (the “Restated Loan Agreement”) to amend and restate the Amended Loan Agreement in its entirety to also provide the Borrower with a new revolving line of credit facility (the “RLOC”, together with the Prior PFG5 Loans, the “Current PFG5 Loans”). Proceeds drawn from the RLOC will be used by the Company: (i) to pay off all outstanding loan amounts owed by the Company and its subsidiaries to SPD Silicon Valley Bank Co., Ltd, a PRC banking institution (“SSVB”), and (ii) for working capital purposes. PFG5’s rights under the Restated Loan Agreement are pari passu with the rights of Partners For Growth IV, L.P. (“PFG4”), a related party of PFG5, under that certain Loan and Security Agreement, dated August 26, 2016, by and between BORQS HK and PFG4, as amended, which remains in full force and effect according to its terms.

 

Subject to advance limits set forth under the Restated Loan Agreement, a total credit line of $12.5 million is potentially available under the RLOC to the Borrower as follows: (i) $9,500,000 may be drawn upon request at any time on or after the Closing Date (“Tranche 1”) and (ii) so long as there is no uncured default at the time of drawdown and if the Company has received at least $10 million in cash proceeds from the sale of its equity securities to investors, then an additional $3,000,000 may be drawn (“Tranche 2”). Any outstanding amounts under the RLOC will accrue interest at a rate of 11% per annum with a maturity date of March 8, 2021 (the “Maturity Date”). The Borrower shall pay interest only on principal outstanding on the RLOC until the Maturity Date, on which date the entire unpaid principal balance on the RLOC plus any and all accrued and unpaid interest shall be repaid. The Borrower may repay and reborrow principal under the RLOC, and any termination of the RLOC by repayment shall be without prepayment or termination fee or penalty of any kind. The commitment fees payable to PFG5 for Tranche 1 and Tranche 2 are $142,500 and $45,000, respectively, with a back-end fees of up to a maximum of $1,900,000 for Tranche 1 and $600,000 for Tranche 2, in each case due and payable on the Maturity Date. On the Closing Date, in connection with the execution of the Restated Loan Agreement, the Company drew down on $9,500,000 of Tranche 1 credit available under the Restated Loan Agreement, of which $809,703 was drawn down by the Company for working capital purposes and $8,690,297 was paid by PFGV on behalf of the Company to SSVB in full satisfaction of all amounts due to SSVB, subject to the post-closing satisfaction of certain PRC regulatory approvals.

 

The loan obligations under the Restated Loan Agreement are guaranteed by the Company and BORQS International (each, a “Guarantor”, together with the Borrowers, the “Obligors”). On the Closing Date, each Obligor executed a deed of guarantee and indemnity agreement in favor of PFG5 (collectively, the “Guarantees”) to guarantee the payment and performance, and remedy of any default on demand, of each Obligor’s obligations under the Restated Loan Agreement. The Current PFG5 Loans under the Restated Loan Agreement are secured by all right, title and interest of the Obligors in and to all the tangible and intangible assets of each Obligor, including each Obligor’s share capital and equity interests in its subsidiaries, bank accounts and receivables and the Intellectual Property (as defined in the Restated Loan Agreement) of the Company’s subsidiaries, all of which are pledged as collateral to secure the payment and performance of the Obligors’ obligations under the Restated Loan Agreement. The Obligors have executed such security instruments, including pledges, debentures, mortgages, and share charges, to reflect the “all assets” security granted to PFG5 under the Restate Loan Agreement (collectively, the “Security Instruments”).

 

The Restated Loan Agreement includes customary representations and warranties and affirmative covenants, negative covenants and financial covenants, including the covenants to meet or exceed (i) quarterly revenues (as required to be classified as such under U.S. Generally Accepted Accounting Principles) of $32,500,000 and (ii) a three month trailing EBITDA target of $2,000,000, with compliance for each covenant determined as of the last day of each calendar quarter for revenues and each calendar month for EBITDA (as defined in the Restated Loan Agreement).

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Additionally, unless permitted under the Restated Loan Agreement or with the prior written consent of PFG5, the Obligors are prohibited from (i) acquiring any assets, except in the ordinary course of business, (ii) making any new investments other than certain permitted investments, (iii) transferring any part of its business or property except as permitted under the Restated Loan Agreement, (iv) guaranteeing or otherwise becoming liable with respect to the obligations of another party or entity, (v) making any loans of any money or other assets, other than certain permitted investments (vi) incurring any indebtedness, other than certain permitted indebtedness and (vii) certain other actions as described in greater detail in the Restated Loan Agreement.

 

An event of default under the Restated Loan Agreement includes, among other things, (i) any non-payment of monetary obligations when due, (ii) materially untrue or misleading representations, warranties, covenants, statements, reports or certificates made or delivered to PFG5 by the Obligors, (iii) failure by Borrower to comply with the financial covenants set forth in the Restated Loan Agreement and described above, (iv) breach by any Obligor of any of the covenants set forth in Section 4.6 of the Restated Loan Agreement, (v) a default or breach under the Restated Loan Agreement or any other related agreement that remains continuing after the applicable cure period, (vi) a bankruptcy of an Obligor or other assignment for the benefit of creditors, (vii) the occurrence of a change of control of any Obligor, and (viii) the occurrence of a “Material Adverse Change” as defined in the Restated Loan Agreement. Upon the occurrence and during the continuance of an event of default under the Restated Loan Agreement, and at any time thereafter, PFG5 may, among other things, without notice or demand, accelerate all outstanding amounts to become immediately due and payable. In addition, the interest rate on each Current PFG5 Loan would become the default rate which is defined in the Restated Loan Agreement to be the lesser of (i) the applicable interest rate set forth in the schedules to the Restated Loan Agreement, plus 6.0% per annum, and (ii) the maximum interest rate allowed to be charged to a commercial borrower under applicable usury laws.

 

The summary descriptions of the Restated Loan Agreement, Guarantees and Security Instruments do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements, copies of which and copies of other ancillary agreements relating to the transactions contemplated by the Restated Loan Agreement are filed as Exhibits 10.1 through 10.18 to this report and are incorporated herein by reference.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BORQS TECHNOLOGIES INC.
  (registrant)
   
Dated: March 14, 2019 By: /s/ Anthony K. Chan
    Anthony K. Chan
    Chief Financial Officer

 

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EXHIBIT INDEX

The following exhibits are filed as part of this Form 6-K:

 

     

Exhibit

 

Description

   
10.1   Amended and Restated Loan and Security Agreement, dated March 8, 2019, by and among the Company, PFG5, BORQS HK, BORQS Tech HK and BORQS International
   
10.2   Deed of Charge of Shares in BORQS  HK
   
10.3   Deed of Debenture of BORQS Tech HK
   
10.4   Reaffirmations of Intellectual Property security Agreement and Joinder, dated March 8, 2019, by and among PFG5, BORQS HK, BORQS Tech HK and BORQS International
     
10.5   Share Pledge Agreement, dated March 8, 2019, by and among PFG5, BORQS HK and BORQS Tech HK
     
10.6   Equity Mortgage, dated March 8, 2019, by and among PFG5, BORQS International and the Company
     
10.7   Share Pledge Agreement, dated March 8, 2019, by and among PFG5, BORQS International, BORQS HK and BORQS Software Solutions Private Limited
     
10.8   Custody and Control Agreement, dated March 8, 2019, by and among PFG5, BORQS International, BORQS HK and Borqs Software Solutions Private Limited
     
10.9   Debenture of Undertaking of Borqs Software Solutions Private Limited
     
10.10   Deed of Charge of Shares of BORQS HK
     
10.11   Deed of Charge of Shares of BORQS International
     
10.12   Deed of Charge of Shares of BORQS Tech HK
     
10.13   Deed of Debenture of BORQS International
     
10.14   Deed of Debenture of the Company
     
10.15   Deed of Guarantee and Indemnity of BORQS HK
     
10.16   Deed of Guarantee and Indemnity of BORQS Tech HK
     
 10.17   Deed of Guarantee and Indemnity of the Company
     
 10.18   Deed of Guarantee and Indemnity of BORQS International

 

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Exhibit 10.1

 

Partners for Growth

 

Amended and Restated Loan and Security Agreement

 

Borrower: BORQS Hong Kong Limited ( 播思微系統香港有限公司 ) , a private company limited by shares incorporated under Hong Kong law, registered with the Companies Registry under number 1151010
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Borrower: BORQS Technologies (HK) Limited ( 播思微科技香港有限公司 ) , a private company limited by shares incorporated under Hong Kong law, registered with the Companies Registry under number 2688549
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Guarantor: BORQS Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410
Address: Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands

 

Guarantor: BORQS International Holding Corp , an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127
Address: PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

 

Effective Date: April 30, 2018
Modification Effective Date: December 17, 2018
Restatement Date: March 8, 2019

 

THIS LOAN AND SECURITY AGREEMENT (“ Agreement ”) was originally entered into on the above-specified Effective Date set forth above and is amended and restated as of the Restatement Date by PARTNERS FOR GROWTH V, L.P. (“ PFG ”), whose address is 1751 Tiburon Blvd., Tiburon, CA 94920 and the Borrowers named above (jointly and severally, “ Borrower ”) and Guarantors named above (jointly and severally, “ Guarantor ”, and collectively with Borrower, “ Obligor ”), whose registered offices are located at the above addresses (“ Obligor’s Address ”). The Schedules to this Agreement being executed and delivered concurrently are an integral part of this Agreement and embody the principal terms of (i) the Loan made on the Effective Date (“ Schedule 1 ”), (ii) the additional Loan made in the form of a secured convertible note (the “ Convertible Note ”) under the terms of that certain Waiver and Modification No. 1 to Loan and Security Agreement (the “ Modification ”, with the principal terms of such additional Loan as set forth in the Convertible Note and in “ Schedule 2 ”), and (iii) a new revolving line of credit facility to be available when the conditions to the initial drawing under such line of credit have been satisfied under the terms of “ Schedule 3 ” (the “ RLOC ” and such referenced Schedules, collectively, the “ Schedules ”). References to “the Agreement”, “this Agreement” or “this Restatement” mean this Agreement as amended and restated on the Restatement Date and includes the Schedules. Certain capitalized terms used in this Agreement have their meanings as set forth in Section 7 below.

 

1. LOANS.

 

1.1 Loans. PFG has made and will, subject to the conditions set forth herein, make loans to Borrower (each a “ Loan ” and collectively, the “ Loans ”) in the amount(s) shown in the Schedules. References to the “Schedule 1 Loan” mean the Loan the principal terms of which are as set forth in Schedule 1. References to the “Schedule 2 Loan” mean the Convertible Note the principal terms of which are as set forth in Schedule 2. References to the “Schedule 3 Loan” mean the Loans under the RLOC facility the principal terms of which are as set forth in Schedule 3.

 

1.2 Interest. All Loans and all other monetary Obligations shall bear interest at the rates shown in the Schedules, except where expressly set forth to the contrary in this Agreement. Interest shall be payable monthly, on the first day of each month for interest accrued during the prior month.

 

 

 

 

Partners for Growth Amended and Restated Loan and Security Agreement

 

1.3 Fees. Borrower shall pay PFG the fees shown in the Schedules, which are in addition to all interest, Lender Expenses and other sums payable to PFG and are not refundable.

 

1.4 Loan Requests. To request an advance under Schedule 3 (the RLOC), Borrower shall make a Qualifying Request to PFG compliant with Section 8.5. Qualifying Requests are not deemed made until PFG acknowledges receipt of the same by electronic mail or otherwise in writing. Without limiting the effect of Section 8.22, each Obligor appoints the Responsible Officer(s) of BORQS HK as its authorized agent to make Qualifying Requests and any Qualifying Request made by such Responsible Officer(s) shall be binding on each Obligor as if made by its own respective directors or officers who are duly authorized to bind such Obligor in respect of this Agreement. PFG’s obligation to fund a request for an advance shall be subject to its receipt of such reports, certificates and other information as may be set forth in the Schedules. Advance requests received after 12:00 Noon U.S. Pacific time will not be deemed to have been received by PFG until the next Business Day. PFG may rely on any Qualifying Request given by a person whom PFG believes in good faith is a Responsible Officer, and each Obligor will indemnify PFG for any loss PFG suffers as a result of such reliance.

 

1.5 Late Fee. If any payment of accrued interest for any month is not made within three business days after the later of (i) the date a bill therefor is sent by PFG or (ii) three business days after the due date therefor, or if any payment of principal or any other payment is not made within three Business Days after its due date, then Borrower shall pay PFG a one-time late payment fee equal to 5% of the amount of each such late payment . The provisions of this paragraph shall not be construed as PFG’s consent to Borrower’s failure to pay any amounts when due, and PFG’s acceptance of any such late payments shall not restrict PFG’s exercise of any remedies arising out of any such failure. Unless expressly waived in writing by PFG in its sole discretion, interest at the Default Rate shall commence to apply to outstanding monetary Obligations as from the date the above grace periods expire.

 

1.6 Invoicing . PFG shall send invoices to Borrower (i) prior to the end of each month reflecting amounts due from time to time under or in connection with this Restatement, including for interest that will fall due through the end of each such month and (as applicable) recurring or scheduled principal payments, and (ii) from time to time not less than three Business Days before the Due Date for other non-recurring monetary Obligations and monetary Obligations not having a specified date for payment; provided, however, the failure of PFG to send or Borrower to receive an invoice for payment of regularly scheduled principal or interest payments falling due shall in no event excuse Borrower from its obligation to timely make such payments. The responsibility to make payments of principal and interest so that they are received by PFG on or prior to the Due Date rests solely with Borrower.

 

1.7 Joinder . BORQS Tech hereby joins this Restatement and other relevant Loan Documents as a Borrower and accedes to the Obligations applicable to a Borrower hereunder and under the other relevant Loan Documents as from the Restatement Date. Group Parent hereby joins this Restatement and other relevant Loan Documents as a Guarantor and accedes to the Obligations applicable to a Guarantor Obligor hereunder and under the other relevant Loan Documents, including as to Obligations arising prior to the Restatement Date. Notwithstanding anything to the contrary set forth in this Restatement or any other Loan Document, by entering into this Restatement, each Borrower and each Obligor (other than BORQS Tech and Group Parent, joined under this Section 1.7) reaffirms its Obligations under the Agreement as in effect on the Effective Date, as amended by this Restatement, and acknowledges and agrees that this Restatement, the joinder and accession of BORQS Tech and Group Parent and the making of new Loans to Borrower under this Restatement do not constitute a novation of their respective obligations under the Loan Agreement, as amended and restated, or of the grants of security effected in connection with this Agreement, all of which remain in full force and effect and are hereby affirmed in respect of Obligations before the Restatement Date and reaffirmed in respect of new Obligations under this Restatement.

 

2. SECURITY INTEREST.

 

2.1 Grant of Security Interest and Lien. To secure the payment and performance of all of the Obligations when due, each Obligor on the Effective hereby reaffirms and grants to PFG as of the Restatement Date and each Obligor joined under Section 1.7 hereby grants to PFG as of the Restatement Date a continuing Lien in, and pledges to PFG, all of the following (collectively, the “ Collateral ”): all right, title and interest of Obligor in and to all of the following, whether now owned or hereafter arising or acquired and wherever in the world located: all Accounts; all Inventory; all Equipment; all Collateral Accounts (including Deposit Accounts); all General Intangibles (including without limitation all Intellectual Property); all Investment Property; all Other Property; and any and all claims, rights and interests in any of the above, and all guaranties and security for any of the above, and all substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against third parties) of, any and all of the above and all Obligor’s books relating to any and all of the above, and provided that if any asset cannot be secured without consent of a third party (and such consent is not given), this Agreement will constitute security over all proceeds and other amounts receivable from such asset.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

2.2 Execution of further Security Documents . The Obligors shall on or about the date of this Agreement enter into the Security Documents. Notwithstanding anything else to the contrary set forth herein or in any other Loan Document, including governing law, jurisdiction or enforcement and rights and remedies available thereunder, the Security Documents are intended to be independent of and supplemental to the Liens, rights and remedies of PFG under this Agreement and the other Loan Documents.

 

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

 

In order to induce PFG to enter into this Agreement and to make Loans, subject to such exceptions as are set forth with specificity in Exhibit A , Obligor represents and warrants to PFG as follows, and Obligor covenants that the following representations were as of the Effective Date and will continue to be true, except for representations expressly specified to be made as of a particular date, and that Obligor will at all times comply (or as applicable, procure the compliance of all Persons under such Obligor’s direct or indirect Control, with all of the following covenants, throughout the term of this Agreement and thereafter until all Obligations (other than inchoate indemnity obligations) have been paid and performed in full:

 

3.1 Corporate Existence, Authority and Consents. Obligor was on the Effective Date and is on the Restatement Date and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and had (as of the Effective Date) and has as of the Restatement Date in full force and effect all material Governmental Authorizations required for each such Obligor to lawfully conduct its business as conducted on each such dates, respectively. Any change to an Obligor’s jurisdiction or form or organization is subject to PFG’s prior consent, which consent shall not be unreasonably withheld if, in PFG’s judgment, its security interest, Collateral, priority of Lien and remedies remain unimpaired and unprejudiced by such change. Obligor is and will continue to be qualified and licensed to do business in all jurisdictions in which any failure to do so could result in an adverse effect on Obligor, the Group, its business or the Group’s business as a whole, or result in a monetary or non-monetary loss or obligation with a value in excess of $50,000. The execution, delivery and performance by Obligor of this Agreement, and all other documents contemplated hereby (i) have been duly and validly authorized, (ii) are enforceable against Obligor in accordance with their terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally, and subject to any Governmental Authorization to be obtained in connection with the granting of security interest hereunder), and (iii) do not violate Obligor’s Constitutional Documents, or any Legal Requirement or any material agreement or instrument of Obligor or relating to its property, (iv) do not require any action by, filing, registration or qualification with, or Governmental Authorization from, any Governmental Body (except such Governmental Authorizations which have already been obtained and are in full force and effect, and such actions, filings, registrations specifically listed in this Agreement or the documents contemplated hereby, including without limitation the registration of Security Instruments with the Hong Kong Companies Registry), and (v) do not constitute grounds for acceleration of any material Indebtedness or obligation under any agreement or instrument of Borrower or relating to its property. Without limiting the foregoing: (A) the Board has the authority under each Obligor’s Constitutional Documents to enter into and cause such Obligor to perform, or to delegate such authority to a Responsible Officer to enter into and cause such Obligor to perform, its Obligations, and (B) other than the approval of the requisite members of the Board, no consent is required of any Person to make the representation set forth in clause (A) absolutely true in all respects (except for such consents that have already been obtained and are in full force and effect).

 

3.2 Name; Trade Names and Styles. As of the Restatement Date, the name of Obligor set forth in the heading to this Agreement is its correct name, as set forth in its Constitutional Documents. Listed in the Representations are all prior names of Obligor and all of Obligor’s present and prior trade names as of the Restatement Date. Obligor shall give PFG 30 days’ prior written notice before changing its name or doing business under any other name. Obligor has complied, and will in the future comply, in all material respects, with all laws relating to the conduct of business under a fictitious business name, if applicable to Obligor.

 

3.3 Place of Business; Location of Collateral. As of the Restatement Date, the address set forth in the heading to this Agreement is Obligor’s chief executive or registered office. In addition, as of the Restatement Date, Obligor has places of business and Collateral is located only at the locations set forth in the Representations. Obligor will give PFG at least 30 days prior written notice before opening any additional place of business. In addition, any relocation of its chief executive office or movement of any Collateral valued at greater than $50,000 to a non-PRC location other than Borrower’s Address or one of the non-PRC locations set forth in the Representations shall require PFG’s prior written consent, which consent shall not unreasonably be withheld if, in PFG’s judgment, its Liens, Collateral, priority of Liens and remedies remain unimpaired and unprejudiced by such change(s). Notwithstanding the foregoing, Obligor may maintain sales offices in the ordinary course of business at which not more than a total of $50,000 fair market value of Collateral is located.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

3.4 Title to Collateral; Perfection; Permitted Liens.

 

(a) Obligor was as of the Effective Date, is as of the Restatement Date and will at all times in the future be, the sole owner of its Collateral, except for Collateral which is leased or licensed to Obligor. The Collateral is as of the Restatement Date and will remain free and clear of any and all Liens, encumbrances and adverse claims, except for Permitted Liens and in such case, only to the extent permitted. As of the Restatement Date, PFG will have, and will continue to have, a First-Priority perfected and enforceable security interest in all of the Collateral and Obligor will at all times defend PFG and the Collateral against all claims of others.

 

(b) Obligor has set forth in the Representations all of Obligor’s Collateral Accounts as of the Restatement Date, and Obligor shall (i) give PFG ten (10) Business Days advance written notice before establishing any new Collateral Accounts and before depositing any Cash or Cash Equivalents or Investment Property into any new Collateral Account and (ii) cause the institution where any such new Collateral Account is maintained to execute and deliver to PFG a Control Agreement in form sufficient to perfect PFG’s security interest in the Collateral Account and otherwise satisfactory to PFG.

 

(c) In the event that Obligor shall at any time after the Effective Date have any commercial tort claims against others, which it is asserting, and in which the potential recovery exceeds $100,000, Obligor shall promptly notify PFG thereof in writing and provide PFG with such information regarding the same as PFG shall request (unless providing such information would waive Obligor’s attorney-client privilege). Such notification to PFG shall constitute a grant of a security interest in the commercial tort claim and all proceeds thereof to PFG, and Obligor shall execute and deliver all such documents and take all such actions as PFG shall request in connection therewith.

 

(d) No Collateral with a value in excess of $250,000 is affixed to any real property in such a manner or with such intent as to become a fixture, except as disclosed in detail in Exhibit A . From and after the Effective Date, without PFG’s consent in each instance, no material part of the Collateral will be affixed to any real property in such a manner, or with such intent, as to become a fixture. Obligor is not, except as set forth in Exhibit A , and will not become a lessee under any real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Obligor’s right to remove any Collateral from the leased premises. Whenever any Collateral is located upon premises in which any third party has an interest, Obligor shall, whenever requested by PFG, use commercially reasonable efforts to cause such third party to execute and deliver to PFG, in form acceptable to PFG, such waivers and subordinations as PFG shall specify [in its good faith business judgment]. Obligor will keep in full force and effect, and will comply with all material terms of, any lease of real property where any of the Collateral now or in the future may be located.

 

(e) Except as specified in the Representations, Obligor is not party to, nor is it bound by, any Restricted License.

 

3.5 Maintenance of Collateral. Obligor will maintain the Collateral in good working condition (ordinary wear and tear excepted), and Obligor will not use the Collateral for any unlawful purpose. Obligor will promptly advise PFG in writing of any material loss or damage to the Collateral.

 

3.6 Books and Records. Obligor has maintained and will maintain at Obligor’s Address complete and accurate books and records, comprising an accounting system in accordance with IFRS or other generally acceptable accounting method (such as GAAP) as Obligor may adopt with notice to PFG.

 

3.7 Financial Condition, Statements and Reports. All Financial Statements now or in the future delivered to PFG have been, and will be, prepared in conformity with IFRS or such other generally acceptable accounting method as Obligor may adopt and now and in the future will fairly present the results of operations and financial condition of Obligor in all material respects, in accordance with IFRS or such other generally acceptable accounting method as Obligor may adopt, at the times and for the periods therein stated. Between the last date covered by any such statement provided to PFG and the Restatement Date, there has been no Material Adverse Change.

 

3.8 Tax Returns and Payments; Pension Contributions. Obligor has timely filed, and will timely file, all required Tax Returns, and Obligor has timely paid, and will timely pay, all Taxes now or in the future owed by Obligor. Obligor may, however, defer payment of any of the foregoing which are contested by Obligor in good faith, provided that Obligor (i) contests the same by appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies PFG in writing of the commencement of, and any material development in, the contesting proceedings initiated by the Borrower, and (iii) posts bonds or takes any other steps required to keep the same from becoming a lien upon any of the Collateral. Obligor is unaware of any claims or adjustments proposed for any of Obligor’s prior tax years which could result in additional Taxes becoming due and payable by Obligor. Obligor has paid, and shall continue to pay all amounts necessary to fund all present and future pension, profit sharing and deferred compensation plans in accordance with their terms, and Obligor has not and will not withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Obligor, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other Governmental Body.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

3.9 Compliance with Law. Obligor has, to the best of its knowledge, complied, and will comply, in all material respects, with all provisions of all Legal Requirements applicable to Obligor, including, but not limited to, those relating to Obligor’s ownership of real or personal property, the conduct and licensing of Obligor’s business, and all environmental matters.

 

3.10 Litigation. There is no claim, suit, litigation, proceeding or investigation pending or (to the best of Obligor’s Knowledge) threatened against or affecting Obligor in any court or before any Governmental Body (or any basis therefor known to Obligor) (i) involving any single claim of $100,000 or more, or involving $250,000 or more in the aggregate , or (ii) which could reasonably be expected to result, either separately or in the aggregate, in any Material Adverse Change. Obligor will promptly inform PFG in writing of any claim, proceeding, litigation or investigation in the future about which it has Knowledge threatened or instituted against Obligor involving any single claim of $100,000 or more, or involving $250,000 or more in the aggregate.

 

3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful business purposes, including any purposes detailed in the Schedules. Obligor is not purchasing or carrying any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System of the United States) and no part of the proceeds of any Loan will be used to purchase or carry any “margin stock” or to extend credit to others for the purpose of purchasing or carrying any “margin stock.”

 

3.12 No Default. At the Restatement Date, no Default or Event of Default has occurred, and no Default or Event of Default will have occurred after giving effect to any Loans being made concurrently herewith.

 

3.13 Protection and Registration of Intellectual Property Rights . Obligor owns or otherwise holds the right to use all Intellectual Property rights material to Obligor’s business or necessary for the conduct of its business as currently conducted and reflected in any Obligor’s financial plans covering future periods. Obligor shall: (a) protect, defend and maintain the validity and enforceability of its Intellectual Property, other than Intellectual Property that is not material to Obligor’s business, has a fair value of less than $50,000 and that Obligor has affirmatively determined not to maintain or to abandon; (b) promptly advise PFG in writing of Known third-party infringements of its Intellectual Property material to its business; (c) not allow any Intellectual Property material to Obligor’s business to be abandoned, forfeited or dedicated to the public without PFG’s written consent, (d) (i) provide written notice to PFG at least ten (10) days prior to entering into or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public and licenses or agreements of Obligor with customers in which Obligor is an original equipment manufacturer), and (ii) use all commercially reasonable efforts to obtain the consent or waiver of any Person whose consent or waiver is necessary for (A) any Restricted License to be deemed “Collateral” and for PFG to have a Lien in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (B) PFG to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with PFG’s rights and remedies under this Agreement and the other Loan Documents, and (e) while any Obligations are outstanding, shall not Transfer any Intellectual Property without PFG’s consent, which consent shall not be unreasonably withheld if no Default or Event of Default has occurred and is then continuing, the Transfer of such Intellectual Property would not give rise to such a Default or Event of Default, and if such Intellectual Property meets the three criteria set forth as the exceptions to Obligor’s duties to protect, defend and maintain under clause (a), above. If, before the Obligations have been paid and/or performed in full, Obligor shall (i) adopt, use, acquire or apply for registration of any trademark, service mark or trade name, (ii) apply for registration of any patent or obtain any patent or patent application; (iii) create or acquire any published or material unpublished works of authorship material to the business that is or is to be registered with the U.S. Copyright Office or any non-U.S. jurisdiction registry; or (iv) register or acquire any domain name or domain name rights, then the provisions of Section 2.1 shall automatically apply thereto, and Obligor shall use all commercially reasonable efforts to give PFG advance written notice thereof and in any event shall thereafter give PFG prompt written notice thereof (which for purposes hereof shall be deemed to be not more than ten (10) Business Days from the occurrence of each and any of the foregoing). Obligor shall further provide PFG with all information and details relating to the foregoing and take such further actions as PFG may reasonably request from time to time to enable PFG to perfect or continue the perfection of PFG’s interest in such Collateral.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

3.14 Domain Rights and Related Matters . Obligor (a) together with other Group Members, are the sole record, legal and beneficial owner of all domain names and domain name rights used in connection with its business and that of its Subsidiaries, free and clear of any rights or claims of any third party; (b) has set forth in the Representations such domain names and ownership thereof, domain registry, domain servers, location and administrative contact information, web hosting and related services and facilities (collectively, “Domain Rights”), which are true, accurate and complete and Obligor shall promptly notify PFG of any material changes to such information; (c) shall maintain all Domain Rights that Obligor has not affirmatively determined to abandon in full force and effect so long as any Obligations remain outstanding; (d) shall, upon request of PFG, notify such third parties (including domain registrars, hosting companies and internet service providers) of PFG’s security interest in Obligor’s Domain Rights; and (e) shall promptly advise PFG in writing of any material Known disputes or infringements of its Domain Rights. The obligations of Obligor under this Section shall not be limited by any obligations under the IP Security Agreement and related Collateral Agreements and Notices executed in connection with this Agreement.

 

3.15 No Insolvency Proceeding . No Insolvency Proceeding has occurred in respect of any Obligor or any of their respective direct and indirect Subsidiaries.

 

3.16 Repetition . The representations of Obligor in this Agreement and in any other Loan Document in relation to itself and other Group Members are deemed to be made by Obligor by reference to the facts and circumstances then existing at all times and on each date until all amounts owed to PFG hereunder or under any Loan Document are paid in full, subject only to such changes that are expressly permitted hereunder.

 

3.17 Solvency . The fair salable value of the assets o f Obligor (including goodwill minus disposition costs) exceeds the fair amount of their respective liabilities (taking into account actual and prospective liabilities); no Obligor is left with unreasonably small capital after the transactions in this Agreement; and no Obligor is unable to pay its debts (including trade debts) as they fall due.

 

4. ADDITIONAL DUTIES OF BORROWER.

 

Borrower will at all times comply with all of the following covenants throughout the term of this Agreement:

 

4.1 Financial and Other Covenants. Borrower shall at all times comply with the financial and other covenants set forth in the Schedules.

 

4.2. Remittance of Proceeds. All proceeds arising from the disposition of any Collateral shall be delivered, in kind, by Borrower to PFG in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations in such order as PFG shall determine; provided that, if no Default or Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to PFG (i) the proceeds of Accounts arising in the ordinary course of business, or (ii) the proceeds of the sale of surplus, worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate purchase price of $50,000 or less (for all such transactions in any fiscal year ). For the avoidance of doubt, payment of trade payables in the ordinary course does not constitute a “disposition of Collateral” for purposes of this Section. Borrower agrees that it will not commingle proceeds of Collateral (other than those described in subclauses (i) and (ii) above) with any of Borrower’s other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for PFG, except as set forth above. Upon the occurrence and during the continuance of a Default or an Event of Default, PFG may, in its good faith business judgment, require that all proceeds of Collateral be deposited by Borrower into a Lock-Box account, or such other “blocked account” as PFG may specify, pursuant to a blocked account agreement in such form as PFG may specify in its good faith business judgment. Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Agreement.

 

4.3 Insurance. Borrower shall at all times use commercially reasonably efforts to insure all of the tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to PFG, in such form and amounts as PFG may reasonably require and as are customary and in accordance with standard practices for Borrower’s industry and locations, and Borrower shall provide evidence of such insurance to PFG. All such insurance policies shall name PFG as an additional loss payee, and shall contain a lenders loss payee endorsement in form reasonably acceptable to PFG . Upon receipt of the proceeds of any such insurance, PFG shall apply such proceeds in reduction of the Obligations as PFG shall determine in its good faith business judgment, except that, provided no Default or Event of Default has occurred and is continuing, PFG shall release to Borrower insurance proceeds with respect to Collateral totaling less than $100,000, which shall be utilized by Borrower for the replacement of the Collateral with respect to which the insurance proceeds were paid. PFG may require reasonable assurance that the insurance proceeds so released will be so used. If Borrower fails to provide or pay for any insurance, PFG may, but is not obligated to, obtain the same at Borrower’s expense. Borrower shall promptly deliver to PFG copies of all material reports made to insurance companies.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

4.4 Reports. Borrower, at its expense, shall provide PFG with the written reports set forth in the Schedules, and such other written reports with respect to Borrower (including budgets, projections, operating plans and other financial documentation), as PFG shall from time to time specify in its good faith business judgment.

 

4.5 Access to Collateral, Books and Records; Additional Reporting and Notices. At reasonable times, and on three (3) Business Days” notice, PFG, or its agents, shall have the right to inspect the Collateral, and the right to audit and copy Obligor’s books and records. The foregoing inspections and audits shall be at Obligor’s expense and the charge therefor shall be $850 per person per day (or such higher amount as shall represent PFG’s then current standard charge for the same), plus Lender Expenses, provided that so long as no Default or Event of Default has occurred and is then continuing and no prior inspection or audit has revealed material deficiencies or inaccuracies in Obligor’s books and records, only one such inspection and audit shall be at Obligor’s expense during any calendar year . Notwithstanding the foregoing, Obligor shall not be required to disclose to PFG any document or information (i) where disclosure is prohibited by applicable Legal Requirement, or (ii) is subject to attorney-client or similar privilege or constitutes attorney work product. If Obligor is withholding any information under the preceding sentence, it shall so advise PFG in writing, giving PFG a general description of the nature of the information withheld. Without limiting the scope of reporting under Section 6 of the Schedules, Obligor shall promptly disclose to PFG any efforts to sell Obligor, its business or assets or any material part thereof or to refinance the Loan and shall disclose the salient details of any offers received from time to time in respect of the foregoing. At any time when a Default or Event of Default has occurred and is continuing (whether or not PFG has agreed to forbear), PFG shall be entitled (i) to be briefed by Obligor as to such matters as PFG may require in its business discretion, (ii) to receive advance notice of any and all Board meetings or written consents, together with the agendas for the foregoing, and (iii) to observe any such Board meetings, whether or not formally constituted as such.

 

4.6 Negative Covenants. Except as may be permitted in the Schedules, no Obligor shall, without PFG’s prior written consent (which shall be a matter of its good faith business judgment and shall be conditioned on Borrower then being in compliance with the terms of this Agreement), do any of the following, and no Obligor shall permit any other Obligor to do any of the following:

 

(i) acquire any assets, except in the ordinary course of business, or make any Investments other than Permitted Investments;

 

(ii) enter into any Liquidity Event or other transaction outside the ordinary course of business with a value in excess of $150,000 (which non-ordinary course transactions shall include mergers, amalgamations, consolidations in respect of any Group Member), provided that with not less than thirty (30) days’ notice to PFG, one Borrower may merge with another Borrower and a Non-Obligor Group Member may merge with a Borrower or another Non-Obligor Group Member ;

 

(iii) Transfer any part of its business or property, except for (A) the sale of finished Inventory in the ordinary course of Borrower’s business, (B) the sale of obsolete or unneeded Equipment in the ordinary course of business and otherwise in compliance with the terms of this Agreement, (C) the making of Permitted Investments, and (D) the granting of Permitted Liens; and, for the avoidance of any doubt, a Transfer of business or property, as contemplated above, would include (1) Borrower or any Subsidiary making or causing any payment to be made on Subordinated Debt unless expressly permitted under the terms of the subordination, intercreditor or other agreement to which the Subordinated Debt is subject (and, if permitted in this Agreement, only to the extent permitted), and (2) other than with the express consent of PFG in its sole business discretion, the amendment or modification of any such subordination, intercreditor or other agreement to provide for earlier or greater principal, interest or other payments thereon or adversely affect the subordination thereof to Obligations owed to PFG;

 

(iv) store any Inventory or other Collateral with any warehouseman or other third party with an aggregate value (per location) of $50,000 or greater, unless there is in place a bailee agreement in such form as PFG shall specify in its good faith business judgment between PFG and such warehouseman or other third party;

 

(v) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis;

 

(vi) make any loans of any money or other assets, other than Permitted Investments;

 

(vii) incur or permit to exist any Indebtedness, other than Permitted Indebtedness;

 

(viii) guarantee or otherwise become liable with respect to the obligations of another party or entity, other than a Permitted Guaranty;

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

(ix) pay or declare any Dividends (except for dividends payable solely in shares of Obligor or any dividends in connection with the Accumulated Dividends (as defined in the articles of association of Guarantor as in effect as of the Restatement Date);

 

(x) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Obligor’s equity, except as required in the ordinary course of business and consistent with past practice in connection with redeeming or purchasing equity of departing employees, up to a maximum aggregate redemption or purchase price of $100,000 in any fiscal year;

 

(xi) engage, directly or indirectly, in any business other than the businesses currently engaged in by Obligor or reasonably related thereto;

 

(xii) in addition to any limitations that may apply under clause (xiii), after the Effective Date, cause or permit any other Obligor to make Permitted Investments in Group Members not an Obligor or incur Permitted Indebtedness to Group Members not an Obligor of more than $50,000 (in the aggregate) in any calendar year;

 

(xiii) with respect to Non-Obligor Group Members, cause or permit (A) any Non-Obligor Group Member to hold cash or Cash Equivalents greater in amount than 150% of the amount required for such Non-Obligor Group Member to carry on its business in the ordinary course and maintain its corporate existence, or (B) any Obligor to make Permitted Investments in any Non-Obligor Group Member or incur Permitted Indebtedness to any Non-Obligor Group Member in amounts materially greater than required in order to enable such Non-Obligor Group Member to carry on its business in the ordinary course and maintain its corporate existence under Legal Requirements applicable to such Non-Obligor Group Member;

 

(xiv) make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to PFG;

 

(xv) (A) without at least thirty (30) days prior written notice to PFG: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than $50,000 in Borrower’s assets or property), (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, (5) change any organizational number (if any) assigned by its jurisdiction of organization; (6) form any new Subsidiaries (non-PRC or PRC), and in each case, subject to (x) Obligor’s and such Subsidiary(ies) compliance with Section 4.9 and 4.14 hereof , (y) subject to the control mechanism being available in the jurisdiction in which a Subsidiary may hold its Collateral Accounts, such Subsidiary(ies) compliance with Section 3.4(b), and (z) such Subsidiary(ies) compliance with Section 8(b) of Schedule 3 ; or (B) fail to provide notice to PFG of any Key Person departing from or ceasing to be actively in the employ of Obligor within the earlier to occur of promptly after Knowledge thereof and (2) two days after such Key Person’s departure from Obligor;

 

(xvi) liquidate or dissolve, or elect or resolve to liquidate or dissolve;

 

(xvii) use proceeds of any Loan for other than the purposes permitted under the relevant Schedule reflecting the terms of such Loan(s);

 

(xviii) with respect to any Person who is or becomes a Guarantor of Obligations on or after the Effective Date, cause or permit any Guarantor to take an action in violation of any negative covenant set forth in this Section 4.6 on an “as if applicable” to Guarantor basis (for example only, a breach of this clause would occur if a Guarantor were to make a payment on its Subordinated Debt as contemplated under clause (xiv), or as contemplated under clause (iii), if a Guarantor were to Transfer shares it owns in a Subsidiary to any Person);

 

(xix) approve or make any borrowing request under the Planned HSBC Facility without PFG’s consent, which shall be a matter of PFG’s sole discretion and may be conditioned upon all PFG (and Affiliate) Obligations being repaid as a condition to any such borrowing; or

 

(xx) the Board shall permit or shall resolve to or approve, or any Obligor shall otherwise take any steps to effect, any of the foregoing actions in clauses (i) through (xix), inclusive, which are not otherwise expressly permitted herein.

 

Transactions permitted by the foregoing provisions of this Section are only permitted if no Default or Event of Default would occur as a result of such transaction.

 

4.7 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or instituted or threatened in writing against PFG with respect to any Collateral or relating to Obligor, Obligor shall, without expense to PFG, make available Obligor and its officers, employees and agents and Obligor’s books and records, to the extent that PFG may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding unless such cooperation would waive Obligor’s attorney-client privilege.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

4.8 Changes. Obligor agrees to promptly notify PFG in writing of any changes in the information set forth in the Representations .

 

4.9 Further Assurances. Obligor agrees, at its expense, on reasonable request by PFG, to execute all documents and take all actions, as PFG, may, in its good faith business judgment, deem necessary or useful in order to perfect and maintain PFG’s perfected First-Priority security interest in the Collateral (subject to Permitted Liens), and in order to fully consummate the transactions contemplated by this Agreement, including without limitation, the joinder of any non-PRC New Subsidiaries to this Agreement and execution of such other agreements and instruments as PFG reasonably request, including execution of a cross-corporate continuing guaranty among Obligor and non-PRC Non-Obligor Group Members. In addition, Obligor shall Deliver to PFG, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Body regarding compliance with or maintenance of Governmental Authorizations or Legal Requirements or that could reasonably be expected to have a material effect on any of the Governmental Authorizations or otherwise on the operations of Obligor or any of its Subsidiaries.

 

4.10 Collateral Accounts . Subject to Section 8(b) of the Schedule 3, each Obligor shall (a) at all times, maintain all of its Collateral Accounts with depositary institutions in respect of which a Control Agreement in favor of PFG is in effect; and (b) provide PFG five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution.

 

4.11 Authorization to File Security Instruments . By executing and delivering this Restatement, each Obligor shall be deemed to have authorized PFG to file Security Instruments with all appropriate jurisdictions, without notice to any Obligor, to perfect or protect PFG’s interest or rights hereunder, including a notice that any disposition of the Collateral, by Obligor or any other Person not made in compliance of this Agreement, shall be deemed to violate the rights of PFG under this Restatement and the Code. Such Security Instruments may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in PFG’s discretion.

 

4.12 Burdensome Agreements . Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any of its Subsidiaries to (a) pay dividends or make any other distributions in respect of its share equity or any other interest or participation in its profits owned by any Obligor or any of its Subsidiaries, or pay any Indebtedness owed to Obligor or any of its Subsidiaries, (b) make loans or advances to Obligor or any of their respective Subsidiaries or (c) transfer any of its properties to Obligor or any of their respective Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable Legal Requirements; (ii) this Agreement and the other Loan Documents; (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any of its Subsidiaries; (iv) customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business; or (v) any holder of a Permitted Lien restricting the transfer of the property subject thereto.

 

4.13 Full Disclosure . No written representation, warranty or other statement of Obligor in any certificate or written statement given to PFG, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to PFG, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by PFG that the projections and forecasts provided by Obligor in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

4.14 Formation or Acquisition of Subsidiaries . Notwithstanding and without limiting the affirmative covenant contained in Section 4.9 and the negative covenants contained in Sections 4.6(xv) hereof, at the time that Obligor forms any direct or indirect non-PRC Subsidiary or acquires any direct or indirect non-PRC Subsidiary after the Effective Date, Obligor shall, unless otherwise directed by PFG in writing, (a) cause such new non-PRC Subsidiary to provide to PFG a joinder to the Loan Agreement to cause such non-PRC Subsidiary to become a co-Borrower hereunder or a guarantor of Obligations under a Guaranty, together with such Security Instruments and/or Control Agreements, all in form and substance reasonably satisfactory to PFG (including being sufficient to grant PFG a first ranking Lien (subject only to Permitted Liens (which may only have superior priority to PFG’s Lien as expressly permitted herein)) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to PFG appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new non-PRC Subsidiary, in form and substance reasonably satisfactory to PFG, and (c) provide to PFG all other documentation in form and substance reasonably satisfactory to PFG, including one or more opinions of counsel reasonably satisfactory to PFG, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 4.14 shall be a Loan Document.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

4.15 Disputes . Borrower shall notify PFG promptly of all disputes or claims relating to Accounts. Borrower shall not forgive (completely or partially), compromise or settle any Account for less than payment in full, or agree to do any of the foregoing, except that Borrower may do so, provided that: (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, and in arm’s length transactions, which are reported to PFG in the reports required to be provided under this Agreement to PFG; (ii) no Default or Event of Default has occurred and is continuing; and (iii) taking into account all such discounts, settlements and forgiveness, the total outstanding RLOC Loans will not exceed the Credit Limit.

 

4.16 Returns . Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower shall promptly handle any resolution of the same, whether an accepted return, credit memorandum to the Account Debtor or otherwise, as customary. In the event any attempted return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in trust for PFG, and immediately notify PFG of the status of the foregoing before accepting a return of the Inventory or issuing any credit memorandum.

 

4.17 Verification . PFG may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Accounts, by means of mail, telephone or otherwise, either in the name of Borrower or PFG or in such other manner as PFG may determine.

 

4.18 No Liability . PFG shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good faith for less than the full amount thereof, nor shall PFG be deemed to be responsible for any of Borrower’s obligations under any contract or agreement giving rise to an Account.

 

5. TERM.

 

5.1 Maturity Date. This Agreement shall continue in effect until the respective Maturity Date of Tranche 1 Loans and Tranche 2 Loans, subject to Sections 5.2, 5.3 and 5.4, below.

 

5.2 Early Termination. This Agreement may be terminated prior to the respective Maturity Date of Tranche 1 Loans and Tranche 2 Loans as follows: (i) if expressly permitted in the Schedules, by Borrower, effective three Business Days after written notice of termination is given to PFG and payment in full in cash of all Obligations (other than inchoate indemnity obligations); or (ii) by PFG at any time after the occurrence and during the continuance of an Event of Default, without notice, effective immediately. If a Borrower right to prepay Obligations is provided in the Schedules and the exercise of such right is subject to payment of any consideration to PFG as a condition to such exercise, a Borrower Default or Event of Default that results in an acceleration of Obligations and/or termination of this Agreement shall not relieve Borrower of the obligation to pay such consideration, which shall be included in the Obligations required to be paid or performed by Borrower.

 

5.3 Payment of Obligations. On the Maturity Date or on any earlier effective date of termination, Borrower shall pay and perform in full all Obligations, whether evidenced by installment notes or otherwise, and whether or not all or any part of such Obligations are otherwise then due and payable. Notwithstanding any termination of this Agreement, (i) all of PFG’s security interests in all of the Collateral and all of the terms and provisions of this Agreement shall continue in full force and effect until all Obligations have been paid and performed in full, and (ii) no further Loans will be made to Borrower unless PFG otherwise agrees in its sole and absolute discretion. No termination shall in any way affect or impair any right or remedy of PFG, nor shall any such termination relieve Borrower of any Obligation to PFG, until all of the Obligations have been paid and performed in full. Upon payment and performance in full of all the Obligations and termination of this Agreement, PFG shall promptly terminate its financing statements with respect to Borrower and deliver to Borrower such other documents as may be required to fully terminate PFG’s security interests.

 

5.4 Survival of Certain Obligations . Without limiting the survival of obligations addressed otherwise in this Agreement and notwithstanding any other provision of this Agreement, all covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full and satisfied. The obligation of Borrower in Section 8.9 to indemnify PFG shall survive until the statute of limitations with respect to such claim or cause of action shall have run.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

6. EVENTS OF DEFAULT AND REMEDIES.

 

6.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” under this Agreement regardless of whether notice thereof is given by PFG, and Obligor shall give PFG immediate written notice thereof:

 

(a) Any warranty, representation, covenant, statement, report or certificate made or delivered to PFG by Obligor or any of their respective officers, employees or agents, now or in the future shall be untrue or misleading in a material respect when made or deemed to be made ; or

 

(b) Borrower shall fail to pay any Loan or any interest thereon or any other monetary Obligation when due ; or

 

(c) (i) Borrower shall fail to comply with any of the financial covenants set forth in the Schedules, or (ii) any Obligor shall breach any of the provisions of Section 4.6 hereof, or (iii) any Obligor shall fail to perform any other non-monetary Obligation which by its nature cannot be cured, or (iv) Borrower shall fail to permit PFG to conduct an inspection or audit as provided in Section 4.5 hereof or shall fail to provide the notices, information, briefing and other rights set forth in Section 4.5, or (v) Borrower shall fail to provide PFG with a Report under Section 6 of the Schedules within three (3) Business Days after the date due; or

 

(d) Borrower shall fail to perform any other non-monetary Obligation, which failure is not cured within ten (10) Business Days after the date due; provided, however, if such failure results from a Default or an Event of Default for which there is a shorter cure period set forth in this Section 6.1, then the applicable cure period shall be such shorter period; or

 

(e) any levy, assessment, attachment or seizure is made on all or any part of the Collateral having an aggregate value of no less than $100,000 which is not cured within five (5) Business Days after the occurrence of the same, or any lien or encumbrance (other than a Permitted Lien) is made on all or any part of the Collateral which is not cured within ten (10) Business Days after the occurrence of the same; or

 

(f) any default or event of default occurs under any obligation secured by a Permitted Lien in the amount of no less than $100,000, which is not cured within any applicable cure period or unconditionally waived in writing by the holder of the Permitted Lien (and for purposes of the foregoing, a waiver does not include a forbearance); or

 

(g) there is, under any agreement to which Borrower is a party with a third party or parties, (i) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of $100,000; or (ii) any breach or default by Borrower, the result of which could result in a Material Adverse Change or have a material adverse effect on Borrower, any Guarantor or its business or prospects (the term “material adverse effect” for purposes hereof, shall be deemed to include (non-exclusively) any event having at such time or cumulatively in the following 12-month period, a dollar impact of $5,000,000 or more; or

 

(h) (i) Dissolution, termination of existence, insolvency or business failure of Borrower or any Guarantor; or (ii) appointment of a receiver, trustee or custodian, for all or any part of the property of, assignment for the benefit of creditors by, or the commencement of any Insolvency Proceeding by, against or in respect of Borrower or any Guarantor under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, in each above case that is not dismissed or stayed within 45 days (and for the avoidance of doubt, PFG shall have no obligation to advance any Loan while any of the foregoing conditions or those set forth in clauses (iii) and (iv), below, exist); or (iii) Borrower shall generally not pay its debts as they become due; or (iv) Borrower shall conceal, remove or Transfer any part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any Transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or

 

(i) Revocation or termination of, or limitation or denial of liability upon, any guaranty of the Obligations or any attempt to do any of the foregoing, or commencement of proceedings by any guarantor of any of the Obligations under any bankruptcy or insolvency law; or

 

(j) revocation or termination of, or limitation or denial of liability upon, any pledge of any certificate of deposit, securities or other property or asset of any kind pledged by any third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or commencement of proceedings by or against any such third party under any bankruptcy or insolvency law; or

 

(k) Borrower makes any payment on account of any indebtedness or obligation which has been subordinated to the Obligations (other than as permitted in the applicable subordination agreement), or if any Person who has subordinated such indebtedness or obligations terminates or in any way repudiates or breaches the terms of his subordination agreement; or); or

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

(l) any Obligor shall, without the prior consent of PFG (which shall be a matter of its sole business discretion unless all Obligations are to be repaid as a condition precedent to such Change in Control being consummated), (i) enter into any agreement, binding or non-binding, that would result in a Change in Control, or (ii) effect or suffer a Change in Control; or

 

(m) a default or breach shall occur under any other Loan Document, which default or breach shall be continuing after the later of cure period expressly specified in such Loan Document or five (5 ) Business Days; or

 

(n) the outstanding principal under the RLOC shall at any time exceed the Credit Limit; or

 

(o) a Material Adverse Change shall occur.

 

PFG may cease making any Loans hereunder during any of the cure periods provided above, and thereafter if an Event of Default has occurred and is continuing.

 

6.2 Remedies. Upon the occurrence and during the continuance of any Event of Default, and at any time thereafter, PFG, at its option, and without notice or demand of any kind (all of which are hereby expressly waived by Borrower), may do any one or more of the following: (a) Cease making Loans or otherwise extending credit to Borrower under this Agreement or any other Loan Document; (b) Accelerate and declare all or any part of the Obligations to be immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing or relating to any Obligation; (c) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes PFG without judicial process to enter onto any of Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge for so long as PFG deems it necessary, in its good faith business judgment, in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that should PFG seek to take possession of any of the Collateral by court process, Borrower hereby irrevocably waives: (i) any bond and any surety or security relating thereto required by any statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that PFG retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to assemble any or all of the Collateral and make it available to PFG at places designated by PFG which are reasonably convenient to PFG and Borrower, and to remove the Collateral to such locations as PFG may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, PFG shall have the right to use Borrower’s premises, vehicles, hoists, lifts, cranes, and other Equipment and all other property without charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its condition at the time PFG obtains possession of it or after further manufacturing, processing or repair, at one or more public and/or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale. PFG shall have the right to conduct such disposition on Borrower’s premises without charge, for such time or times as PFG deems reasonable, or on PFG’s premises, or elsewhere and the Collateral need not be located at the place of disposition. PFG may directly or through any affiliated company purchase or lease any Collateral at any such public disposition, and if permissible under applicable Legal Requirement, at any private disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any liability Borrower may have if any Collateral is defective as to title or physical condition or otherwise at the time of sale; (g) Demand payment of, and collect any Accounts and General Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes PFG to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, to take possession of and open mail addressed to Borrower and remove therefrom payments made with respect to any item of the Collateral or proceeds thereof, and, in PFG’s good faith business judgment, to grant extensions of time to pay, compromise claims and settle Accounts and the like for less than face value; (h) Exercise any and all rights under any present or future Control Agreements relating to Deposit Accounts or Investment Property; (i) Demand and receive possession of any of Borrower’s federal and state income tax returns and the books and records utilized in the preparation thereof or referring thereto; and (j) without limiting the rights and remedies of PFG under clauses (a) through (i), inclusive, PFG may exercise any rights and remedies it may have under the Security Instruments in any jurisdiction where such Security Instruments may be enforced. All Lender Expenses, liabilities and obligations incurred by PFG with respect to the foregoing shall be added to and become part of the Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Without limiting any of PFG’s rights and remedies, from and after the occurrence and during the continuance of any Event of Default, the interest rate applicable to the Obligations shall be the Default Rate.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

6.3 Standards for Determining Commercial Reasonableness. Without limiting the standards that may be applicable to the enforcement of Security Instruments in any non-U.S. jurisdiction in which such Security Instruments may be enforced, Borrower and PFG agree that a sale or other disposition (collectively, “sale”) of any Collateral which complies with the following standards will conclusively be deemed to be commercially reasonable: (i) Notice of the sale is given to Borrower at least ten days prior to the sale, and, in the case of a public sale, notice of the sale is published at least five days before the sale in a newspaper of general circulation in the county where the sale is to be conducted; (ii) Notice of the sale describes the collateral in general, non-specific terms; (iii) The sale is conducted at a place designated by PFG, with or without the Collateral being present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the purchase price in cash or by cashier’s check or wire transfer is required; (vi) With respect to any sale of any of the Collateral, PFG may (but is not obligated to) direct any prospective purchaser to ascertain directly from Borrower any and all information concerning the same. PFG shall be free to employ other methods of noticing and selling the Collateral, in its discretion, if they are commercially reasonable. Without limiting the foregoing, if Exigent Circumstances exist, Borrower and PFG agree that notice periods may be shorter than as set forth above and such shorter notice periods are commercially reasonable in Exigent Circumstances. Borrower further acknowledges and agrees that if PFG’s or third parties’ access to Collateral is inhibited, restricted or denied, it shall be commercially reasonable for PFG to conduct a sale of Collateral under such circumstances even though the lack of access to Collateral would likely give rise to a sale price less than if parties had unfettered access to Collateral for purposes of conducting a sale.

 

6.4 Power of Attorney. Upon the occurrence and during the continuance of any Event of Default, without limiting PFG’s other rights and remedies, Borrower grants to PFG an irrevocable power of attorney coupled with an interest, authorizing and permitting PFG (acting through any of its employees, attorneys or agents) at any time, at its option, but without obligation, with or without notice to Borrower, and at Borrower’s expense, to do any or all of the following, in Borrower’s name or otherwise, but PFG agrees that if it exercises any right hereunder, it will do so in good faith and in a commercially reasonable manner: (a) Execute on behalf of Borrower any documents that PFG may, in its good faith business judgment, deem advisable in order to perfect and maintain PFG’s security interest in the Collateral, or in order to exercise a right of Borrower or PFG, or in order to fully consummate all the transactions contemplated under this Agreement, and all other Loan Documents; (b) Execute on behalf of Borrower, any invoices relating to any Account, any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic’s, materialman’s or other lien, or assignment or satisfaction of mechanic’s, materialman’s or other lien; (c) Take control in any manner of any cash or non-cash items of payment or proceeds of Collateral; endorse the name of Borrower upon any instruments, or documents, evidence of payment or Collateral that may come into PFG’s possession; (d) Endorse all checks and other forms of remittances received by PFG; (e) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (f) Grant extensions of time to pay, compromise claims and settle Accounts and General Intangibles for less than face value and execute all releases and other documents in connection therewith; (g) Pay any sums required on account of Borrower’s taxes or to secure the release of any liens therefor, or both; (h) Settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor; (i) Instruct any third party having custody or control of any books or records belonging to, or relating to, Borrower to give PFG the same rights of access and other rights with respect thereto as PFG has under this Agreement; (j) Execute on behalf of Borrower and file in Borrower’s name such documents and instruments as may be necessary or appropriate to effect the Transfer of Domain Rights, domain names, domain registry administrative contacts and domain and website hosting services into the name of PFG or its designees, and (k) Take any action or pay any sum required of Borrower pursuant to this Agreement and any other Loan Documents. Any and all Lender Expenses incurred by PFG with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. In no event shall PFG’s rights under the foregoing power of attorney or any of PFG’s other rights under this Agreement be deemed to indicate that PFG is in control of the business, management or properties of Borrower.

 

6.5 Application of Proceeds. All proceeds realized as the result of any sale of the Collateral shall be applied by PFG first to Lender Expenses incurred in the exercise of its rights under this Agreement, second to the interest due upon any of the Obligations, and third to the principal of the Obligations, in such order as PFG shall determine in its sole discretion. Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to PFG for any deficiency. If, PFG, in its good faith business judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, PFG shall have the option, exercisable at any time, in its good faith business judgment, of either reducing the Obligations by the principal amount of purchase price or deferring the reduction of the Obligations until the actual receipt by PFG of the cash therefor.

 

6.6 Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement, PFG shall have all the other rights and remedies accorded a secured party under the Code and under all other applicable Legal Requirements, and under any other instrument or agreement now or in the future entered into between PFG and Borrower, including the Security Instruments, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by PFG of one or more of its rights or remedies shall not be deemed an election, nor bar PFG from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay of PFG to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed. The rights of PFG hereunder shall be supplemental to any rights and remedies of PFG under the Security Instruments.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

7. Definitions. As used in this Agreement, the following terms have the following meanings:

 

Account Debtor ” means the obligor on an Account.

 

Accounts ” means all present and future “accounts” as defined in the Code in effect on the Effective Date with such additions to such term as may hereafter be made, and includes without limitation all accounts receivable, healthcare receivables and other sums owing to Borrower.

 

Advance ” or “ advance ” means the funding of any Loan to or on behalf of Borrower.

 

Affiliate ” means, with respect to any Person, a relative, partner, shareholder, director, officer, or employee of such Person, or any parent or Subsidiary of such Person, or any Person directly or indirectly through any other Person controlling, controlled by or under common control with such Person.

 

Availability ” means the dollar amount of Schedule 3 Loans that may be drawn at any time by Borrower under the terms of Section 1 of Schedule 3.

 

Back-End Fee ” has the meaning set forth in Section 8(e) of Schedule 1.

 

Board ” means the Board of Directors of each Obligor and other relevant Group Member, as the context permits.

 

BORQS Beijing ” means Borqs Communication Technology (Beijing) Ltd.( 播思通讯技术(北京)有限公司), a PRC wholly foreign-owned enterprise Subsidiary of BORQS HK.

 

BORQS HK ” means BORQS Hong Kong Limited.

 

BORQS India ” means BORQS Software Solutions Private Limited, an Indian company established on July 17, 2009, a Subsidiary of Cayman Parent (save for one share held by BORQS HK).

 

BORQS Tech ” means BORQS Technologies (HK) Limited, a Hong Kong company established on April 30, 2018 and a Subsidiary of Cayman Parent.

 

Borrower ” means the entities identified on the first page of this Agreement as Borrowers and any other Person who may from time to time be joined as a Borrower under this Agreement, in each case individually and collectively, jointly and severally; a reference to “Borrower” means “each Borrower”.

 

Borrowing Base Certificate ” means the certificate required to be provided by Borrower as a condition to each request for an advance under Schedule 3, in the initial form appended hereto as Exhibit C .

 

Business Day ” or “ business day ” means a day on which PFG is open for business.

 

BVI Security Documents ” means the Loan Documents to be executed and delivered by Group Parent under or in connection with this Restatement which, for avoidance of doubt, includes: (i) a general debenture (incorporating fixed and floating charges), (ii) a deed of guarantee and indemnity of the Obligations of each Borrower and each other Guarantor, (iii) the share mortgage and related charges in relation to the shares Group Parent owns in Cayman Parent, and (iv) the Reaffirmation of Intellectual Property Security Agreement & Joinder (or separate Intellectual Property Security Agreement, as PFG may require); (v) a Certificate signed by a Responsible Officer/Director appending the written resolutions or minutes of a meeting of the Board authorizing the execution, delivery and performance of the Restatement and the other Loan Documents applicable to it; (vi) a Certificate of Good Standing issued by the British Virgin Islands Registry of Corporate Affairs, together with such other documents and instruments as may be executed and delivered in connection any of the foregoing.

 

Cash ” means unrestricted and unencumbered (except for the Liens of PFG) cash or cash equivalents in Deposit Accounts or other Collateral Accounts for which there is in effect a Control Agreement among Borrower, PFG and the depositary institution in respect of such accounts, unless the requirement for a Control Agreement has been waived by PFG.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Cash Equivalents ” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States, any agency or any State thereof, or the Governmental Body of any other country (including without limitation the PRC, Hong Kong, Japan, the Cayman Islands or India), having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having a rating of at least A-1 or the equivalent thereof by Standard & Poor’s Ratings Group or a rating of P-1 or the equivalent thereof by Moody’s Investors Service, Inc.; (c) certificates of deposit, time deposits and bankers’ acceptances maturing no more than one (1) year after the date of acquisition, and overnight bank deposits, in each case which are issued by a commercial bank organized under the laws of the United States, any state thereof or any other jurisdiction (including without limitation the PRC, Hong Kong, Japan, the Cayman Islands or India), having capital and surplus in excess of $500,000,000; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition and (e) Investments pursuant to Borrower’s Investment Policy, provided that such investment policy (and any such amendment thereto) has been provided by Borrower to PFG and approved in writing by PFG.

 

Cayman Parent ” means BORQS International Holding Corp., an exempted limited liability company incorporated under the laws of the Cayman Islands bearing Company No. 192127.

 

Cayman Security Documents ” means the Loan Documents to be executed and delivered by Cayman Parent under or in connection with this Restatement, including (i) a second equitable mortgage over registered shares in Cayman Parent (including a notation of the equitable share mortgage in the Register of Members of Cayman Parent, Directors’ letter(s) of resignation, directors’ letter(s) of authority and an undated share transfer instrument); (ii) a priority debenture over assets of Cayman parent (including updated Register of Mortgages and Charges with notation); (iii) a Deed of Guarantee and Indemnity from Cayman Parent; (iv) a Deed of Charge of Shares in respect of Cayman Parent’s shares in BORQS HK; (v) a Deed of Charge of Shares in respect of Cayman Parent’s shares in BORQS Tech; (vi) a Deed of Charge of Shares in respect of Cayman Parent’s shares in Borqs India; (vii) the Reaffirmation of Intellectual Property Security Agreement and Joinder referenced in clause (iii) of this Section 9; and (viii) a Deed of Confirmation of existing security, and Cayman Parent corporate authorizations and related consents and certificates, together with such other documents and instruments as may be executed and delivered in connection any of the foregoing.

 

Change in Control ” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing thirty-five percent (35%) or more of the combined voting power of Borrower’s then outstanding securities in a single transaction or a series of related transactions (other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to PFG the venture capital or private equity investors at least seven (7) Business Days prior to the initial closing of the transaction and provides to PFG a description of the material terms of the transaction and such other information as PFG may reasonably request); or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Borrower (together with any new directors whose election by the Board of Borrower was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office (other than as a result of the above-referenced venture capital / private equity exception, subject to the same notice and information requirements as specified above).

 

Code ” means the Uniform Commercial Code as adopted and in effect in the State of California from time to time.

 

Collateral ” has the meaning set forth in Section 2 above.

 

Collateral Account ” is any Deposit Account.

 

Compliance Certificate ” means Borrower’s certification of its compliance with the terms and conditions of this Agreement and such other matters as PFG may require to be addressed in such certificate, in the form as initially set forth as Exhibit B hereto, as such form may be amended from time to time upon advance notice from PFG.

 

Constitutional Document ” means for any Person, such Person’s formation documents, as last certified by the Secretary of State (or equivalent Governmental Body) of such Person’s jurisdiction of organization, if applicable, together with, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its certificate of incorporation, articles of association and/or limited liability company agreement (or operating or similar agreement), (c) if such Person is a partnership, its partnership agreement (or similar agreement), and (d) if such Person is a statutory joint venture company or similar entity, its joint venture (or similar) agreement, each of the foregoing with all current amendments or modifications thereto.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Contingent Obligation ” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, Dividend, letter of credit or other obligation of another such as an obligation, in each case directly or indirectly guaranteed, endorsed, co made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

 

continuing ” and “ during the continuance of ” when used with reference to a Default or Event of Default means that the Default or Event of Default has occurred and has not been either waived in writing by PFG or cured within any applicable cure period.

 

Control ” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect through one or more Affiliates, of the power to direct, cause the direction of or materially influence the management, policies or decision-making of a Person, whether through the direct, indirect or beneficial ownership or voting of securities, by contract, by proxy or otherwise.

 

Control Agreement ” means (i) a written agreement among PFG, Borrower and a depositary bank or other custodian in respect of Borrower’s Collateral Accounts by which the depositary bank or other custodian, as appropriate, agrees to comply with instructions given from time to time by PFG directing the disposition of the funds, investments and securities in Borrower’s Collateral Accounts without further consent of Borrower, which instructions may include not complying with instructions (which term may include the honoring of checks written by Borrower against funds in said accounts) given by Borrower, and containing other terms acceptable to PFG, and (ii) such other notices and depositary acknowledgments as may be customary and appropriate to perfect a security interest in Collateral Accounts under the laws of non-U.S. jurisdictions.

 

Current Depositary(ies) ” means the banking and / or other financial institutions at which Borrower maintains Collateral Accounts on the Restatement Date.

 

Default ” means any event which with notice or passage of time or both, would constitute an Event of Default.

 

Default Rate ” means the lesser of (i) the applicable rate(s) set forth in each Schedule, plus six percent (6%) per annum, and (ii) the maximum rate of interest that may lawfully be charged to a commercial borrower under applicable usury laws.

 

Deposit Accounts ” means all present and future “deposit accounts” as defined in the Code in effect on the Effective Date in the name of an Obligor, with such additions to such term as may hereafter be made, and includes without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts and certificates of deposit, and as used in this Agreement, the term “Deposit Accounts” shall be construed to also include securities, commodities and other Investment Property accounts.

 

Dividend ” means a payment or other distribution in respect to equity to an owner thereof, (A) whether or not (i) in respect of net profits or otherwise, (ii) declared by Borrower’s (or other relevant party’s) (iii) Board, previously paid, or (iv) authorized in its Constitutional Documents or otherwise, and (B) for the avoidance of doubt, includes distributions to members of a limited liability company.

 

Eligible Accounts ” means Accounts and General Intangibles arising in the ordinary course of the Group’s business from the sale of goods or the rendition of services, or the non-exclusive licensing of Intellectual Property, which PFG, in its good faith business judgment, shall deem eligible for borrowing. Without limiting the fact that the determination of which Accounts are eligible for borrowing is a matter of PFG’s good faith business judgment, the following (the “ Minimum Eligibility Requirements ”) are the minimum requirements for an Account to be an Eligible Account:

 

(i) the Account must not be outstanding for more than 90 days from its invoice date (the “ Eligibility Period ”) or consist of a credit balance over 90 days from its inception,

 

(ii) the Account must not represent progress or milestone billings, or be due under a fulfillment or requirements contract with the Account Debtor,

 

(iii) the Account must not be subject to any contingencies (including Accounts arising from promotional sales, sales on consignment, guaranteed sale or other terms pursuant to which payment by the Account Debtor may be conditional),

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

(iv) the Account must not be owing from an Account Debtor with whom any Group Member has any dispute (whether or not relating to the particular Account),

 

(v) the Account must not be owing from an Affiliate of any Group Member,

 

(vi) the Account must not be owing from an Account Debtor which is subject to any Insolvency Proceeding, or whose financial condition is not acceptable to PFG, or which fails, ceases to trade in the ordinary course or abandons of a material portion of its business,

 

(vii) the Account must not be owing from any Governmental Authority or any department, agency or instrumentality thereof,

 

(viii) the Account must not be owing from an Account Debtor located outside of the United States, Canada, Hong Kong, India, Japan, Taiwan, the PRC and European Union jurisdictions, provided that in any individual case PFG reserves the right to subject the approval of an Account as Eligible to additional conditions, such as a letter of credit in favor of Borrower from a prospective Account Debtor,

 

(ix) the Account must not be owing from an Account Debtor to whom any Group Member is or may be liable for goods purchased from such Account Debtor or otherwise (but, in such case, the Account will be deemed not eligible only to the extent of any amounts owed by such Group Member to such Account Debtor),

 

(x) the Account must not be a contra account or reflect a customer deposit,

 

(xi) the Account must not be invoiced and collected in a currency other than US Dollars or Hong Kong Dollars, and

 

(xiii) no holder of Group Member Indebtedness (other than PFG) shall have any outstanding loans or other extensions of credit with respect to the Account.

 

Accounts owing from one Account Debtor will not be deemed Eligible Accounts to the extent they exceed 25% of the total Accounts outstanding. In addition, if more than 50% of the Accounts owing from an Account Debtor are outstanding for a period longer than their Eligibility Period (without regard to unapplied credits) or are otherwise not eligible Accounts, then all Accounts owing from that Account Debtor will be deemed ineligible for borrowing unless PFG otherwise agrees in its sole discretion. PFG may, from time to time, in its good faith business judgment, revise the Minimum Eligibility Requirements, upon written notice to Borrower.

 

Equipment ” means all present and future “equipment” as defined in the Code in effect on the Effective Date with such additions to such term as may hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

 

Event of Default ” means any of the events set forth in Section 6.1 of this Agreement.

 

Executive Director ” means a corporate director of a Person who has the inherent or lawfully-granted executive authority to contractually bind such Person by his or her signature or other action.

 

Exigent Circumstances ” means circumstances that substantially inhibit an orderly sale process or that imply urgency due to rapid erosion of value or opportunity, including Borrower closing its business or “going dark”, inability or refusal (express or implied by non-response) to provide for the security of Collateral.

 

Financial Statements ” means consolidated and consolidating financial statements of Group Parent and, to the extent individually presented for audit or Legal Requirement compliance, including a balance sheet, income statement and cash flow and, in the case of monthly-required financial statements, showing data for the month being reported and a history showing each month from the beginning of the relevant fiscal year.

 

First-Priority ” means, in relation to PFG’s Liens in Collateral, a Lien that is prior to any other Lien, the Liens of PFG4 (pari passu with PFG), and other Permitted Liens, which other Permitted Liens may only have superior priority to PFG’s Lien as expressly specified herein or pursuant to the terms of a subordination agreement between PFG and the holder of such other Permitted Lien, and “ First Ranking ” in relation to charges created under debentures executed by Obligor means a charge that is prior to charges other than those of PFG4 (pari passu with PFG) and any other charges to which PFG expressly consents, in its business discretion.

 

General Intangibles ” means all present and future “general intangibles” as defined in the Code in effect on the Effective Date with such additions to such term as may hereafter be made, and includes without limitation all Intellectual Property, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income tax refunds, security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

good faith business judgment ” means honesty in fact and good faith (as defined in Section 1201 of the Code) in the exercise of PFG’s business judgment.

 

Governmental Authorization ” means any: (a) permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance, confirmation, endorsement, waiver, certification, designation, rating, registration, qualification or authorization that is, has been issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement; or (b) right under any Contract with any Governmental Body.

 

Governmental Body ” means any: (a) nation, principality, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any securities or securities exchange regulatory agency or other body or authority, governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other tribunal); (d) multi-national organization or body; or (e) individual, entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

 

Group ” means the direct and indirect Subsidiaries and controlled Affiliates of Group Parent and “ Group Member ” means each and any of such foregoing Persons.

 

Group Parent ” means Borqs Technologies, Inc., a BVI company (NASDAQ:BRQS), the parent company of Cayman Parent and the top tier entity in the Group.

 

Guarantor ” means each of Group Parent, Cayman Parent and any other Persons who may from time to time be joined to the Guaranty or otherwise guaranty the Obligations hereunder.

 

Guaranty(ies) ” means those certain Deeds of Guarantee and Indemnity executed and delivered by certain Guarantors on the Effective Date and each Guarantor in favor of PFG on the Restatement Date in respect of Borrower’s and each other Guarantor’s Obligations and any other guarantees executed and delivered by a new Guarantor of Obligations after the Restatement Date.

 

Hong Kong Security Documents ” means the Loan Documents to be executed and delivered by each Borrower domiciled in Hong Kong, S.A.R. (or subject to Hong Kong law by virtue of the relevant Security Instrument in respect of a non-Hong Kong domiciled Person) under or in connection with the Loan Agreement, including a Hong Kong law Deed of Charge of Shares by Cayman Parent in respect of the Shares in BORQS Hong Kong and in BORQS Tech, a Hong Kong law Deed of Debenture by BORQS Hong Kong constituting a fixed and floating charge over all its assets and a Hong Kong law Deed of Debenture by BORQS Tech constituting a fixed and floating charge over all its assets, and all related share transfers instruments, proxies, authorizations letters, notices, registrations, corporate authorizations, certificates and all other documents executed or delivered in connection with any of the foregoing.

 

HSBC ” means The Hongkong and Shanghai Banking Corporation Limited.

 

IFRS ” means International Financial Reporting Standards.

 

including ” means including (but not limited to).

 

Indebtedness ” means (a) indebtedness for borrowed money or the deferred purchase price of property or services (other than trade payables arising in the ordinary course of business), (b) obligations evidenced by bonds, notes, debentures or other similar instruments, (c) reimbursement obligations in connection with letters of credit, (d) capital lease obligations and (e) Contingent Obligations.

 

India Security Documents ” means that certain pledge agreement between Cayman Parent and PFG relating to BORQS India, all related irrevocable stock powers and proxies and all related Reserve Bank of India registrations and approvals of the foregoing and all other documents, instruments, registrations and recordings effected in connection with any of the foregoing.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Insolvency Proceeding ” means (a) any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law in any jurisdiction, including winding-up procedures, assignments for the benefit of creditors, compositions, receiverships, administrations, extensions generally with its creditors, or proceedings seeking reorganization, arrangement or other relief; or (b) if any step is taken with a view to a moratorium or a composition, assignment or similar arrangement with any of a Person’s creditors; (c) if a meeting of a Person’s shareholders, directors or other officers is convened for the purpose of considering any resolution for, to petition for or to make an application to or to file documents with a court or any registrar for, such Person’s winding-up, administration or dissolution or any such resolution is passed; or (d) if an order is made for a Person’s winding-up, administration or dissolution, or any Person presents a petition, or makes an application to or files documents with a court or any registrar, for such Person’s winding-up, administration or dissolution, or gives notice to Agent and Lenders of an intention to appoint an administrator; or (e) if any liquidator, receiver, administrative receiver, administrator or similar officer is appointed in respect of a Person or any of such Person’s assets; or (f) if a Person’s shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint, a liquidator, receiver, administrator or similar officer.

 

Intellectual Property ” means all present and future: (a) copyrights, copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, (b) trade secret rights, including all rights to unpatented inventions and know-how, and confidential information; (c) mask work or similar rights available for the protection of semiconductor chips; (d) patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same; (e) trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are registered, and all applications to register and registrations of the same and like protections, and the entire goodwill of the business of Obligor connected with and symbolized by any such trademarks; (f) Domain Rights as described in Section 3.14 hereof, (g) computer software and computer software products; (h) designs and design rights; (i) technology; (j) all claims for damages by way of past, present and future infringement of any of the rights included above; and (k) all licenses or other rights to use any property or rights of a type described above.

 

Inventory ” means all present and future “inventory” as defined in the Code in effect on the Effective Date with such additions to such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of a Group Member’s custody or possession or in transit and including any returned goods and any documents of title representing any of the above.

 

Investment ” means any beneficial ownership interest in any Person (including any stock, partnership interest or other equity or debt securities issued by any Person), and any loan (whether or not convertible), advance or capital contribution to any Person.

 

Investment Property ” means all present and future investment property, securities, stocks, bonds, debentures, debt securities, partnership interests, limited liability company interests, options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any securities account or otherwise, and all options and warrants to purchase any of the foregoing, wherever located, and all other securities of every kind, whether certificated or uncertificated.

 

Key Person ” means BORQS HK’s Chairman and Chief Executive Officer, Pat Chan, and BORQS HK’s Senior Vice President Corporate Finance, Anthony Chan.

 

Knowledge ” or “ best of knowledge ” and words of similar import mean either (i) the actual knowledge of any of an Obligor’s officers, including its Executive Directors, any Chief Executive Officer, President, designated legal representative under the Legal Requirements of any non-U.S. jurisdiction, Chief Information/Intelligence Officer (if any), Chief Technology Officer (or equivalent), Chief Financial Officer and Corporate Controller, or Obligor’s Vice Presidents or General Managers supervising a business unit or division, or any persons succeeding or performing the responsibilities of such identified positions including Directors with executive authority, or (ii) such knowledge as the persons in such identified positions would have assuming (A) Obligor policies in accordance with generally-accepted norms of corporate governance and (B) the actual exercise of reasonable diligence and prudence by such persons in accordance with such policies.

 

Legal Requirement ” means any written local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, ruling, directive, pronouncement, requirement, specification, determination, decision, opinion or interpretation that is, has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Body.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Lender Expenses ” means, in each case without limitation as to type and kind: reasonable Professional Costs, and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by PFG, pursuant to, or in connection with, or relating to this Agreement (whether or not a lawsuit is filed), including, but not limited to, Professional Costs PFG pays or incurs in order to do the following: (i) prepare and negotiate this Agreement and all present and future documents relating to this Agreement; (ii) obtain legal advice in connection with this Agreement or Obligor; enforce, or seek to enforce, any of its rights or retain the services of consultants to do so; (iii) prosecute actions against, or defend actions by, Account Debtors; (iv) commence, intervene in, or defend any action or proceeding; (v) initiate any complaint to be relieved of the automatic stay in bankruptcy; (vi) file or prosecute any probate claim, bankruptcy claim, third-party claim, or other claim; (vii) examine, audit, copy, and inspect any of the Collateral or any of Obligor’s books and records, subject to Section 4.5; (viii) protect, obtain possession of, lease, dispose of, or otherwise enforce PFG’s security interest in, the Collateral; (ix) otherwise represent PFG in any litigation relating to Obligor; and (x) all costs associated with the operation of the RLOC, including wire and other banking fees, including setup and recurring costs associated with deposit accounts PFG may initiate and operate to fund advances.

 

Lien ” or “ lien ” is a security interest, claim, mortgage, deed of trust, levy, charge, pledge or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

 

Liquidity Event ” means a transaction in respect of the Group where an investor would reasonably be expected to realize upon its investment in the Group, such as, for example only, a public offering or listing, whether initial or secondary, a transaction in which the Group (or the material operating members thereof) are merged or acquired, or a sale of a substantial part of the assets of the Group, in each case other than as part of an internal reorganization of the Group.

 

Loan Documents ” means, collectively, this Agreement, the Representations, and all other present and future documents, instruments and agreements between or in respect of PFG, Obligor or any other Group Member, including, but not limited to those relating to this Agreement, and all amendments and modifications thereto and replacements therefor.

 

Material Adverse Change ” means any of the following: (i) a material adverse change in the business, operations, or financial or other condition of Obligor or the Group as a whole, or (ii) a material impairment of the prospect of repayment of any portion of the Obligations; or (iii) a material impairment of the value or priority of PFG’s Liens in the Collateral, or (iv) PFG’s determination, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Section 5 of the Schedules during the next succeeding financial reporting period.

 

Maturity ” means the day on which the Obligations become due and payable whether at the Maturity Date or by acceleration or otherwise, or when such Obligations are in fact repaid (such as, by prepayment),

 

Maturity Date ” means the relevant Maturity Date set forth in Section 4 of the Schedules.

 

Modification ” has the meaning set forth in the introductory paragraph to this Agreement and “ Modification Effective Date ” means December 17, 2018.

 

New Subsidiary(ies) ” means any person that becomes a direct or indirect Subsidiary of an Obligor after the date hereof.

 

Non-Obligor Group Member(s) ” means any direct or indirect Group Member not joined as a co-Borrower hereunder or a guarantor of Obligations.

 

Non-PRC ” (or “ non-PRC ”) in relation to a Subsidiary means a Subsidiary that is not formed under the laws of the PRC.

 

Obligations ” means all present Loans and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and indebtedness at any time owing by Obligor to PFG, including obligations and covenants intended to survive the termination of this Agreement, whether evidenced by this Agreement or any note or other instrument or document, or otherwise, including indebtedness under any obligation to purchase equity derivatives (including stock warrants) purchased or otherwise issued to PFG from time to time, whether arising from an extension of credit, opening of a letter of credit, banker’s acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including, without limitation, those acquired by assignment and any participation by PFG in Obligor’s debts owing to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorney’s fees, expert witness fees, audit fees, collateral monitoring fees, closing fees, facility fees, commitment fees, contingent fees, back-end and performance-based fees, termination fees, minimum interest charges and any other sums chargeable to Obligor under this Agreement or under any other Loan Documents.

 

Ordinary (or “ordinary”) course of business ” and derivatives shall apply to an action taken or an action required to be taken and not taken by or on behalf of an Obligor. An action will not be deemed to have been taken in the “ordinary course of business” unless : (a) such action is consistent with its past practices (if such type of action has been taken in the past and, if not, such action shall be deemed not in the ordinary course of business) and is similar in nature and magnitude to actions customarily taken by it; (b) such action is taken in accordance with sound and prudent business practices in its jurisdiction of organization; and (c) such action is not required to be authorized by its shareholders and does not require any other separate or special authorization of any nature.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Other Property ” means the following as defined in the Code in effect on the Effective Date with such additions to such terms as may hereafter be made, and all rights relating thereto: all present and future “commercial tort claims” (including without limitation any commercial tort claims identified in the Representations), “documents”, “instruments”, “promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”, “fixtures”, “farm products” and “money”; and all other goods and personal property of every kind, tangible and intangible, whether or not governed by the Code.

 

Payment ” means all checks, wire transfers and other items of payment received by PFG for credit to Obligor’s outstanding Obligations.

 

Permitted Guaranty ” means the Guarantor guarantees of Borrower Obligations in favor of PFG.

 

Permitted Indebtedness ” means:

 

(i) the Loans and other Obligations;

 

(ii) Indebtedness existing on the Restatement Date and shown on Exhibit A hereto;

 

(iii) Subordinated Debt;

 

(iv) other Indebtedness secured by Permitted Liens described in clauses (i) and (iii) of that definition;

 

(v) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

 

(vi) Liens of carriers, warehouseman, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed $50,000 and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

 

(vii) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (i) through (vi) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower;

 

(ix) Indebtedness owing to Partners for Growth IV, L.P.; and

 

(x) reimbursement obligations in respect of letters of credit in an aggregate face amount outstanding not to exceed $300,000 at any time outstanding, which have been reported to PFG in writing.

 

Permitted Investments ” are:

 

(i) Investments (if any) shown on Exhibit A and existing on the Restatement Date;

 

(ii) Investments consisting of Cash Equivalents;

 

(iii) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Obligor;

 

(iv) Investments in Subsidiaries existing on the Restatement Date in amounts consistent with past practice; and

 

(v) at any time when no Default or Event of Default has occurred and is continuing, Investments in Borrower’s PRC and India Subsidiaries consisting of cash required in the ordinary course of such Subsidiaries’ business to maintain ordinary course operations and pay ordinary course expenses, subject to a calendar quarterly limit of the Dollar equivalent of $500,000 for each of BORQS Beijing and Borqs India, provided that (A) any unused Investment limit in one calendar quarter to the next calendar quarter and (B) with notice to PFG, PFG may in its discretion permit a greater threshold upon Borrower request if Borrower demonstrates a customary business need for a higher threshold limit.

 

Permitted Liens ” means the following:

 

(i) purchase money Liens (including Liens arising under any retention of title, hire purchase or conditional sales arrangement or arrangements having similar effect) (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than $250,000 in the aggregate amount outstanding, or (ii) existing on such Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

 

(ii) Liens for Taxes not yet payable;

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

(iii) additional Liens consented to in writing by PFG, which consent may be withheld in its good faith business judgment. PFG shall have the right to require, as a condition to its consent under this subparagraph (iii), that the holder of the additional security interest or lien sign a subordination agreement in PFG’s then standard form, acknowledge that the security interest is subordinate to the security interest in favor of PFG, and agree not to take any action to enforce its subordinate security interest so long as any Obligations remain outstanding, and that Obligor agrees that any uncured default in any obligation secured by the subordinate security interest shall also constitute an Event of Default under this Agreement;

 

(iv) Liens being terminated substantially concurrently with this Agreement;

 

(v) Liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations which are not delinquent;

 

(vi) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA);

 

(vii) Liens incurred in connection with the extension, renewal or refinancing of Indebtedness secured by liens of the type described above in clauses (i), (ii), (iii) and (ix), provided that any extension, renewal or replacement lien is limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase and other terms are holistically not less favorable to Borrower;

 

(viii) Liens in favor of customs and revenue authorities which secure payment of customs duties in connection with the importation of goods;

 

(ix) Liens to secure the Loans or other Obligations;

 

(x) non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business;

 

(xi) Liens existing on the Restatement Date and specified in Exhibit A hereto; and

 

(xii) Liens securing Indebtedness owing to Partners for Growth IV, L.P.

 

Person ” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, government, or any agency or political division thereof, or any other entity.

 

PFG4 ” means Partners for Growth IV, L.P., a Delaware limited partnership and secured lender to Borrower.

 

Plan ” means Borrower’s financial plan as presented to PFG on December 12, 2018, in PDF format in a file entitled “BORQS 2015-2019 PL 20180411 V1.1” for the 2018-2019 calendar years, as such plan may be delivered by Borrower and approved by PFG (for purposes of setting financial covenants covering future periods) for periods not reflected in the initial financial plan.

 

Planned HSBC Facility ” means one or more planned borrowing facilities (from HSBC) Obligor has notified to PFG that would refinance all PFG Loans and repay all Obligations to PFG and its Affiliates.

 

PRC ” means the People’s Republic of China (including Hong Kong and Macau).

 

PRC Security Documents ” means a share pledge agreement in respect of BORQS HK’s ownership interest in BORQS Beijing (in English and Chinese), sole shareholders resolutions of BORQS HK in respect of the same (in English and Chinese), and all related documents required for PRC registrations of the foregoing and all other documents, instruments, registrations and recordings effected in connection with any of the foregoing, together with (as a condition subsequent) notice from the Governmental Body that is the competent company registration authority evidencing that the PRC Security Document has been registered.

 

Professional Costs ” means all reasonable fees and expenses of auditors, accountants, valuation experts, Collateral disposition service providers, restructuring and other advisory services in connection with restructurings, workouts and Insolvency Proceedings, and fees and costs of attorneys.

 

Qualifying Request ” means a request made by a Responsible Officer of Borrower under Section 1.4 for an advance under Schedule 3 or any other matter for which PFG’s consent, waiver or forbearance is required under the Loan Documents, accompanied by such certificates as are required as a condition to advances, together with such supporting materials as may be required by PFG in connection therewith.

 

Representations ” means the written Representations and Warranties provided by Borrower to PFG on behalf of the Group referred to in the Schedules.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Responsible Officer(s) ” means BORQS HK’s Chairman and Chief Executive Officer, Pat Chan, and Borrower’s Senior Vice President Corporate Finance, Anthony Chan, and any other person authorized to bind each Group Member and notified to PFG in writing by a Responsible Officer as a new Responsible Officer.

 

Restricted License ” means any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security in Borrower’s interest in such license or agreement or any other property, or (b) for which a default under or termination of could interfere with PFG’s right to sell any Collateral.

 

RMB ” means Renminbi, the lawful currency of the People’s Republic of China.

 

Security Documents ” means the BVI Security Documents, the Cayman Security Documents, the Hong Kong Security Documents, the India Security Documents and the PRC Security Documents.

 

Security Instruments ” means financing statements, mortgages, charges and similar notices filed under the Code or other relevant Legal Requirement (U.S., Cayman Islands, British Virgin Islands, Hong Kong, S.A.R., the PRC or any other non-U.S. law) in any jurisdiction in which such financing statements, mortgages, debentures, charges and similar agreements, instruments and notices may be filed, including fixed and floating charges, share charges, mortgage debentures, and any other notices, instruments and filings that reflect the “all assets” security granted hereunder to PFG, including first ranking fixed and floating charges over an Obligor’s registered and unissued share capital, reputation and goodwill, Intellectual Property, Accounts, its rights to receive funds from its customers, and other fixed assets and any tax benefit it may have.

 

Subordinated Debt ” means debt incurred by Obligor subordinated to Obligor’s debt to PFG pursuant to a subordination agreement entered into between PFG, Obligor and the subordinated creditor(s) upon terms acceptable to PFG in its sole business discretion, but which may at PFG’s option include: (i) subordination of subordinated creditor Lens, (ii) restrictions or prohibition of payments on subordinated debt until all Obligations to PFG are fully repaid and performed, and (iii) a prohibition on the exercise of remedies by a subordinated creditor until all Obligations to PFG are fully repaid and performed.

 

Subsidiary ” means, with respect to any Person, (i) any Person of which more than 50% of the voting stock or other equity interests is owned or (ii) a Person controlled, directly or indirectly, by such Person or one or more Affiliates of such Person and which, for the avoidance of doubt, shall include a “sister” company to a Person under common direct or indirect ownership meeting the above specified percentage for being considered a “Subsidiary”.

 

Tax ” means any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or may in the future be (a) imposed, assessed or collected by or under the authority of any Governmental Body, or (b) payable pursuant to any tax-sharing agreement or similar contract.

 

Tax Return ” means any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

 

Transfer ” or “ transfer ” shall include any sale, assignment with or without consideration, encumbrance, hypothecation, pledge, or other transfer or disposition of any kind, including, but not limited to, transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of law, directly or indirectly.

 

$ ” means United States dollars.

 

Other Terms . All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in accordance with IFRS or such other generally acceptable accounting method as Obligor later adopts with notice to PFG, consistently applied. All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined therein.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

8. GENERAL PROVISIONS.

 

8.1 Confidentiality . PFG agrees to use the same degree of care that it exercises with respect to its own proprietary information, to maintain the confidentiality of any and all proprietary, trade secret or other information identified by a Responsible Officer as confidential provided to or received by PFG from Borrower or its Affiliates or representatives, including business plans and forecasts, non-public financial information, confidential or secret processes, formulae, devices and contractual information, customer lists, and employee relation matters, provided that PFG may disclose such information (i) to its officers, directors, employees, attorneys, accountants, affiliates, and advisory boards (provided they are informed of the confidential nature of the information and instructed to keep it confidential), (ii) subject to an agreement containing provisions substantially the same as this Section, to any participants, prospective participants, assignees and prospective assignees, (iii) to such other Persons to whom PFG shall at any time be required to make such disclosure in accordance with applicable Legal Requirement or legal process, provided that PFG shall use commercially reasonably efforts to notify such Persons the confidential nature of the information, and (iv) in its good faith business judgment in connection with the enforcement of its rights or remedies after an Event of Default, or in connection with any dispute with Borrower or any other Person relating to Borrower. The confidentiality agreement in this Section supersedes any prior confidentiality agreement of PFG relating to Obligor.

 

8.2 Interest Computation. In computing interest on the Obligations, all Payments received after 12:00 Noon, Pacific Time, on any day shall be deemed received on the next Business Day.

 

8.3 Payments . All Payments may be applied, and in PFG’s good faith business judgment reversed and re-applied, to the Obligations, in such order and manner as PFG shall determine in its good faith business judgment.

 

8.4 Monthly Accountings. PFG may provide Borrower monthly with an account of advances, charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed correct, accurate and binding on Obligor and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by PFG), unless Borrower notifies PFG in writing to the contrary within 60 days after such account is rendered, describing the nature of any alleged errors or omissions.

 

8.5 Notices. All notices to be given under this Agreement or any other Loan Documents shall be in writing and shall be given either personally, or by nationally recognized overnight air courier, or by regular first-class mail, certified mail return receipt requested, or by fax to the most recent fax number a party has for the other party (and if by fax, sent concurrently by one of the other methods provided herein), or by electronic mail, addressed to PFG 1751 Tiburon Blvd., Tiburon, CA 94920, (attention: “Notices”; notices@pfgrowth.com), with a copy to Greenspan Law Office, 620 Laguna Rd, Mill Valley, CA 94941, attention: Ben Greenspan, ben@greenspan-law.com; to Borrower or its Affiliates at Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, PRC (北京市朝阳区酒仙桥路10号恒通商务园B23楼A座) (attention: President), Email: akchan@borqs.com, with a copy to Jessica Yuan, Esq., Ellenoff Grossman & Schole LLP, 1345 Avenue of the Americas, New York, NY 10105, USA; phone: (212) 370-1300; fax: (212) 370-7889; email: jyuan@egsllp.com, or at any other address designated in writing by one party to the other party. All notices shall be deemed to have been given upon delivery in the case of notices personally delivered, or at the expiration of one Business Day if sent by a nationally recognized overnight air courier, or the date of actual delivery following the deposit thereof in the United States mail, with postage prepaid, or on the first business day of receipt during business hours in the case of notices sent by fax or electronic mail, as provided herein.

 

8.6 Authorization to Use Obligor Name, Etc. Obligor irrevocably authorizes PFG to: (i) use Obligor’s logo on PFG’s website and in its marketing materials to denote the lending relationship between PFG and Obligor; (ii) use a “tombstone” to highlight the transaction(s) from time to time between PFG and Obligor; and (iii) to issue press releases in a form reasonable acceptable to Borrower and PFG highlighting and summarizing the credit facilities extended by PFG to Obligor from time to time under this Agreement, as amended from time to time, all of the above (i) through (iii), for marketing purposes.

 

8.7 Severability. Should any provision of this Agreement be held by any court of competent jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this Agreement, which shall continue in full force and effect.

 

8.8 Integration. This Restatement, as restated and such other written agreements, documents and instruments as were executed in connection with the Agreement (prior to its amendment and restatement) or are executed in connection with this Restatement are the final, entire and complete agreement between Borrower and PFG and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Restatement, provided that Security Documents executed in connection with this Restatement shall be supplemental to and not supersede Security Documents executed in connection with this Restatement. The amendment and restatement of the Agreement as set forth herein shall not amend or be deemed to amend the other Loan Documents in effect prior to this Restatement (including agreements granting equity derivatives) except to the extent such other Loan Documents are separately amended or restated or except as otherwise expressly specified herein with respect to a particular Loan Document. There are no oral understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

8.9 Waivers; Indemnity. The failure of PFG at any time or times to require Obligor to strictly comply with any of the provisions of this Agreement or any other Loan Document shall not waive or diminish any right of PFG later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of PFG or its agents or employees, but only by a specific written waiver signed by an authorized officer of PFG and delivered to the relevant Obligor. Obligor waives the benefit of all statutes of limitations relating to any of the Obligations or this Agreement or any other Loan Document, and Obligor waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, General Intangible, document or guaranty at any time held by PFG on which Obligor is or may in any way be liable, and notice of any action taken by PFG, unless expressly required by this Agreement. Obligor hereby agrees to indemnify PFG and its affiliates, subsidiaries, parent, directors, officers, employees, agents, and attorneys, and to hold them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties and Lender Expenses of every kind, which they may sustain or incur based upon or arising out of any of the Obligations, or any relationship or agreement between PFG and Obligor, or any other matter, relating to Obligor or the Obligations; provided that this indemnity shall not extend to damages determined by a court of competent jurisdiction in a final judgment to have been proximately caused by the indemnitee’s own gross negligence or willful misconduct. Notwithstanding any provision in this Agreement to the contrary, the indemnity agreement set forth in this Section shall survive any termination of this Agreement and shall for all purposes continue in full force and effect.

 

8.10 No Liability for Ordinary Negligence. Obligor agrees that any and all claims it may have under this Agreement shall be limited to claims against PFG and not its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing PFG. Neither PFG, nor any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing PFG shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Obligor or any other party through the negligence of PFG, or any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing PFG, but nothing herein shall relieve PFG from liability for its own gross negligence or willful misconduct.

 

8.11 Amendment. The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by a Responsible Officer and a duly authorized officer of PFG. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver.

 

8.12 Time of Essence. Time is of the essence in the performance by Obligor of each and every obligation under this Agreement.

 

8.13 Lender Expenses. Obligor shall reimburse PFG for all Lender Expenses. All Lender Expenses to which PFG may be entitled pursuant to this Paragraph shall immediately become part of the Obligations, shall be due on demand, and if not paid within two (2) Business Days after demand, shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations.

 

8.14 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Obligor and PFG; provided, however, that no Obligor may assign or Transfer any of its rights under this Agreement without the prior written consent of PFG, and any prohibited assignment shall be void. No consent by PFG to any assignment shall release Obligor from its liability for the Obligations.

 

8.15 Joint and Several Liability. The liability of Obligor shall be joint and several, and the compromise of any claim with, or the release of, any Obligor shall not constitute a compromise with, or a release of, any other Obligor.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

8.16 Limitation of Actions. Any claim or cause of action by Obligor against PFG, its directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Loan Agreement, or any other Loan Document, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, incurred, done, omitted or suffered to be done by PFG, its directors, officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Obligor by the commencement of an action or proceeding in a court of competent jurisdiction by (a) the filing of a complaint within one year after the earlier to occur of (i) the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based, or (ii) the date this Agreement is terminated, and (b) the service of a summons and complaint on an officer of PFG, or on any other person authorized to accept service on behalf of PFG, within thirty (30) days thereafter. Obligor agrees that such one-year period is a reasonable and sufficient time for Obligor to investigate and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of PFG in its sole discretion. This provision shall survive any termination of this Loan Agreement or any other Loan Document.

 

8.17 Loan Monitoring. At reasonable times and upon reasonable advance notice to a Responsible Officer, PFG shall have the right to visit personally with Obligor up to two times per calendar year at its principal place of business or such other location as the parties may mutually agree, for the purpose of meeting with Obligor’s management in order to remain as up-to-date with Obligor’s business as is practicable and to maintain best practices in terms of lender loan monitoring and diligence. Lender Expenses incurred for travel, lodging and similar expenses for up to three PFG staff for such visits shall be at Obligor’s expense and reimbursed in the same manner as other PFG expenses under this Agreement .

 

8.18 Paragraph Headings; Construction; Counterparts. Paragraph headings are only used in this Agreement for convenience. Obligor and PFG acknowledge that the headings may not describe completely the subject matter of the applicable paragraph, and the headings shall not be used in any manner to construe, limit, define or interpret any term or provision of this Agreement. This Agreement has been fully reviewed and negotiated between the parties with the benefit of independent counsel and no uncertainty or ambiguity in any term or provision of this Agreement shall be construed strictly against PFG or Obligor under any rule of construction or otherwise. References to “Borrower” and “Guarantor” are construed to mean “each Borrower” and “each Guarantor”, unless otherwise expressly specified. References in definitions to such terms as defined under the laws of one jurisdiction (such as references to the “Code”) shall be deemed to include all local law corollaries and reasonable equivalents of such terms in each other relevant jurisdiction. Amounts set off in brackets or parentheses are negative. The word “shall” is mandatory, the word “may” is permissive, and the word “or” is not exclusive. The term “Agreement” includes the Schedules. Obligations of a similar nature addressed in different sections of this Agreement shall be deemed supplemental to one another and not exclusive unless expressly set forth as such. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. Each Schedule shall survive the repayment of Obligations under such Schedule to the extent necessary to give meaning to provisions in a Schedule that incorporate the provisions of another Schedule by reference.

 

8.19 Correction of Loan Documents. PFG may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties so long as PFG provides a Responsible Officer with written notice of such correction and allows such Responsible Officer at least ten (10) days to object to such correction. In the event of such objection, such correction shall not be made except by an amendment signed by both PFG and a Responsible Officer on behalf of Obligor.

 

8.20 Governing Law; Jurisdiction; Venue. This Agreement and all acts and transactions hereunder and all rights and obligations of PFG and Obligor hereunder shall be governed by the laws of the State of California, provided that the Security Documents relevant to any particular Group Member may be governed by the applicable law specified in such Security Documents. As a material part of the consideration to PFG to enter into this Agreement, Obligor (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at PFG’s sole option, be litigated in courts located within California and that the exclusive venue therefor shall, at PFG’s sole option, be Santa Clara County; (ii) consents to the jurisdiction and venue of any such court (or such other court and jurisdiction as PFG may elect to enforce the Loan Documents or exercise remedies against Collateral) and consents to service of process in any such action or proceeding by personal delivery or by internationally-recognized commercial courier or overnight delivery service to the last known address for BORQS HK; and (iii) waives any and all rights Obligor may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding. Notwithstanding anything to the contrary in the foregoing, (x) PFG may enforce the Obligations (including the obligations of each Guarantor), the Security Documents, the Security Instruments and the other Loan Documents in any jurisdiction in which Borrower, Guarantor, any Group Member or any of their respective Collateral resides or is deemed to reside, including the British Virgin Islands, Cayman Islands, India, the PRC and Hong Kong, and (y) execution and delivery of this Loan Agreement “as a deed” by non-U.S. Persons shall be construed under Hong Kong law.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

8.21 Withholding; Gross-up . Payments received by PFG from Obligor under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Body (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Body, applicable Legal Requirement, regulation or international agreement requires Obligor to make any withholding or deduction from any such payment or other sum payable hereunder to PFG, Obligor hereby covenants and agrees that the amount due from Obligor with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, PFG receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Obligor shall pay the full amount withheld or deducted to the relevant Governmental Body. Obligor will, upon request, furnish PFG with proof reasonably satisfactory to PFG indicating that Obligor has made such withholding payment; provided, however, that Obligor need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Obligor. The agreements and obligations of Obligor contained in this Section 8.21 shall survive the termination of this Agreement.

 

8.22 Multiple Obligors; Suretyship Waivers. If at any time there is more than one Obligor under this Agreement:

 

(a) Obligors’ Agent . Subject to Section 1.4, each Obligor hereby irrevocably appoints each other Obligor, as the agent, attorney-in-fact and legal representative of all Obligors for all purposes, including requesting disbursement of the Loan and receiving account statements and other notices and communications to Obligors (or any of them) from PFG. PFG may rely, and shall be fully protected in relying, on any request for a Loan, disbursement instruction, report, information or any other notice or communication made or given by any Obligor, whether in its own name, as Obligors’ agent, or on behalf of one or more Obligors, and PFG shall not have any obligation to make any inquiry or request any confirmation from or on behalf of any other Obligor as to the binding effect on it of any such request, instruction, report, information, other notice or communication, nor shall the joint and several character of Obligors’ obligations hereunder be affected thereby.

 

(b) Waivers . Each Obligor hereby waives: (i) any right to require PFG to institute suit against, or to exhaust its rights and remedies against, any other Obligor or any other Person, or to proceed against any property of any kind which secures all or any part of the Obligations, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts held by or maintained with PFG or any indebtedness of PFG to any other Obligor, or to exercise any other right or power, or pursue any other remedy PFG may have; (ii) any defense arising by reason of any disability or other defense of any other Obligor or any other endorser, co-maker or other Person, or by reason of the cessation from any cause whatsoever of any liability of any other Obligor or any other endorser, co-maker or other Person, with respect to all or any part of the Obligations, or by reason of any act or omission of PFG or others which directly or indirectly results in the discharge or release of any other Obligor or any other endorser, co-maker or other Person or any Obligations or any security therefor, whether by operation of law or otherwise; (iii) any defense arising by reason of any failure of PFG to obtain, perfect, maintain or keep in force any Lien on, any property of any Obligor or any other Person; (iv) any defense based upon or arising out of any Insolvency Proceeding, liquidation or dissolution proceeding commenced by or against or in respect of any Obligor or any other endorser, co-maker or other Person, including without limitation any discharge of, or bar against collecting, any of the Obligations (including without limitation any interest thereon), in or as a result of any such proceeding. Until all of the Obligations have been paid, performed, and discharged in full, nothing shall discharge or satisfy the liability of Obligor hereunder except the full performance and payment of all of the Obligations. If any claim is ever made upon PFG for repayment or recovery of any amount or amounts received by PFG in payment of or on account of any of the Obligations, because of any claim that any such payment constituted a preferential Transfer or fraudulent conveyance, or for any other reason whatsoever, and PFG repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over PFG or any of its property, or by reason of any settlement or compromise of any such claim effected by PFG with any such claimant (including without limitation the any other Obligor), then and in any such event, Obligor agrees that any such judgment, decree, order, settlement and compromise shall be binding upon Obligor, notwithstanding any revocation or release of this Agreement or the cancellation of any note or other instrument evidencing any of the Obligations, or any release of any of the Obligations, and Obligor shall be and remain liable to PFG under this Agreement for the amount so repaid or recovered, to the same extent as if such amount had never originally been received by PFG, and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Agreement. Each Obligor hereby expressly and unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against any other Obligor, and all rights of recourse to any assets or property of any other Obligor, and all rights to any collateral or security held for the payment and performance of any Obligations, including (but not limited to) any of the foregoing rights which Obligor may have under any present or future document or agreement with any other Obligor or other Person, and including (but not limited to) any of the foregoing rights which Obligor may have under any equitable doctrine of subrogation, implied contract, or unjust enrichment, or any other equitable or legal doctrine. Each Obligor further hereby waives any other rights and defenses that are or may become available to Obligor by reason of California Civil Code Sections 2787 to 2855 (inclusive), 2899, and 3433, as now in effect or hereafter amended, and under all other similar statutes and rules now or hereafter in effect.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

(c) Consents . Each Obligor hereby consents and agrees that, without notice to or by Obligor and without affecting or impairing in any way the obligations or liability of Obligor hereunder, PFG may, from time to time before or after revocation of this Agreement, do any one or more of the following in PFG’s sole and absolute discretion: (i) accept partial payments of, compromise or settle, renew, extend the time for the payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Obligations; (ii) grant any other indulgence to any Obligor or any other Person in respect of any or all of the Obligations or any other matter; (iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or extend the time for the performance, discharge, or payment of, any and all property of any kind securing any or all of the Obligations or any guaranty of any or all of the Obligations, or on which PFG at any time may have a Lien, or refuse to enforce its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (iv) substitute or add, or take any action or omit to take any action which results in the release of, any one or more other Obligors or any other endorsers or guarantors of all or any part of the Obligations, including, without limitation one or more parties to this Agreement, regardless of any destruction or impairment of any right of contribution or other right of Obligor; (v) apply any sums received from any other Obligor, any guarantor, endorser, or co-signer, or from the disposition of any Collateral or security, to any indebtedness whatsoever owing from such Person or secured by such Collateral or security, in such manner and order as PFG determines in its sole discretion, and regardless of whether such indebtedness is part of the Obligations, is secured, or is due and payable. Obligor consents and agrees that PFG shall be under no obligation to marshal any assets in favor of Obligor, or against or in payment of any or all of the Obligations. Obligor further consents and agrees that PFG shall have no duties or responsibilities whatsoever with respect to any property securing any or all of the Obligations. Without limiting the generality of the foregoing, PFG shall have no obligation to monitor, verify, audit, examine, or obtain or maintain any insurance with respect to, any property securing any or all of the Obligations.

 

(d) Independent Liability . Each Obligor hereby agrees that one or more successive or concurrent actions may be brought hereon against Obligor, in the same action in which any other Obligor may be sued or in separate actions, as often as deemed advisable by PFG. Each Obligor is fully aware of the financial condition of each other Obligor and is executing and delivering this Agreement based solely upon its own independent investigation of all matters pertinent hereto, and Obligor is not relying in any manner upon any representation or statement of PFG with respect thereto. Each Obligor represents and warrants that it is in a position to obtain, and each Obligor hereby assumes full responsibility for obtaining, any additional information concerning any other Obligor’s financial condition and any other matter pertinent hereto as Obligor may desire, and Obligor is not relying upon or expecting PFG to furnish to it any information now or hereafter in PFG’s possession concerning the same or any other matter.

 

(e) Subordination . All indebtedness of a Obligor now or hereafter arising held by another Obligor is subordinated to the Obligations and Obligor holding the indebtedness shall take all actions reasonably requested by PFG to effect, to enforce and to give notice of such subordination.

 

8.23 Electronic Execution of Documents. The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable Legal Requirement, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

 

8.24 Relationship . The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

 

8.25 Third Parties . Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

8.26 Mutual Waiver of Jury Trial. Obligor and PFG each hereby waive the right to trial by jury in any action or proceeding based upon, arising out of, or in any way relating to, this Agreement or any other present or future instrument or agreement between PFG and Obligor, or any conduct, acts or omissions of PFG or Obligor or any of their directors, officers, employees, agents, attorneys or any other persons affiliated with PFG or Obligor, in all of the foregoing cases, whether sounding in contract or tort or otherwise. WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY , if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, PFG desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then PFG may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to the Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of PFG at any time to exercise self-help remedies, foreclose against Collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

 

[Signature Page Follows]

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Executed and Delivered as a Deed by )   Lender:
BORQS Hong Kong Limited )    
Acting by:   Partners for Growth V, L.P.
     

/s/ Pat Sek Yuen Chan

  By:

/s/ Geoffrey Allan

Name: Pat Sek Yuen Chan   Name: Geoffrey Allan
Title: Sole Director   Title: Manager, Partners for Growth V, LLC,
          Its General Partner
     
Executed and Delivered as a Deed by )    
BORQS Technologies (HK) Limited )    
         
Acting by:    
         
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
     
Executed and Delivered  as a Deed by )    
BORQS International Holding Corp )    
         
Acting by:    
     
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
         
in the presence of:    
     
/s/ Anthony Chan    
Witness name: Anthony Chan    
Witness occupation: CFO    
         
Executed and delivered as a deed by )    
Borqs Technologies, Inc. )    
Acting by its duly authorised director )   /s/ Pat Sek Yuen Chan
    Name:   Pat Sek Yuen Chan

 

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Partners for Growth Amended and Restated Loan and Security Agreement

 

Partners For Growth

 

Schedule 1 to Loan and Security Agreement

 

Borrower: BORQS Hong Kong Limited ( 播思微系統香港有限公司 ) , a private company limited by shares incorporated under Hong Kong law, registered with the Companies Registry under number 1151010
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Borrower: BORQS Technologies (HK) Limited ( 播思微科技香港有限公司 ) , a private company limited by shares incorporated under Hong Kong law, registered with the Companies Registry under number 2688549
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Guarantor: BORQS Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410
Address: Kingston chambers, PO Box 173, Road Town, Tortola, British Virgin Islands

 

Guarantor: BORQS International Holding Corp , an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127
Address: PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

 

Effective Date: April 30, 2018
Modification Effective Date: December 17, 2018
Restatement Date: March 8, 2019

 

This Schedule 1 forms an integral part of the Amended and Restated Loan and Security Agreement between PARTNERS FOR GROWTH V, L.P. and the above-referenced Borrowers and Guarantors dated the Restatement Date.

 

 

 

1. LOAN (Section 1.1):

 

The Schedule 1 Loan :   The Schedule 1 Loan consists of a term loan in the maximum amount of $3,000,000, all of which was timely advanced to Borrower on the Effective Date .
     
Repayment :   Borrower shall pay interest only on Loan principal until May 1, 2019, on which date Borrower shall the first of twenty-four (24) equal monthly principal payments due on the first day of each calendar month, equal in amount to the principal amount of the Loan outstanding on the last day of each preceding calendar month, divided by the number of months then remaining to the Maturity Date, plus interest on the principal outstanding during such prior month , with such payments continuing on the same day of each month until the Maturity Date, on which date the entire unpaid principal balance of the Loan plus any and all accrued and unpaid interest and other monetary Obligations then owing shall be paid. Repaid principal may not be reborrowed.
     
Prepayment:   Borrower may prepay the Loan in whole or in part at any time without prepayment fee or penalty of any kind.

 

 

 

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Partners for Growth Schedule 1 to Loan and Security Agreement

 

2. Interest.

 

Interest Rate (Section 1.2):    
     
    The Loan shall bear interest at a per annum rate equal to 12.00%, fixed.
     
    Interest shall be calculated on the basis of a 360-day year and a year of twelve months of 30 days each for the actual number of days elapsed. Accrued interest for each month shall be payable monthly, on the first day of each month for interest accrued during the prior month.

 

 

 

3. Fees (Section 1.3):

 

Commitment Fee :   Timely paid upon PFG invoice following the Effective Date.
     
Back-End Fee :   $600,000, fully earned and due at Maturity.

 

 

 

4. SCHEDULE 1 LOAN Maturity Date

 

(Section 5.1):   April 30, 2021.

 

 

 

5. Financial Covenants

 

(Section 4.1):   The financial covenants and other terms set forth in Section 5 of Schedule 3 are incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

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Partners for Growth Schedule 1 to Loan and Security Agreement

 

6. Reporting.

 

(Section 4.4):    
     
    The Reporting requirements set forth in Section 6 of Schedule 3 are incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

7. Borrower Information :

 

    Section 7 of Schedule 3 is hereby incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

8. ADDITIONAL PROVISIONS

 

    Section 8 of Schedule 3 (save for use of proceeds) is hereby incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

[Signature Page Follows]

 

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Partners for Growth Schedule 1 to Loan and Security Agreement

 

Executed and Delivered as a Deed by )   Lender:
BORQS Hong Kong Limited )    
Acting by:   Partners for Growth V, L.P.
     

/s/ Pat Sek Yuen Chan

  By:

/s/ Geoffrey Allan

Name: Pat Sek Yuen Chan   Name: Geoffrey Allan
Title: Sole Director   Title: Manager, Partners for Growth V, LLC,
          Its General Partner
     
Executed and Delivered as a Deed by )    
BORQS Technologies (HK) Limited )    
         
Acting by:    
         
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
     
Executed and Delivered  as a Deed by )    
BORQS International Holding Corp )    
         
Acting by:    
     
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
         
in the presence of:    
     
/s/ Anthony Chan    
Witness name: Anthony Chan    
Witness occupation: CFO    
         
Executed and delivered as a deed by )    
Borqs Technologies, Inc. )    
Acting by its duly authorised director )   /s/ Pat Sek Yuen Chan
    Name:   Pat Sek Yuen Chan

 

Signature Page – Schedule 1 to Amended and Restated Loan and Security Agreement

 

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Partners For Growth

 

Schedule 2 to Loan and Security Agreement

 

Borrower: BORQS Hong Kong Limited ( 播思微系統香港有限公司 ) , a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 1151010
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Borrower: BORQS Technologies (HK) Limited ( 播思微科技香港有限公司 ) , a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 2688549
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Guarantor: BORQS Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410
Address: Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands

 

Guarantor: BORQS International Holding Corp , an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127
Address: PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

 

Effective Date: April 30, 2018
Modification Effective Date: December 17, 2018
Restatement Date: March 8, 2019

 

This Schedule 2 forms an integral part of the Amended and Restated Loan and Security Agreement between PARTNERS FOR GROWTH V, L.P. and the above-referenced Borrowers and Guarantors dated the date specified above as the “ Modification Effective Date ”.

 

 

 

1. LOAN (Section 1.1):

 

(a) The Schedule 2 Loan :   The Schedule 2 Loan consists of a convertible term loan in the principal amount of $1,000,000 as set forth in this Schedule 2 and as detailed and embodied in the Convertible Note dated the Modification Effective Date and advanced to Borrower on the Modification Effective Date.
     
(b) Repayment :   Subject to PFG’s right to convert the Convertible Note into the ordinary shares of Group Parent at any time the Convertible Note is outstanding and unpaid, Borrower shall pay interest only on Schedule 2 Loan principal until the Schedule 2 Loan Maturity Date set forth in Section 4 of this Schedule 2, on which date the entire unpaid principal balance of the Schedule 2 Loan plus any and all accrued and unpaid interest and other monetary Obligations then owing shall be paid. Prepaid Schedule 2 principal may not be reborrowed.

 

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Partners for Growth Schedule 2 to Loan and Security Agreement

 

(c) Conversion :   At any time while the Schedule 2 Loan is outstanding, upon notice only to Borrower on behalf of Group Parent, PFG may elect to convert the Schedule 2 Loan (in whole only, unless Borrower has prepaid the Schedule 2 Loan in part and, in such case and subject to the obligation of Group Parent to issue PFG a warrant as set forth in clause (d) of this Section 1, the remaining balance) into the ordinary shares of Group Parent, as set forth in the Convertible Note.
     
(d) Prepayment:   Borrower may prepay the Loan in whole or in part at any time without prepayment fee or penalty of any kind; provided, however, prepayment of the Convertible Note shall be subject to the concurrent issuance of a warrant to purchase Group Parent’s ordinary shares reflecting the conversion value (in ordinary shares) that equates to the principal prepaid. For example only, if the Convertible Note were convertible into 1,000 Group Parent ordinary shares and $500,000 in Schedule 2 Loan principal is prepaid, then such prepayment would be subject to the concurrent issuance of a warrant to acquire 500 Group Parent ordinary shares.

 

 

 

2. Interest.

 

Interest Rate (Section 1.2):    
     
    The Loan shall bear interest at a per annum rate equal to 12.00%, fixed.
     
    Interest shall be calculated on the basis of a 360-day year and a year of twelve months of 30 days each but paid for the actual number of days elapsed during each month or other accrual period. Accrued interest for each month shall be payable monthly, on the first day of each month for interest accrued during the prior month.

 

 

 

3. Fees (Section 1.3):

 

Commitment Fee :   $15,000, of which PFG acknowledges timely receipt promptly following the Modification Effective Date.

 

 

 

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Partners for Growth Schedule 2 to Loan and Security Agreement

 

4. SCHEDULE 2 LOAN Maturity Date

 

(Section 5.1):   December 17, 2023.

 

 

 

5. Financial Covenants

 

(Section 4.1):   The financial covenants and other terms set forth in Section 5 of Schedule 3 are incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

6. Reporting.

 

(Section 4.4):    
     
    The Reporting requirements set forth in Section 6 of Schedule 3 are incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

7. Borrower Information :

 

    Section 7 of Schedule 3 is hereby incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

 

 

8. ADDITIONAL PROVISIONS

 

    Section 8 of Schedule 3 (save for use of proceeds) is hereby incorporated by reference into this Schedule 1, whether or not the Schedule 3 Loan is outstanding at any relevant time of interpretation.

 

[Signature Page Follows]

 

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Partners for Growth Schedule 2 to Loan and Security Agreement

 

Executed and Delivered as a Deed by )   Lender:
BORQS Hong Kong Limited )    
Acting by:   Partners for Growth V, L.P.
     

/s/ Pat Sek Yuen Chan

  By:

/s/ Geoffrey Allan

Name: Pat Sek Yuen Chan   Name: Geoffrey Allan
Title: Sole Director   Title: Manager, Partners for Growth V, LLC,
          Its General Partner
     
Executed and Delivered as a Deed by )    
BORQS Technologies (HK) Limited )    
         
Acting by:    
         
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
     
Executed and Delivered  as a Deed by )    
BORQS International Holding Corp )    
         
Acting by:    
     
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
         
in the presence of:    
     
/s/ Anthony Chan    
Witness name: Anthony Chan    
Witness occupation: CFO    
         
Executed and delivered as a deed by )    
Borqs Technologies, Inc. )    
Acting by its duly authorised director )   /s/ Pat Sek Yuen Chan
    Name:   Pat Sek Yuen Chan

 

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Partners For Growth

 

Schedule 3 to Loan and Security Agreement

 

Borrower: BORQS Hong Kong Limited ( 播思微系統香港有限公司 ) , a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 1151010
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Borrower: BORQS Technologies (HK) Limited ( 播思微科技香港有限公司 ) , a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 2688549
Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Guarantor: BORQS Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410
Address: Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands

 

Guarantor: BORQS International Holding Corp , an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127
Address: PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

 

Effective Date: April 30, 2018
Modification Effective Date: December 17, 2018
Restatement Date: March 8, 2019

 

This Schedule 3 forms an integral part of the Amended and Restated Loan and Security Agreement between PARTNERS FOR GROWTH V, L.P. and the above-referenced Borrowers and Guarantors dated the date specified above as the “ Restatement Date ”.

 

 

 

1. LOAN (Section 1.1):

 

(a) The Schedule 3 Loan    
  (RLOC) Credit Limit :   An amount not to exceed the lesser of (i) the aggregate of Tranche 1 and Tranche 2 at any one time outstanding (as applicable, in accordance with the terms of clause (ii), below) (the “ Dollar Credit Limit ”), and (ii) up to 80% (the “ Advance Rate ”) of the amount of Borrower’s Eligible Accounts (as defined in Section 8 above) (such lesser of (i) and (ii), the “ Credit Limit ”), which may be drawn by Borrower in minimum increments of $500,000.

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

(b) Tranched Credit :   Within the later to occur of (i) two (2) Business Days following the Restatement Date and (ii) satisfaction of the conditions set forth in Section 9 of this Schedule 3 (or the waiver or deferral thereof by PFG in its sole discretion), PFG shall make $9,500,000 (“ Tranche 1 ”) available to be drawn by Borrower pursuant to Qualifying Requests. So long as no Default or Event of Default has occurred and is then continuing, PFG shall make an additional $3,000,000 (“ Tranche 2 ”) available to be drawn by Borrower within five (5) Business Days of Borrower or Group Parent demonstrating to PFG’s reasonable satisfaction that as measured from the Restatement Date, it has received not less than $10,000,000 in cash proceeds from the sale of its equity securities to investors.
     
(c) Advance Rate :   PFG may, from time to time, modify the Advance Rate, in its good faith business judgment, upon notice to Borrower, based on changes in collection experience with respect to Accounts, the Group’s financial condition from time to time and the value, PFG’s perfection in and the priority of PFG Liens in Collateral.
     
(d) Repayment :   On the first day of each calendar month Borrower shall pay interest only on principal outstanding on the RLOC during the prior month, until the Schedule 3 Loan Maturity Date set forth in Section 4 of this Schedule 3, on which date the entire unpaid principal balance of the Schedule 3 Loan plus any and all accrued and unpaid interest and other monetary Obligations then owing shall be paid. Except for mandatory repayment of principal Obligations resulting from an Overadvance (as set forth in clause (c), below), Borrower may repay and reborrow principal under the RLOC.
     
(e) Overadvances :   If at any time and for any reason the total of all RLOC principal outstanding exceeds the Credit Limit (an “ Overadvance ”), Borrower shall immediately and in no event later than one Business Day from the occurrence of such Overadvance pay the amount of such excess to PFG, without notice or demand from PFG. Without limiting Borrower’s obligation to repay to PFG the amount of any Overadvance, Borrower agrees to pay PFG interest on the outstanding amount of any Overadvance at the Default Rate.
     
(f) Prepayment and    
 Termination :   Borrower may terminate this Agreement (save for Obligations intended to survive termination hereof and, as applicable, Group Parent’s obligation to issue a warrant to PFG under the terms of Schedule 2, Section 1(d) - Prepayment) by repaying all Obligations under this Agreement in full. Any such termination by repayment shall be without prepayment or termination fee or penalty of any kind.

 

 

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

2. Interest.

 

Interest Rate (Section 1.2):    
     
    The Loan shall bear interest at a per annum rate equal to 11.00%, fixed.
     
    Interest shall be calculated on the basis of a 360-day year and a year of twelve months of 30 days each but calculated daily and paid for the actual number of days elapsed during each month or other accrual period. Accrued interest for each month shall be payable monthly, on the first day of each month for interest accrued during the prior month.

 

 

 

3. Fees (Section 1.3):

 

Commitment Fees :   Tranche 1 . $142,500, payable promptly upon PFG invoice following the Restatement Date in respect of Tranche 1 Availability.
     
    Tranche 2 .  $45,000, payable promptly upon PFG invoice following PFG making Tranche 2 available to be drawn, provided if the amount made available under Tranche 2 is more or less than the Tranche 2 Credit Availability amount, the fee shall be one and one half percent (1.5%) of the Tranche 2 amount made available by PFG.
     
Back-End Fee :   As from the Restatement Date, a fee equal to twenty percent (20%) of the Dollar Credit Limit of Tranche 1 and Tranche 2 (if Tranche 2 becomes available to Borrower under the terms of Section 1(b) of this Schedule 3) (such percentages of Dollar Credit Limit, collectively, the “Back-End Fee”), shall accrue on a monthly basis for each calendar month or part thereof that Tranche 1 and/or Tranche 2 have been made initially available for borrowing, up to a maximum of $1,900,000 (the “Tranche 1 Back-End Fee Cap”) and $600,000 (with respect to Tranche 2 (the “Tranche 2 Back-End Fee Cap”). The Back-End Fees shall be paid at Maturity. For example, $111,764.11 of Back-End Fee in respect of Tranche 1 would accrue in on the Restatement Date and on the first day of each of the sixteen (16) following calendar months until the Tranche 1 Back-End Fee Cap has been accrued in respect of Tranche 1. Likewise, on the date that PFG has made Dollar Credit in respect of Tranche 2 available, a Back-End fee of $35,294.18 shall accrue in respect of Tranche 2 and on the first day of each of the following sixteen (16) calendar months, an additional $35,294.18 shall accrue until the Tranche 2 Back-End Fee Cap has accrued.

 

 

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

4. SCHEDULE 3 LOAN Maturity Date

 

(Section 5.1):   March 8, 2021.

 

 

 

5. Financial Covenants

 

(Section 4.1):   The Group shall meet or exceed (i) Revenues of $32,500,000 on a calendar quarterly basis and (ii) three (3) month trailing EBITDA, tested monthly, of $2,000,000, with compliance determined as of the last day each calendar quarter (Revenues) and each calendar month (EBITDA).
     
Definitions :   For purposes of the foregoing financial covenants, the following term shall have the following meaning:
     
    EBITDA ” means (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income tax expense.
     
    Revenue(s) ” means revenues required to be classified as such under U.S. GAAP.
     
Future Periods :   For future periods not covered by the above requirements, the thresholds shall be set by PFG in consultation with Borrower based on its then-current Plan, but in no event (for each measurement period) less than the immediately prior measurement period. For instance, the minimum EBITDA threshold for January 2019 would be as set, but in no event less than $32,500,000, and for March 2019 (for Revenues) would be as set but in no event less than $2,000,000.

 

 

 

6. Reporting.

 

(Section 4.4):

 

  Borrower shall provide PFG with the following:
     
  (a) Monthly accounts payable, accounts receivable and deferred Revenue schedules, aged by invoice date, and outstanding or held check registers, if any, within 20 days after the end of each month.
     
  (b) Monthly unaudited consolidated and consolidating Financial Statements, as soon as available, and in any event within 20 days after the end of each month.

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

  (c) Monthly Compliance Certificates within 20 days after the end of each month and at each request for an advance, signed by the Chief Financial Officer of Borrower, certifying that as of the end of such month or as at such date of request for an advance Borrower was in full compliance with all of the terms and conditions of this Agreement and setting forth calculations showing compliance with the financial covenants set forth in this Schedule 3 and such other information as PFG shall reasonably request.
     
  (d) Updates to the Representations, as and when required to render the information therein true, correct, accurate and complete as of the date of such date: (i) in all respects as to matters addressed in Part A of the Representations (except for the Collateral values set forth in Part A, Section 3(g), which must be true and correct in all material respects) and Part B, Section 11, and (ii) in all material respects with respect to all other sections of the Representations.
     
  (e) Annual Borrower (Group) Board-approved Budgets and Forecasts, as soon as available and in any event within thirty (30) days of approval by Borrower’s Board.  
     
  (f) Annual consolidated and consolidating Financial Statements, as soon as available, and in any event within 120 days following the end of Borrower’s fiscal year, certified by, and with an opinion containing no material qualifications of, independent certified public accountants acceptable to PFG. If Borrower is required to file and is current in its filings with a securities regulatory agency and the same information is generally available to the public within said period through such agency (such as, through EDGAR with respect to US public companies), this requirement will be deemed satisfied.
     
  (g) Notification of any changes in the executive management (including directors) of any Group Members, promptly upon such change(s).
     
  (h) A Borrowing Base Certificate reflecting the terms of this Agreement, in such form as PFG and Borrower may agree, as initially set forth in Exhibit C , to be delivered monthly within two (2) Business Days of the end of each calendar month and with each Qualifying Request for an advance.

 

 

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

7. Borrower Information :

 

    Borrower represents and warrants that the information set forth in the Representations and Warranties of Borrower dated March 8, 2019, previously submitted to PFG (the “ Representations ”) is true and correct as of the Restatement Date.

 

 

 

8. ADDITIONAL PROVISIONS

 

  (a) Collateral Accounts.   To the fullest extent available in the jurisdictions in which Borrower holds its Collateral Accounts, concurrently, Borrower shall cause the banks and other institutions where its Collateral Accounts are maintained to enter into Control Agreements with PFG, in form and substance legally sufficient and otherwise satisfactory to PFG in its good faith business judgment and sufficient to perfect PFG’s security interest in said Collateral Accounts, provided that no Control Agreement shall be required in respect of any Collateral Account that does not at any time have a value in excess of $25,000. Any Control Agreements required to be in effect under this Agreement shall, subject to applicable Legal Requirement, permit PFG upon a Default to exercise exclusive control over said Collateral Accounts and proceeds thereof. As a continuing obligation, all primary operating accounts and excess Cash of Borrower shall be maintained with Silicon Valley Bank and HSBC.
     
  (b) Subordination of Inside Debt .  All present and future indebtedness of Borrower to its officers, directors and shareholders (“Inside Debt”) shall, at all times, be subordinated to the Lien of PFG in respect of and prior payment of Obligations.  Borrower represents and warrants that there is no Inside Debt presently outstanding, except as set forth in Exhibit A .  Prior to incurring any Inside Debt in the future, Borrower shall cause the person to whom such Inside Debt will be owed to execute and deliver to PFG a subordination agreement on PFG’s standard form.
     

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

  (c) Adjustment for Extraordinary Events . In the event that Borrower engages in a corporate transaction or other restructure that would bear in any non-trivial way on any of the financial covenant thresholds set forth in Section 5 of this Schedule 3, such as an acquisition that accretes to EBITDA or Revenue or a change in fiscal year or other periods, then PFG shall be entitled to reset the financial covenant thresholds to reasonably adjust for the effect of such corporate or other restructure transactions.
     
  (d) Use of Proceeds . The proceeds of the Schedule 3 Loan shall be used (i) in the first instance, to refinance all obligations owing to SPD Silicon Valley Bank Co., Ltd. and Borrower expressly authorizes PFG to directly pay the relevant pay-off amount on behalf of Borrower as if Borrower had requested and drawn such amount under the RLOC, and (ii) for general working capital purposes.
     
  (e) Special RLOC Representations and Warranties . Obligor hereby represents and warrants to and covenants with PFG as follows:
     
    (i) Representations and Warranties Relating to Accounts . Each Account with respect to which RLOC advances are requested shall, on the date each advance is requested and made: (A) represent an undisputed bona fide existing unconditional obligation of the Account Debtor created by the sale, delivery, and acceptance of goods or the rendition of services, or the non-exclusive licensing of Intellectual Property, in the ordinary course of the Group’s business, and (B) meet the Minimum Eligibility Requirements as defined in Section 8 of the Agreement.
     
    (ii) Representations Relating to Documents and Legal Compliance . All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Accounts are and shall be true and correct in all material respects and all such invoices, instruments and other documents and all of the Group’s books and records are and shall be genuine and in all respects what they purport to be.  All sales and other transactions underlying or giving rise to each Account shall comply in all material respects with all Legal Requirements. To Obligor’s Knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Accounts are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accordance with their terms.

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

    (iii) Documents Relating to Accounts . If requested by PFG, Borrower shall furnish PFG with copies (or, at PFG’s request, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Accounts, and Borrower warrants the genuineness of all of the foregoing.  Borrower shall also furnish to PFG an aged accounts receivable trial balance as provided in the Schedule. In addition, Borrower shall deliver to PFG, on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Accounts, in the same form as received, with all necessary endorsements, and copies of all credit memos.
     
    (iv) Collection of Accounts . Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. PFG may, in its good faith business judgment, require that all proceeds of Collateral be deposited by Borrower into a lockbox account, or such other “blocked account” as PFG may specify, pursuant to a blocked account agreement in such form as PFG may specify in its good faith business judgment.

 

 

 

9. CONDITIONS

 

    In addition to any other conditions to the Schedule 3 Loan set out in this Agreement (the conditions to the Schedule 1 Loan and Schedule 2 Loan, save for the joinder of BORQS Tech as a Borrower and Group Parent as a Guarantor of Obligations, being acknowledged by PFG to have been satisfied or waived on or after the Effective Date), PFG will not make any Schedule 3 Loan until PFG shall have received from Borrower, in form and substance reasonably satisfactory to PFG, such documents, and completion of such other matters, as PFG may reasonably deem necessary or appropriate, including that there shall be no discovery of any facts or circumstances which would, as determined by PFG in its good faith business judgment, materially negatively affect or be reasonably expected to materially negatively affect the collectability of the Obligations, PFG’s security interest in Borrower’s Collateral or the value thereof. Notwithstanding the foregoing, Borrower agrees to deliver to PFG each item required to be delivered to PFG under this Agreement as a condition precedent to the Schedule 3 Loan. Borrower expressly agrees that the making of the Schedule 3 Loan made prior to the receipt by PFG of any such item shall not constitute a waiver by PFG of Borrower’s obligation to deliver such item unless so waived in a separate writing, and the making of the Schedule 3 Loan in the absence of a required item shall be in PFG’s sole discretion. Without limiting the foregoing, as conditions precedent to the Loan, Borrower shall provide:

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

    (i) duly executed original signatures of each Obligor to the Restatement and each Schedule, including this Schedule 3;
     
    (ii) a Certificate for each Obligor signed by a Responsible Officer (on behalf of each Obligor) appending the written resolutions or minutes of a meeting of their respective Boards and, as required, their respective shareholder(s), authorizing the execution, delivery and performance of this Restatement and the other Loan Documents executed and delivered in connection herewith; a Certificate of Good Standing issued by the respective Governmental Body of each Obligor; and a Certificate of Incumbency (or similar) issued by registered agent of each Obligor identifying its officers and directors together with certified copies of its Register of Directors and Register of Members; and the Constitutional Documents of each Obligor, certified by their respective Responsible Officers;
     
    (iii) each Obligor shall have executed and delivered that certain Reaffirmation of Intellectual Property Security Agreement and Joinder, in agreed form;
     
    (iv) Any Control Agreements as required by Section 8(b) of this Schedule 3, duly executed by Borrower and each relevant depositary institution in favor of PFG;
     
    (v) to the extent reasonably practicable, certified copies, dated as of a recent date, of Security Instrument searches, as PFG shall request, accompanied by written evidence that the Liens indicated in any such Security Instruments either constitute Permitted Liens or have been or, in connection with the Schedule 3 Loan, will be terminated or released;
     
    (vi) the Representations as updated to the Restatement Date, duly executed by each Borrower and Guarantor;
     
    (vii) the insurance policies and/or endorsements required pursuant to Section 4.3;
     
    (viii) payment of the Commitment Fees payable under Section 3 of this Schedule 3 and Lender Expenses incurred in connection with the Schedule 3 Loan;
     
    (ix) any third party consents required in order for Borrower to enter into and perform this Restatement;

 

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Partners for Growth Schedule 3 to Loan and Security Agreement

 

    (x) any Liens of record in respect of any Obligor, including the charge of HSBC in respect of BORQS HK, shall have been terminated or HSBC shall have entered into a deed of priority or other undertaking in form and substance acceptable to PFG;
     
    (xi) subordination agreements in favor of PFG from holders of Indebtedness, as applicable;
     
    (xii) execution and delivery of all required BVI Security Documents in connection with this Restatement and, as conditions subsequent, particulars of the BVI Security Documents (A) entered in a register of charges copies of which should be sent to the British Virgin Islands Registered Agent of Group Parent and (B) filed at the British Virgin Islands Registry of Corporate Affairs within ten (10) Business Days of the date of the BVI Security Documents; and (C) PFG’s receipt within ten (10) Business Days from the Restatement Date of a Certificate of Registration of the BVI Security Documents from the BVI Registry of Corporate Affairs;
     
    (xiii) execution and delivery of the Cayman Security Documents in connection with this Restatement;
     
    (xiv) execution and delivery of the Hong Kong Security Documents in connection with this Restatement;
     
    (xv) execution and delivery of the PRC Security Documents in connection with this Restatement, and within a further ten (10) Business Days, completion of all filings, registrations and similar actions to ensure compliance with the Legal Requirements of all applicable Governmental Bodies in connection with the PRC Security Documents;
     
    (xvi) within ten (10) Business days, execution and delivery of the India Security Documents in connection with this Restatement, including the Share Pledge Agreement, and within a further ten (10) Business Days, completion of all filings, registrations and similar actions to ensure compliance with the Legal Requirements of all applicable Governmental Bodies in connection with the India Security Documents;
     
    (xvii) execution, delivery of all other Security Instruments contemplated under the BVI Security Documents, Cayman Security Documents or Hong Kong Security Documents, and within ten (10) Business Days, completion of all filings, registrations and similar actions to ensure compliance with the Legal Requirements of all applicable Governmental Bodies in connection with the BVI, Cayman and Hong Kong Security Documents, respectively;

 

- 18 -

 

 

Partners for Growth Schedule 3 to Loan and Security Agreement

 

    (xviii) a payoff letter from SPD Silicon Valley Bank Co., Ltd., together with a letter of instruction from BORQS HK for PFG to directly fund the RLOC (in whole or in part) by paying the payoff amount to SPD Silicon Valley Bank Co., Ltd. on behalf of Obligor; and
     
    (xix) to the extent that the conditions to this Agreement have not been completed as of the Restatement Date, a post-closing obligations letter in PFG’s customary form by which PFG waives or defers performance of such conditions as PFG is willing to defer in its sole business discretion.

 

 

 

10. CONDITIONS to SCHEDULE 3 Advances AFTER RESTATEMENT DATE

 

    In addition to any other conditions to advances set out in this Agreement, PFG will not be required to consider any request for an advance under this Schedule 3 until PFG shall have received from Borrower, in form and substance satisfactory to PFG, the following:
     
    (i) delivery of a duly executed Qualifying Request, together with all supporting materials and such other information as PFG may then request;
     
    (ii) a Compliance Certificate executed and delivered in accordance with this Agreement;
     
    (iii) in the case of a requested advance under Tranche 2, evidence that the conditions to Tranche 2 Availability have been satisfied;
     
    (iv) a Borrowing Base Certificate executed and delivered in accordance with this Agreement;
     
    (v) certification of Borrower that no Default or Event of Default has occurred and is continuing (to the extent such certification is not then a part of the Compliance Certificate or Borrowing Base Certificate); and
     
    (vi) Borrower shall have satisfied any conditions set forth in Section 9 of this Schedule 3 that may have been deferred as post-closing conditions.

 

[Signature Page Follows]

 

- 19 -

 

 

Partners for Growth Schedule 3 to Loan and Security Agreement

 

Executed and Delivered as a Deed by )   Lender:
BORQS Hong Kong Limited )    
Acting by:   Partners for Growth V, L.P.
     

/s/ Pat Sek Yuen Chan

  By:

/s/ Geoffrey Allan

Name: Pat Sek Yuen Chan   Name: Geoffrey Allan
Title: Sole Director   Title: Manager, Partners for Growth V, LLC,
          Its General Partner
     
Executed and Delivered as a Deed by )    
BORQS Technologies (HK) Limited )    
         
Acting by:    
         
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
     
Executed and Delivered  as a Deed by )    
BORQS International Holding Corp )    
         
Acting by:    
     
/s/ Pat Sek Yuen Chan    
Name: Pat Sek Yuen Chan    
Title: Sole Director    
         
in the presence of:    
     
/s/ Anthony Chan    
Witness name: Anthony Chan    
Witness occupation: CFO    
         
Executed and delivered as a deed by )    
Borqs Technologies, Inc. )    
Acting by its duly authorised director )   /s/ Pat Sek Yuen Chan
    Name:   Pat Sek Yuen Chan

  

- 20 -

 

 

Partners for Growth

 

 

Exhibit A to Loan and Security Agreement

 

Section 3.4(d) – Fixtures, Etc. – None.

 

Section 7—“Permitted Indebtedness”—Other Existing Permitted Indebtedness: - None

 

Section 7—“Permitted Investments”—Other Existing Permitted Investments: – None.

 

Section 7— “Permitted Liens” —Other Existing Permitted Liens: – None.

 

Schedule Section 8 - “Inside Debt”: – None.

 

- 21 -

 

 

Exhibit B to Loan and Security Agreement – Compliance Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C to Loan and Security Agreement – Borrowing Base Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

Exhibit 10.2

 

Date: March 8, 2019

 

  

 

BORQS Hong Kong Limited

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEBENTURE

 

(constituting a fixed and floating charge over all the assets of

BORQS Hong Kong Limited )

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS HONG KONG LIMITED , a private company limited by shares duly incorporated and validly existing under the laws of Hong Kong with registration number 1151010 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Bank Accounts ” means all present and future bank accounts held in the name of the Chargor from time to time, including but not limited to the bank accounts listed in Schedule 1 hereto;

 

Charged Assets ” means all assets listed in Clause 2.2;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

Hong Kong ” means the Hong Kong Special Administrative Region of the People's Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Chargor and BORQS Technologies (HK) Limited as borrowers and BORQS Technologies, Inc. and BORQS International Holding Corp as guarantors;

 

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Party ” means a party to this Deed;

 

Receivables ” means all present and future book and other debts, receivables, monies, revenues, royalties, claims and choses in action due or owing to or purchased or otherwise acquired by the Chargor (including all credit balances and deposits of the Chargor with the Lender or any other bank or financial institution and any monies credited to any suspense account by the Lender, together with the debts represented by them, and any surplus arising on a realisation of any Encumbrance whether in favour of the Lender or any other person), the proceeds of the same, all legal, beneficial or equitable interests and rights in trust (including any beneficial interest, claim or entitlement in or to the assets of any occupational retirement scheme belonging to or held by the Chargor, the benefit of all discretionary payments and the proceeds of any claim or receivable of the Chargor not itself capable of being charged and the full benefit of all guarantees, indemnities, Encumbrances, rights of set-off, security reservations of proprietary rights, rights of tracing and all other rights and remedies in respect of the same or otherwise);

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means the assets listed in Clause 2.3(a)(ii), including but not limited to the shares listed in Schedule 1 hereto.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assignees and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

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(c) this Deed , the Loan Agreement , the other Loan Documents or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 19.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Assignment

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor as beneficial owner agrees to assign and hereby assigns absolutely (subject to a proviso for reassignment on redemption) to the Lender the Receivables.

 

2.3. Charge

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor as beneficial owner agrees to charge and hereby charges to the Lender:

 

(a) by way of first fixed charge:

 

(i) to the extent that any of the Receivables are not effectively assigned under Clause 2.2 (Assignment) or such rights have been effectively assigned but such assignment has not been perfected by the service of the appropriate notice, those Receivables;

 

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(ii) all present and future shares, namely all right, title and interest held by the Chargor in and to all stocks, shares, debentures, bonds or other securities or investments and all other interests of the Chargor in any person and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iii) all present and future uncalled capital, goodwill and all patents, patent applications, inventions, trademarks and service marks and applications therefor, trade names, registered designs, copyrights, know-how and other intellectual property rights held by the Chargor and all licences and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iv) all present and future real property and all rights and interests in or affecting land (or the proceeds of sale of land or the documents of title to land) of the Chargor and all buildings, structures, fixtures (including trade fixtures), owned by the Chargor, including the full benefit of all Encumbrances, options, agreements, rights and interests of the Chargor over or affecting land of the Chargor and all fixed plant, other plant, machinery, fittings and equipment and all other chattels now or at any time after the date of this Deed belonging to the Chargor and its interest in any plant, machinery, equipment or chattels in its possession, including the benefit of all contracts and warranties relating to the same (excluding any of the same for the time being forming part of its stock in trade or work in progress);

 

(v) all present and future rights under any sale or purchase agreements and distributorship or any similar agreements entered into by it, any letters of credit issued in its favour and all bills of exchange and other negotiable instruments held by it;

 

(vi) all present and future benefits of all licences, quota, consents and authorities (statutory or otherwise) held in connection with its business or the use of any asset charged by any other sub-paragraph in this Clause 2.3 and the right to recover and receive all proceeds and/or compensation which may be payable to it in respect of them; and

 

(vii) all present and future benefits in respect of all contracts and policies of insurance of whatever nature which are from time to time taken out by or on behalf of the Chargor or (to the extent of such interest) in which the Chargor has an interest and all claims and returns of premiums in respect of them; and

 

(b) by way of first floating charge, the undertaking and all present and future property, assets and rights of the Chargor, whatsoever and wheresoever not otherwise effectively charged by way of first fixed charge by Clause 2.3(a),

 

in each case, provided that if any asset cannot be secured without consent of a third party and such consent is not obtained, this Agreement will constitute security over all proceeds and other amounts receivable from such asset.

 

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2.4. Crystallisation

 

The Lender may, by notice in writing to the Chargor, convert the floating charge referred to in Clause 2.3(b) into a specific fixed charge as regards all or part of the Charged Assets, if an Event of Default has occurred and is continuing, or the Lender considers those assets to be in danger of being seized or sold under any distress, execution or sequestration or to be otherwise in jeopardy.

 

The floating charge referred to in Clause 2.3(b) shall (in addition to the circumstances in which the same shall occur under general law) automatically be converted into a specific fixed charge:

 

(a) if the Chargor takes steps to create any subsequent Encumbrance (other than Permitted Liens) on any of the Charged Assets without the prior approval of the Lender;

 

(b) on the convening of any meeting of the members of the Chargor to consider a resolution to wind up the Chargor (or not to wind up the Chargor);

 

(c) immediately prior to the presentation of a petition (other than a frivolous or vexatious petition) to wind up the Chargor; or

 

(d) if any person levies or attempts to levy distress, execution or sequestration against any of the Charged Assets.

 

2.5. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following (in each case, in form and substance satisfactory to the Lender):

 

(a) any documents necessary or conducive to enable the Lender to register such Charged Assets in its name or in the name of its nominee(s); and

 

(b) all documents necessary and satisfactory to the Lender in order to effect a valid transfer of any Charged Assets following an Event of Default.

 

2.6. Registration

 

The Chargor shall at its own cost:

 

(a) immediately after the execution of this Deed:

 

(i) register the Security with the Hong Kong Companies Registry in accordance with Section 335 of the Companies Ordinance (Cap. 622 of the Laws of Hong Kong);

 

(ii) notify each company in which the Chargor holds Shares of the Security;

 

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(b) promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure that there shall be delivered to the Lender:

 

(i) evidence of the registration of the Security with the Hong Kong Companies Registry;

 

(ii) a copy of the acknowledgement of the Security by each company in which the Chargor holds Shares; and

 

(iii) a copy of a written notice of charge to each bank where Bank Accounts are held substantially in the form as set out in Schedule 2 hereto; and

 

(c) use its best efforts to obtain written acknowledgement of the notice(s) sent in accordance with Clause 2.6(b)(iii) by each relevant bank as soon as practical after the date of execution of this Deed.

 

2.7. Existing Security

 

The Security is in addition to and does not terminate or replace any prior Encumbrances created by the Chargor in favour of the Lender in respect of all or part of the Secured Obligations or any other obligations towards the Lender and all such prior Encumbrances are hereby expressly confirmed and reaffirmed.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

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4. Covenants

 

4.1. General Covenants

 

The Chargor covenants that it shall observe and perform each of the following covenants and undertakings in relation to its business, property and assets or (as the case may be) the Charged Assets:

 

(a) conduct and carry on its business in a proper and efficient manner and not make any substantial alteration in the nature or mode of conduct of its business;

 

(b) keep or cause to be kept proper books of accounts relating to its business and from time to time within a reasonable time after being requested by the Lender, furnish the Lender with such information about the assets, business and financial condition of the Chargor as the Lender may require;

 

(c) use commercially reasonable endeavours to duly and punctually pay and discharge all debts, obligations and liabilities, and all rents, rates, taxes, outgoings and impositions payable in respect of any premises now or from time to time after the date of this Deed owned, tenanted, occupied or used by the Chargor and, when required, produce to the Lender receipts or other evidence satisfactory to the Lender that such payments have been made, or (as the case may be) such obligations and liabilities have been discharged;

 

(d) (i) use commercially reasonable endeavours to take all steps to maintain, preserve and protect its revenues and assets (tangible and intangible) and maintain and (where applicable) take out insurances in respect of its business, undertaking, property and assets and against such risks and contingencies as is prudent (given the industry practice in relation to the business, undertaking, property or asset concerned) with the interest of the Lender noted on the policies and with the policies containing such provisions for the benefit of the Lender as the Lender may require; (ii) on demand produce to the Lender the policies of such insurances and proof of payment of all premiums and other monies necessary for effecting and keeping such insurances; and (iii) immediately upon receipt pay to the Lender and pending such payment hold on trust for the Lender all monies received by the Chargor by virtue of any insurances maintained or effected by it (whether or not effected pursuant to the above) for application in making good the loss or damage in respect of which such monies are received or, at the option of the Lender, for payment to such account(s) as the Lender may specify;

 

(e) if so required by the Lender, give notice (in such form as the Lender may require) to any person requiring payment into such account(s) as the Lender may specify of all monies due or to become due to the Chargor from that person;

 

(f) deposit with the Lender all certificates and documents of title, duly executed transfers and any other documents relating to the Charged Assets as the Lender may from time to time require;

 

(g) use its commercially reasonable endeavours to observe and perform all covenants and stipulations (under any agreement, law, regulation or otherwise) from time to time affecting any of the Charged Assets, take such action as may from time to time be necessary or desirable to preserve and maintain the Charged Assets or any registration thereof, and not do or omit to be done any act, matter or thing whereby any provision of any applicable law, decree, order or regulation from time to time affecting any of the Charged Assets is infringed;

 

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(h) if requested to do so by the Lender, make entries in any public register or give such notices as the Lender may consider appropriate to record the existence of this Deed, any security created by it or the restrictions contained in it;

 

(i) not declare any dividends or pay any similar distribution to shareholders or redeem or purchase its own shares unless explicitly permitted under the Loan Agreement or with the prior written consent of the Lender;

 

(j) inform the Lender immediately on contracting to purchase any estate or interest in real property and provide to the Lender such information in relation to the same as the Lender may from time to time require;

 

(k) keep all its buildings and erections and all the plant, machinery, equipment, accessories, fixtures, fittings, vehicles and other effects and every part of them in good and substantial repair and in good working order and condition, and not to pull down or remove any of the same without the prior written consent of the Lender;

 

(l) not make any application under the Buildings Ordinance (Cap. 123 of the Laws of Hong Kong) to carry out any development of any of the immovable property for the time being owned by the Chargor;

 

(m) not call up or receive in advance of calls any of the uncalled capital for the time being of the Chargor;

 

(n) not continue its existence in a jurisdiction outside of Hong Kong or attempt or resolve to do so; and

 

(o) generally not to do or cause or permit to be done anything which may in any way jeopardise or otherwise prejudice the value of the Charged Assets as a whole or the Security and not (without the prior written consent of the Lender) incur any expenditure or liabilities of an exceptional or unusual nature.

 

4.2. Trade receivables

 

The Chargor shall on a quarterly basis and immediately on demand by the Lender provide the Lender with a list of its then outstanding trade receivables, specifying the full name and address details of the relevant customer or other trade debtor and the amount and due date of the relevant receivable.

 

4.3. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender, except as expressly permitted under the Loan Documents:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset (other than the Charged Assets subject to the floating charge under Clause 2.3(b)); or

 

(c) take or permit the taking of any action which may result in the rights attaching to any Charged Asset being altered.

 

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4.4. Subsequent Encumbrances

 

If the Lender receives notice (actual or otherwise) of any subsequent Encumbrance, assignment or other disposition affecting the Charged Assets or any interest in the Charged Assets or the proceeds of sale thereof, the Lender shall be deemed to have opened a new account when such notice was received and as from that time all payments in respect of or on account of the Secured Obligations shall be deemed to have been credited to the new account and shall not, as between the Chargor and the Lender, operate to reduce the amount of the Secured Obligations outstanding when such notice was received.

 

4.5. Lien

 

The Lender shall have and shall be authorised to exercise a lien over all property of the Chargor coming into the possession or control of the Lender, for custody or any other reason and whether or not in the ordinary course of banking business, with power for the Lender to sell such property to satisfy the Secured Obligations if an Event of Default has occurred and is continuing.

 

4.6. Voting Rights and Dividends

 

(a) Until an Event of Default occurs, the Chargor shall be entitled to:

 

(i) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(ii) exercise all voting and other rights and powers attaching to the Shares, provided that it must not do so in a manner which has the effect of changing the terms of the Shares (or any class of them) or of any related rights or is prejudicial to the interests of the Lender.

 

(b) At any time following the occurrence of an Event of Default, the Lender may effectuate the transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

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5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

i. the re-execution of this Deed or such Loan Document;

 

ii. the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

iii. the giving of any notice, order or direction and the making of any filing or registration,

 

which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

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6. Power to remedy

 

6.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

6.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 6 shall not render it liable as a mortgagee in possession.

 

6.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 6 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

7. Representations and Warranties

 

7.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as a limited liability company with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has the power and authority to enter into and perform this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors' rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

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(e) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(f) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

(g) as at the date of this Deed, the contents of Schedule 1 hereto, and the other information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(h) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

7.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 7 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 7.1(g), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

7.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 7.1.

 

8. Enforcement of Security

 

8.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default.

 

8.2. Statutory powers

 

The power of sale and other powers conferred to the Chargee pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

8.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

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8.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of any subsidiary companies; and/or

 

(c) apply all payments, dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender's other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

8.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrances shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

8.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

8.7. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 8.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

8.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

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(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

8.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 8.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

8.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 8.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

8.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

9. Receivership

 

9.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

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9.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

9.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO (as extend and/or revised by this Deed) as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

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(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 9.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

9.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

10. Power of Attorney

 

10.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

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(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

10.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

11. Expenses and Indemnity

 

11.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

11.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 
(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

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11.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

11.4. Default Interest

 

The amounts payable under this Clause 11 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

12. Application of Proceeds

 

12.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 
(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) the Chargor and/or the claims of those entitled to any surplus.

 

12.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 12.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

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12.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order,

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 12.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 12.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

13. Protection of Lender

 

13.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

13.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

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13.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

13.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

13.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

14. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

15. Redemption of Prior Encumbrances

 

On or at any time after the Security has become enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

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(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor,

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

16. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

17. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

18. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

19. Assignment

 

19.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each Party and its successors in title and permitted assignees.

 

19.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

19.3. Assignment by the Lender

 

The Lender may assign all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

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20. Notices

 

20.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement.

 

20.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

21. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

22. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

23. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by both Parties.

 

24. Governing Law and Jurisdiction

 

24.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

24.2. Hong Kong Jurisdiction

 

The Parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each Party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

24.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

  

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SCHEDULE 1

Asset Information

 

(a) Offices / locations where movable assets are held

 

Borqs Hong Kong Limited

Office B, 21/F., Legend Tower, 7 Shing Yip Street

Kwun Tong, Kowloon, Hong Kong

 

Borqs Beijing Ltd.

Tower A, Building B23, Universal Business Park

No. 10 Jiuxianqiao Road, Chaoyang District

Beijing 100015, China

 

Borqs Software Solutions Private Limited

Prestige Al-Kareem, NO.3 Edward Road, Civil Station

Corporation Division NO.72

Bangalore, Karnataka, INDIA 560052

 

(b) Intellectual Property Rights

 

Ownership of the domain name (details as set out in the table below): borqs.com

 

Service Provider Contact Details and Account Number (if any)   Owner and Registrar or Administrative Contact of Record   Expiry Date of Domain
www.verio.com   Pat Chan, assigned to Borqs Hong Kong Limited   July 5, 2020

 

(c) Shares

 

Direct ownership:

 

i) 1 out of 10,000 shares of Borqs Software Solutions Private Limited
ii) 100% of Borqs Beijing Ltd.
iii) 55% of Bozz Solutions, Inc.
iv) 60% of Borqs KK
v) 100% of Borqs Korea Branch Office

 

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Indirect ownership:

 

i) 100% of Beijing Big Cloud Century Technology Limited
ii) 100% of Borqs Wireless Ltd.
iii) 100% of Beijing Borqs Software Technology Co., Limited
iv) 100% of Borqs Beijing Ltd. Shenzhen Branch Office
v) 49.9% of Br. Droid Desenvolvimento De Software S.A.
vi) 100% of Beijing Big Cloud Network Technology Co., Ltd.
vii) 79% of Yuantel (Beijing) Investment Management Co., Ltd.
viii) 75.05% of Yuantel (Beijing) Telecommunications Technology Co. Ltd.
ix) Beijing Big Cloud Information Technology Co., Limited
x) Jiangsu Chen Hui Information Technolgy Co., Limited

 

(d) Bank Accounts

 

Bank Name   Account Number   Branch Address
Silicon Valley Bank   3300710367   3003 Tasman Drive, Santa Clara, CA 95054, USA
HSBC   168-316727-838   1 Queen’s Road Central, Hong Kong
HSBC   817-880297-201   1 Queen’s Road Central, Hong Kong
SPD Silicon Valley Bank   NRA10010020000000602   21/F, Block B, Baoland Plaza, No.588 Dalian Road, Shanghai 200082, China

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SCHEDULE 2

Form of Notice

 

To: [ insert account bank ]

 

Date:

 

Dear Sirs,

 

NOTICE OF CHARGE

 

We hereby give you notice that we have assigned and charged to Partners For Growth V, L.P. (the “ Lender ”) all our rights, title and interest in our bank account[s] held with you with account number[s] [•] (including any renewal or redesignation thereof) (the “Accounts[s] ”) and all monies standing to the credit of the Account from time to time under a deed of debenture dated [•] 2019 (the “ Debenture ”).

 

We hereby irrevocably and unconditionally instruct you that, with effect from the service of a notice by or on behalf of the Lender on you notifying you that an event of default has occurred under the Debenture: (i) any then existing payment instructions affecting the Account[s] shall immediately and automatically be terminated and payments and communications in respect of the Account[s] should be made to the Lender and (ii) all rights, title and interest in the Account[s] shall vest in the Lender.

 

This letter is governed by the laws of Hong Kong.

 

Please acknowledge receipt of this notice by signing the acknowledgement enclosed and returning it to us with a copy to the Lender:

 

PARTNERS FOR GROWTH V, L.P.

1751 Tiburon Blvd., Tiburon,

CA 94920 USA

Yours faithfully,

 

__________________

For and on behalf of [●]

 

Form of Acknowledgement

 

To: [Chargor]

Copy to: PARTNERS FOR GROWTH V, L.P.

 

We acknowledge receipt of the Notice of Charge dated [•] 2019 and confirm that we will comply with the terms set out in the Notice of Charge. We further confirm that, following receipt of the notice of an event of default as set out in the Notice of Charge we will not act in relation to the Account[s] except as instructed by the Lender or any persons authorised by the Lender and we shall send all statements and other notices in relation to the Account[s] to the Lender.

 

__________________

For and on behalf of [ insert account bank ]

 

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IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender.

 

EXECUTED and DELIVERED )
as a DEED by BORQS HONG KONG LIMITED )
    
Acting by:  /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Sole director  
    
in the presence of :  
   
   
/s/ Anthony Chan                
Witness name: Anthony Chan  
Witness occupation: CFO  
    
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

 

Name: Geoffrey Allan

Title: Director

 

 

in the presence of :

 

 

/s/ Amy Spencer                          

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

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Exhibit 10.3

 

Date: March 8, 2019

 

  

 

BORQS Technologies (HK) Limited

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEBENTURE

 

(constituting a fixed and floating charge over all the assets of

BORQS Technologies (HK) Limited )

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS TECHNOLOGIES (HK) LIMITED , a private company limited by shares duly incorporated and validly existing under the laws of Hong Kong with registration number 2688549 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Bank Accounts ” means all present and future bank accounts held in the name of the Chargor from time to time, including but not limited to the bank accounts listed in Schedule 1 hereto;

 

Charged Assets ” means all assets listed in Clause 2.2;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Chargor and BORQS Hong Kong Limited as borrowers and BORQS Technologies, Inc. and BORQS International Holding Corp as guarantors;

 

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Party ” means a party to this Deed;

 

Receivables ” means all present and future book and other debts, receivables, monies, revenues, royalties, claims and choses in action due or owing to or purchased or otherwise acquired by the Chargor (including all credit balances and deposits of the Chargor with the Lender or any other bank or financial institution and any monies credited to any suspense account by the Lender, together with the debts represented by them, and any surplus arising on a realisation of any Encumbrance whether in favour of the Lender or any other person), the proceeds of the same, all legal, beneficial or equitable interests and rights in trust (including any beneficial interest, claim or entitlement in or to the assets of any occupational retirement scheme belonging to or held by the Chargor, the benefit of all discretionary payments and the proceeds of any claim or receivable of the Chargor not itself capable of being charged and the full benefit of all guarantees, indemnities, Encumbrances, rights of set-off, security reservations of proprietary rights, rights of tracing and all other rights and remedies in respect of the same or otherwise);

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means the assets listed in Clause 2.3(a)(ii).

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assignees and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

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(c) this Deed , the Loan Agreement , the other Loan Documents or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 19.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Assignment

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor as beneficial owner agrees to assign and hereby assigns absolutely (subject to a proviso for reassignment on redemption) to the Lender the Receivables.

 

2.3. Charge

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor as beneficial owner agrees to charge and hereby charges to the Lender:

 

(a) by way of first fixed charge:

 

(i) to the extent that any of the Receivables are not effectively assigned under Clause 2.2 (Assignment) or such rights have been effectively assigned but such assignment has not been perfected by the service of the appropriate notice, those Receivables;

 

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(ii) all present and future shares, namely all right, title and interest held by the Chargor in and to all stocks, shares, debentures, bonds or other securities or investments and all other interests of the Chargor in any person and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iii) all present and future uncalled capital, goodwill and all patents, patent applications, inventions, trademarks and service marks and applications therefor, trade names, registered designs, copyrights, know-how and other intellectual property rights held by the Chargor and all licences and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iv) all present and future real property and all rights and interests in or affecting land (or the proceeds of sale of land or the documents of title to land) of the Chargor and all buildings, structures, fixtures (including trade fixtures), owned by the Chargor, including the full benefit of all Encumbrances, options, agreements, rights and interests of the Chargor over or affecting land of the Chargor and all fixed plant, other plant, machinery, fittings and equipment and all other chattels now or at any time after the date of this Deed belonging to the Chargor and its interest in any plant, machinery, equipment or chattels in its possession, including the benefit of all contracts and warranties relating to the same (excluding any of the same for the time being forming part of its stock in trade or work in progress);

 

(v) all present and future rights under any sale or purchase agreements and distributorship or any similar agreements entered into by it, any letters of credit issued in its favour and all bills of exchange and other negotiable instruments held by it;

 

(vi) all present and future benefits of all licences, quota, consents and authorities (statutory or otherwise) held in connection with its business or the use of any asset charged by any other sub-paragraph in this Clause 2.3 and the right to recover and receive all proceeds and/or compensation which may be payable to it in respect of them; and

 

(vii) all present and future benefits in respect of all contracts and policies of insurance of whatever nature which are from time to time taken out by or on behalf of the Chargor or (to the extent of such interest) in which the Chargor has an interest and all claims and returns of premiums in respect of them; and

 

(b) by way of first floating charge, the undertaking and all present and future property, assets and rights of the Chargor, whatsoever and wheresoever not otherwise effectively charged by way of first fixed charge by Clause 2.3(a),

 

in each case, provided that if any asset cannot be secured without consent of a third party and such consent is not obtained, this Agreement will constitute security over all proceeds and other amounts receivable from such asset.

 

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2.4. Crystallisation

 

The Lender may, by notice in writing to the Chargor, convert the floating charge referred to in Clause 2.3(b) into a specific fixed charge as regards all or part of the Charged Assets, if an Event of Default has occurred and is continuing, or the Lender considers those assets to be in danger of being seized or sold under any distress, execution or sequestration or to be otherwise in jeopardy.

 

The floating charge referred to in Clause 2.3(b) shall (in addition to the circumstances in which the same shall occur under general law) automatically be converted into a specific fixed charge:

 

(a) if the Chargor takes steps to create any subsequent Encumbrance (other than Permitted Liens) on any of the Charged Assets without the prior approval of the Lender;

 

(b) on the convening of any meeting of the members of the Chargor to consider a resolution to wind up the Chargor (or not to wind up the Chargor);

 

(c) immediately prior to the presentation of a petition (other than a frivolous or vexatious petition) to wind up the Chargor; or

 

(d) if any person levies or attempts to levy distress, execution or sequestration against any of the Charged Assets.

 

2.5. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following (in each case, in form and substance satisfactory to the Lender):

 

(a) any documents necessary or conducive to enable the Lender to register such Charged Assets in its name or in the name of its nominee(s); and

 

(b) all documents necessary and satisfactory to the Lender in order to effect a valid transfer of any Charged Assets following an Event of Default.

 

2.6. Registration

 

The Chargor shall at its own cost:

 

(a) immediately after the execution of this Deed:

 

(i) register the Security with the Hong Kong Companies Registry in accordance with Section 335 of the Companies Ordinance (Cap. 622 of the Laws of Hong Kong);

 

(ii) notify each company in which the Chargor holds Shares of the Security;

 

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(b) promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure that there shall be delivered to the Lender:

 

(i) evidence of the registration of the Security with the Hong Kong Companies Registry;

 

(ii) a copy of the acknowledgement of the Security by each company in which the Chargor holds Shares; and

 

(iii) a copy of a written notice of charge to each bank where Bank Accounts are held substantially in the form as set out in Schedule 2 hereto; and

 

(c) use its best efforts to obtain written acknowledgement of the notice(s) sent in accordance with Clause 2.6(b)(iii) by each relevant bank as soon as practical after the date of execution of this Deed.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

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4. Covenants

 

4.1. General Covenants

 

The Chargor covenants that it shall observe and perform each of the following covenants and undertakings in relation to its business, property and assets or (as the case may be) the Charged Assets:

 

(a) conduct and carry on its business in a proper and efficient manner and not make any substantial alteration in the nature or mode of conduct of its business;

 

(b) keep or cause to be kept proper books of accounts relating to its business and from time to time within a reasonable time after being requested by the Lender, furnish the Lender with such information about the assets, business and financial condition of the Chargor as the Lender may require;

 

(c) use commercially reasonable endeavours to duly and punctually pay and discharge all debts, obligations and liabilities, and all rents, rates, taxes, outgoings and impositions payable in respect of any premises now or from time to time after the date of this Deed owned, tenanted, occupied or used by the Chargor and, when required, produce to the Lender receipts or other evidence satisfactory to the Lender that such payments have been made, or (as the case may be) such obligations and liabilities have been discharged;

 

(d) (i) use commercially reasonable endeavours to take all steps to maintain, preserve and protect its revenues and assets (tangible and intangible) and maintain and (where applicable) take out insurances in respect of its business, undertaking, property and assets and against such risks and contingencies as is prudent (given the industry practice in relation to the business, undertaking, property or asset concerned) with the interest of the Lender noted on the policies and with the policies containing such provisions for the benefit of the Lender as the Lender may require; (ii) on demand produce to the Lender the policies of such insurances and proof of payment of all premiums and other monies necessary for effecting and keeping such insurances; and (iii) immediately upon receipt pay to the Lender and pending such payment hold on trust for the Lender all monies received by the Chargor by virtue of any insurances maintained or effected by it (whether or not effected pursuant to the above) for application in making good the loss or damage in respect of which such monies are received or, at the option of the Lender, for payment to such account(s) as the Lender may specify;

 

(e) if so required by the Lender, give notice (in such form as the Lender may require) to any person requiring payment into such account(s) as the Lender may specify of all monies due or to become due to the Chargor from that person;

 

(f) deposit with the Lender all certificates and documents of title, duly executed transfers and any other documents relating to the Charged Assets as the Lender may from time to time require;

 

(g) use its commercially reasonable endeavours to observe and perform all covenants and stipulations (under any agreement, law, regulation or otherwise) from time to time affecting any of the Charged Assets, take such action as may from time to time be necessary or desirable to preserve and maintain the Charged Assets or any registration thereof, and not do or omit to be done any act, matter or thing whereby any provision of any applicable law, decree, order or regulation from time to time affecting any of the Charged Assets is infringed;

 

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(h) if requested to do so by the Lender, make entries in any public register or give such notices as the Lender may consider appropriate to record the existence of this Deed, any security created by it or the restrictions contained in it;

 

(i) not declare any dividends or pay any similar distribution to shareholders or redeem or purchase its own shares unless explicitly permitted under the Loan Agreement or with the prior written consent of the Lender;

 

(j) inform the Lender immediately on contracting to purchase any estate or interest in real property and provide to the Lender such information in relation to the same as the Lender may from time to time require;

 

(k) keep all its buildings and erections and all the plant, machinery, equipment, accessories, fixtures, fittings, vehicles and other effects and every part of them in good and substantial repair and in good working order and condition, and not to pull down or remove any of the same without the prior written consent of the Lender;

 

(l) not make any application under the Buildings Ordinance (Cap. 123 of the Laws of Hong Kong) to carry out any development of any of the immovable property for the time being owned by the Chargor;

 

(m) not call up or receive in advance of calls any of the uncalled capital for the time being of the Chargor;

 

(n) not continue its existence in a jurisdiction outside of Hong Kong or attempt or resolve to do so; and

 

(o) generally not to do or cause or permit to be done anything which may in any way jeopardise or otherwise prejudice the value of the Charged Assets as a whole or the Security and not (without the prior written consent of the Lender) incur any expenditure or liabilities of an exceptional or unusual nature.

 

4.2. Trade receivables

 

The Chargor shall on a quarterly basis and immediately on demand by the Lender provide the Lender with a list of its then outstanding trade receivables, specifying the full name and address details of the relevant customer or other trade debtor and the amount and due date of the relevant receivable.

 

4.3. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender, except as expressly permitted under the Loan Documents:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset (other than the Charged Assets subject to the floating charge under Clause 2.3(b)); or

 

(c) take or permit the taking of any action which may result in the rights attaching to any Charged Asset being altered.

 

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4.4. Subsequent Encumbrances

 

If the Lender receives notice (actual or otherwise) of any subsequent Encumbrance, assignment or other disposition affecting the Charged Assets or any interest in the Charged Assets or the proceeds of sale thereof, the Lender shall be deemed to have opened a new account when such notice was received and as from that time all payments in respect of or on account of the Secured Obligations shall be deemed to have been credited to the new account and shall not, as between the Chargor and the Lender, operate to reduce the amount of the Secured Obligations outstanding when such notice was received.

 

4.5. Lien

 

The Lender shall have and shall be authorised to exercise a lien over all property of the Chargor coming into the possession or control of the Lender, for custody or any other reason and whether or not in the ordinary course of banking business, with power for the Lender to sell such property to satisfy the Secured Obligations if an Event of Default has occurred and is continuing.

 

4.6. Voting Rights and Dividends

 

(a) Until an Event of Default occurs, the Chargor shall be entitled to:

 

(i) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(ii) exercise all voting and other rights and powers attaching to the Shares, provided that it must not do so in a manner which has the effect of changing the terms of the Shares (or any class of them) or of any related rights or is prejudicial to the interests of the Lender.

 

(b) At any time following the occurrence of an Event of Default, the Lender may effectuate the transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

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5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

i. the re-execution of this Deed or such Loan Document;

 

ii. the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

iii. the giving of any notice, order or direction and the making of any filing or registration,

 

which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

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6. Power to remedy

 

6.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

6.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 6 shall not render it liable as a mortgagee in possession.

 

6.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 6 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

7. Representations and Warranties

 

7.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as a limited liability company with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has the power and authority to enter into and perform this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

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(e) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(f) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

(g) as at the date of this Deed, the contents of Schedule 1 hereto, and the other information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(h) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

7.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 7 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 7.1(g), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

7.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 7.1.

 

8. Enforcement of Security

 

8.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default.

 

8.2. Statutory powers

 

The power of sale and other powers conferred to the Chargee pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

8.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

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8.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of any subsidiary companies; and/or

 

(c) apply all payments, dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

8.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrances shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

8.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

8.7. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 8.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

8.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

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(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

8.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 8.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

8.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 8.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

8.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

9. Receivership

 

9.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

14

 

 

9.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

9.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO (as extend and/or revised by this Deed) as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

15

 

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 9.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

9.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

10. Power of Attorney

 

10.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

16

 

 

(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

10.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

11. Expenses and Indemnity

 

11.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

11.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 
(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

17

 

 

11.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

11.4. Default Interest

 

The amounts payable under this Clause 11 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

12. Application of Proceeds

 

12.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 
(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) the Chargor and/or the claims of those entitled to any surplus.

 

12.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 12.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

18

 

 

12.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order,

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 12.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 12.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

13. Protection of Lender

 

13.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

13.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

19

 

 

13.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

13.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

13.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

14. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

15. Redemption of Prior Encumbrances

 

On or at any time after the Security has become enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

20

 

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor,

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

16. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

17. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

18. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

19. Assignment

 

19.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each Party and its successors in title and permitted assignees.

 

19.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

19.3. Assignment by the Lender

 

The Lender may assign all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

21

 

 

20. Notices

 

20.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement.

 

20.2. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

21. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

22. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

23. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by both Parties.

 

24. Governing Law and Jurisdiction

 

24.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

24.2. Hong Kong Jurisdiction

 

The Parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each Party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

24.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

  

22

 

 

SCHEDULE 1

Asset Information

 

(a) Offices / locations where movable assets are held

 

BORQS Technologies (HK) Limited

Office B, 21/F., Legend Tower, 7 Shing Yip Street

Kwun Tong, Kowloon, Hong Kong

 

(b) Bank Accounts

  

Bank Name   Account Number   Branch Address
HSBC   817-815038-838   G/F 82-84 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong

 

23

 

 

SCHEDULE 2

Form of Notice

 

To: [ insert account bank ]

 

Date:

 

Dear Sirs,

 

NOTICE OF CHARGE

 

We hereby give you notice that we have assigned and charged to Partners For Growth V, L.P. (the “ Lender ”) all our rights, title and interest in our bank account[s] held with you with account number[s] [●] (including any renewal or redesignation thereof) (the “Accounts[s] ”) and all monies standing to the credit of the Account from time to time under a deed of debenture dated [●] 2019 (the “ Debenture ”).

 

We hereby irrevocably and unconditionally instruct you that, with effect from the service of a notice by or on behalf of the Lender on you notifying you that an event of default has occurred under the Debenture: (i) any then existing payment instructions affecting the Account[s] shall immediately and automatically be terminated and payments and communications in respect of the Account[s] should be made to the Lender and (ii) all rights, title and interest in the Account[s] shall vest in the Lender.

 

This letter is governed by the laws of Hong Kong.

 

Please acknowledge receipt of this notice by signing the acknowledgement enclosed and returning it to us with a copy to the Lender:

 

PARTNERS FOR GROWTH V, L.P.

1751 Tiburon Blvd., Tiburon,

CA 94920 USA

Yours faithfully,

 

__________________

For and on behalf of [●]

 

Form of Acknowledgement

 

To: [Chargor]

Copy to: PARTNERS FOR GROWTH V, L.P.

 

We acknowledge receipt of the Notice of Charge dated [•] 2019 and confirm that we will comply with the terms set out in the Notice of Charge. We further confirm that, following receipt of the notice of an event of default as set out in the Notice of Charge we will not act in relation to the Account[s] except as instructed by the Lender or any persons authorised by the Lender and we shall send all statements and other notices in relation to the Account[s] to the Lender.

 

__________________

For and on behalf of [ insert account bank ]

 

24

 

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender.

 

EXECUTED and DELIVERED )
as a DEED by BORQS TECHNOLOGIES (HK) LIMITED )
    
Acting by: /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Sole director  
    
in the presence of :  
   
   
/s/ Anthony Chan                      
Witness name: Anthony Chan  
Witness occupation: CFO  
    
EXECUTED and DELIVERED  

as a DEED by PARTNERS FOR GROWTH V, L.P.

)

 

Acting by: /s/ Geoffrey Allan

 

 

Name: Geoffrey Allan

Title: Director

 

 

in the presence of :

 

 

/s/ Amy Spencer                    

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

25

 

Exhibit 10.4

 

REAFFIRMATION OF INTELLECTUAL PROPERTY

SECURITY AGREEMENT AND JOINDER

 

THIS REAFFIRMATION OF INTELLECTUAL PROPERTY AND SECURITY AGREEMENT AND JOINDER (including related Collateral Agreements and Notices, this “ Reaffirmation ”) is dated as of March 8, 2019 (“the Reaffirmation Effective Date ”), by and between Partners for Growth V, L.P., a Delaware limited partnership with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920 (“ PFG ”), each of BORQS Hong Kong Limited, a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 1151010, with its address at Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong (the “ Original Grantor ”), and each of (i) BORQS Technologies (HK) Limited, a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 2688549, with its address at Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong, (ii) BORQS Technologies, Inc., a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410 with its registered address at Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands, and (iii) BORQS International Holding Corp, an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127, with its registered address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the persons referenced in clauses (i), (ii) and (iii), the “ Additional Grantors ” and, collectively with the Original Grantor, “ Grantor ”).

 

R E C I T A L S:

 

A. The Original Grantor entered into that certain Intellectual Property Security Agreement (including Collateral Agreements and Notices) dated April 30, 2018 (the “ IPSA ”) pursuant to which it granted PFG a security interest in all of Grantor’s right, title and interest in the Grantor’s Intellectual Property to secure performance of all Obligations of Borrower under that certain Loan and Security Agreement of even date with the IPSA between PFG and Grantor pursuant to which Borrowers borrowed money from PFG (the “ Loan Agreement ” and such above date, the “ Loan Agreement Effective Date ”).

 

B. Concurrently, the parties are entering into that certain Amended and Restated Loan and Security Agreement (the “ Restatement ”) pursuant to which, inter alia, new credit is being extended by PFG and new Group Members are being joined to the Loan Documents as additional Borrowers and Guarantors (collectively, “ Obligor ”).

 

C. The parties desire to affirm that the obligations of the Original Grantor under the IPSA and PFG’s rights thereunder, security interests, dates and manner of perfection and other benefits will be deemed to apply in favor of PFG under the Restatement.

 

1

 

 

D. The parties desire to join the Additional Grantors to the IPSA.

 

G. In order to induce PFG to enter into the Restatement and make additional credit available, the Original Grantors have agreed to reaffirm their obligations to PFG under the IPSA as obligations to PFG under the Restatement and to the joinder of the Additional Grantor to the IPSA.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Incorporation of Recitals . The Recitals set forth above are incorporated herein by reference as if fully set forth in the text of this Reaffirmation.

 

2. Definitions . Capitalized terms used in this Reaffirmation and not otherwise defined herein shall have the meanings assigned in the IPSA or, as applicable, the Restatement. 

 

3.  Reaffirmation . Grantor hereby represents, warrants and covenants that:

 

(a)  all obligations of Grantor under the IPSA in relation to the Loan Agreement shall hereafter be deemed and shall constitute Obligations to PFG under the Restatement;

 

(b)  all Obligations under the Loan Agreement in relation to the IPSA shall hereafter constitute Obligations of Grantor under the Restatement;

 

(c) the Obligations are secured by all Intellectual Property and Domain Rights of each Group Member;

 

(d) Grantor hereby covenants and agrees with PFG that the IPSA shall continue in full force and effect for the benefit of PFG, that there are no offsets, claims or defenses of Grantor with respect to the IPSA, and that the IPSA is hereby ratified and confirmed in all respects; and

 

(e) Any and all Intellectual Property and Domain Rights required to be disclosed under the Restatement and this IPSA have been disclosed and are as set forth in Exhibit A hereto as of the Reaffirmation Effective Date.

 

4.   Joinder . Each of the Original Grantors consents to the joinder of the Additional Grantor and each Additional Grantor agrees to be bound by the terms and conditions of the IPSA.

 

5.   Successors and Assigns . This Reaffirmation shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives, successors and assigns.

 

6.  Severability . In case any one or more of the provisions contained in this Reaffirmation shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

7.  Full Force and Effect . Except as expressly provided herein, all terms and provisions of the IPSA shall remain unchanged and in full force and effect.

 

This Reaffirmation shall be governed by the governing law of the IPSA.

 

[Signature Pages Follow]

 

2

 

 

In witness whereof, each Grantor has caused this Reaffirmation of Intellectual Property Security Agreement and Joinder to be duly and lawfully executed by its authorized representative.

 

GRANTORS :

 

EXECUTED AND DELIVERED AS A DEED BY )

BORQS HONG KONG LIMITED )

 

ACTING BY:

 

/s/ Pat Sek Yuen Chan                              

NAME: Pat Sek Yuen Chan

TITLE: SOLE DIRECTOR

 

 

PFG :

 

PARTNERS FOR GROWTH V, L.P.

 

 

 

 

BY: /s/ Geoffrey Allan                             

 

NAME: Geoffrey Allan

 

TITLE: MANAGER, PARTNERS FOR GROWTH V, LLC, ITS GENERAL PARTNER

 

EXECUTED AND DELIVERED AS A DEED BY )

BORQS TECHNOLOGIES (HK) LIMITED )

 

ACTING BY:

 

/s/ Pat Sek Yuen Chan                              

NAME: Pat Sek Yuen Chan

TITLE: SOLE DIRECTOR

 

 

 

 

 

 

 

 

EXECUTED AND DELIVERED AS A DEED BY )

BORQS INTERNATIONAL HOLDING CORP )

 

ACTING BY:

 

/s/ Pat Sek Yuen Chan                              

NAME: Pat Sek Yuen Chan

 

TITLE: SOLE DIRECTOR

Executed and delivered as a deed by )

Borqs Technologies, Inc. )

Acting by its duly authorised )

director )

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Anthony Chan                  

NAME: Anthony Chan

 

3

 

 

Schedule of Intellectual Property

 

Trademarks

 

Appln No./

Date Filed/

Date Allowed

 

Mark

Applicant

 

Class

 

Services

 

Country

Statement of Use due

  None          
             
             

 

Patents

 

Patent/Application Number Title Owner
     
None    

 

Copyrights

 

None.

 

Domains

 

Domain Name Host / Admin Owner Expiry
borqs.com

www.verio.com / Steve Lee

+86-139-0139-5984

BORQS Hong Kong Limited, by assignment from Pat Chan July 5, 2020

 

 

 

4

 

Exhibit 10.5

 

 

 

 

 

SHARE PLEDGE AGREEMENT

 

between

 

BORQS Hong Kong Limited

 

(as pledgor)

 

 

Borqs Communication Technology (Beijing) Ltd. (播思通讯技术(北京)有限公司)

 

(as company)

 

 

and

 

 

PARTNERS FOR GROWTH V, L.P.

(as pledgee)

 

 

 

 

 

Date: March 8, 2019

 

 

 

 

Table of Contents

 

Article Page
   
1 Definitions and Interpretation 1
2 Pledge 2
3 Perfection of Pledge 3
4 Amount of Secured Indebtedness 4
5 Documents to be provided by the Pledgor 4
6 Company’s Acknowledgement 4
7 Representations and Warranties 5
8 Undertakings 6
9 Continuing Security 7
10  Enforcement of Pledge 8
11 Application of Enforcement Proceeds 9
12 Costs and Expenses 9
13 Indemnity 10
14 Power of Attorney 10
15 Release 10
16 Notices 10
17 Assignment 11
18 Governing Law and Jurisdiction 11
19 Miscellaneous 11
Execution Page 13

 

 

 

 

This SHARE PLEDGE AGREEMENT (this “ Agreement ”) is made on March 8, 2019 by and between:

 

A BORQS Hong Kong Limited, a company incorporated under the law of Hong Kong with its address at Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong (the “ Pledgor ”);

 

B Borqs Communication Technology (Beijing) Ltd. (播思通讯技术(北京)有限公司), a company incorporated under the law of PRC with its registered address at Room 104, 1st Floor, 82 Building, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing and with uniform social credit code (统一社会信用代码 ) 91110108666251455B (the “ Company ”); and

 

C PARTNERS FOR GROWTH V, L.P., a company incorporated under the law of California with its address at 1751 Tiburon Blvd., Tiburon, California (the “ Pledgee ”).

 

Whereas:

 

1 The Pledgor and BORQS Technologies (HK) Limited as borrowers (collectively, the “ Borrowers ”), BORQS Technologies, Inc. and BORQS International Holding Corp as guarantors and the Pledgee as lender entered into an amended and restated loan and security agreement dated March 8, 2019 and may enter into certain new loan agreements within two and a half years after the date of this Agreement (the “ Loan Agreements “ and each a “ Loan Agreement ”), pursuant to which the Pledgee has made and will, subject to the conditions set forth herein, make the Loans (as defined below) to Borrowers;

 

2 The Pledgor is the shareholder of the Company; and

 

3 In consideration of the Pledgee’s grant of the Loans to the Borrowers, the Pledgor agrees to pledge the shares of the Company held by it in favour of the Pledgee to secure the payment and performance by the Borrowers of all of the obligations when due under the Loan Agreement.

 

NOW, THEREFORE , the parties hereby agree as follows:

 

1 Definitions and Interpretation

 

  1.1 Definitions

 

Unless otherwise defined in this Agreement, terms defined in the Loan Agreement shall have the same meanings when used herein. In this Agreement:

 

Articles of Association ” means the full, latest and valid articles of association of the Company up to the date of this Agreement, including any amendment, modification and supplement thereof from time to time hereafter.

 

Event of Default ” has the same meaning as defined in the Loan Agreement.

 

Loans ” means the loans provided by the Pledgee to the Borrowers in the Loan Agreement, which includes a term loan in the maximum amount of US$3,000,000, a convertible term loan in the principal amount of US$1,000,000, a revolving line of credit facility, and any other additional loans or credit accommodations or facilities in the future provided by the Pledgee to the Borrowers.

 

1

 

 

Pledged Shares ” means the capital contribution of US$ 80 million made by the Pledgor to the Company accounting for 100% of the registered capital of the Company and all rights and benefits the Pledgor is legally entitled to now or hereafter as the shareholder of the Company pursuant to the Articles of Association or the applicable laws, including but not limited to all dividends, distributions, indemnities, payments of whatever nature and other entitlements and benefits.

 

Pledge ” has the meaning given to that term in clause 2 (Pledge) of this Agreement.

 

PRC ” means the People’s Republic of China, for the purpose of this Agreement, not including Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan.

 

Registration Authority ” means the authority that is responsible for registering the share pledge, which is Beijing Administration for Market Regulation or its local counterpart and its successor.

 

Secured Liabilities ” means all and any monies and liabilities (whether actual or contingent and whether owed on a joint and several basis, or in any capacity whatsoever) which are now or at any time may become payable from or by the Borrowers to the Pledgee under the Loan Agreement and the Loans, including but not limited to principal, interest, default interest, penalty, indemnity, damages, together with all commissions, fees, costs, and expenses which the Pledgee may incur in enforcing or obtaining payment of any such monies and liabilities thereunder and the pledge created hereunder (including the legal fees).

 

  1.2 Interpretation

 

  (a) The principles of interpretation contained in the Loan Agreement shall apply to the construction and interpretation of this Agreement mutatis mutandis.

 

  (b) The expressions “Pledgee”, “Borrowers”, “Pledgor” and “Company” shall where the context permits include their respective agents, successors and assigns and any persons deriving title under them.

 

2 Pledge

 

  2.1 As security for the due and punctual payment or discharge by the Borrowers of the Secured Liabilities, the Pledgor hereby pledges in favor of the Pledgee the Pledged Shares and all of its rights and interests in such Pledged Shares or any other rights or interests to which it may become entitled in relation to the Pledged Shares hereafter.

 

  2.2 Notwithstanding Clause 2.1 above, the Pledgor shall:

 

  (a) remain liable to perform all of its obligations under the Articles of Association; and

 

  (b) unless and until the pledge created hereunder becomes enforceable, be entitled to exercise any voting right or other rights and powers in connection with the Pledged Shares, provided that the exercise of such voting rights or other rights by the Pledgor shall not prejudice all or any part of the rights and interests of the Pledgee hereunder.

 

2

 

 

  2.3 In case the value of the Pledged Shares, according to the evaluation or calculation by the Pledgee from time to time, has decreased and is not sufficient to cover the full amount of the Secured Liabilities, the Pledgee is entitled to require the Pledgor to take measures to recover the value of the Pledged Shares or provide additional security acceptable to the Pledgee.

 

3 Perfection of Pledge

 

  3.1 Registration

 

The Pledgor and the Company shall at its own cost:

 

  (a) register the Pledge with the Registration Authority by submitting the documents required by the Registration Authority no later than seven (7) days after the date of this Agreement. The Pledgor and the Company shall do the best effort to obtain a written acknowledgement from the Registration Authority to certify the registration of the Pledge with the Registration Authority no later than fifteen (15) days after the date of the registration of Pledge; and

 

  (b) the Pledgor shall procure that the Company shall record the Pledge on the capital contribution certificate issued by it to the Pledgor and the shareholder register of the Company and provide a copy of such capital contribution certificate and shareholder register to the Pledgee certified by the Company's legal representative and affixing the Company's chop; and

 

  (c) register, or assist the Pledgee to register, the Pledge with the Hong Kong Companies Registry by submitting the documents required by the Hong Kong Companies Registry no later than thirty (30) days after the date of this Agreement, to ensure that it has an effective first-ranking fixed charge and floating charge over the Pledged Shares.

 

  3.2 Further Assurance

 

The Pledgor and the Company shall at any time upon reasonable request of the Pledgee and at its own cost take whatever action (including but not limited to executing any documents, obtaining any approvals, carrying out notarization of this Agreement and completing any registration, filing or recording) for the purpose of:

 

  (a) creating and perfecting the pledge created hereunder;

 

  (b) filing, amending and renewing the pledge hereunder in favor of the Pledgee with the any competent government agency; and

 

  (c) enforcing this Agreement according to its terms or assisting the exercise by the Pledgee of any its rights, powers or discretion in respect of the pledge created hereunder.

 

3

 

 

4 Amount of Secured Indebtedness

 

The amount of indebtedness secured by this Pledge is US$ 25,000,000 (equivalent to RMB 175,000,000). The aforesaid amount of secured indebtedness is for registration purpose only, and this Clause 4 shall be subject to any other provisions in this Agreement.

 

5 Documents to be provided by the Pledgor

 

Unless explicitly waived by the Pledgee in writing, the Pledgor shall procure the receipt by the Pledgee of all the following documents in form and substance satisfactory to the Pledgee before the advance date under the Loan Agreement (or such other time as agreed by the Pledgee):

 

  (a) the documents in respect of the Pledgor and this Agreement which are specified in the Loan Agreement as conditions precedent for the advance;

 

  (b) certified true copies of all incorporation and constitutional documents of the Company, including but not limited to:

 

  (i) the current Articles of Association (including any amendment and supplement thereto); and

 

  (ii) the current and effective business license of the Company.

 

  (c) original shareholders’ resolution of the Pledgor approving the execution and performance of this Agreement and the authorization to the relevant authorized signatory, together with the specimen signature of such authorized signatory;

 

  (d) supporting documents evidencing that the Pledgor has paid up the capital contributed by it in accordance with the Articles of Association;

 

  (e) registration certificate evidencing that the pledge hereunder has been registered with the Registration Authority; and

 

  (f) other documents which may be reasonably required by the Pledgee from time to time.

 

6 Company’s Acknowledgement

 

The Company by its execution of this Agreement acknowledges the Pledge by the Pledgor contained herein. The Company further agrees that, to the extent permitted by applicable law, it will from time to time do or permit to be done every act or thing which the Pledgee may reasonably require for the purpose of perfecting the Pledge hereunder or enforcing the rights herein contained and will not do anything which may adversely affect the interest of the Pledgee in this Agreement. In particular, the Company agrees that, upon the occurrence and during the continuance of an event of default, all sums from time to time payable by it to the Pledgor in respect of or in connection with the share interests shall be paid to the Pledgee to the extent permitted by law.

 

4

 

 

7 Representations and Warranties

 

  7.1 The Pledgor hereby represents and warrants to the Pledgee that:

 

  (a) it is a legal entity duly incorporated and validly existing under the laws of the jurisdiction of its incorporation and has the power to own its assets and carry on its business as it is being conducted;

 

  (b) the Company is a company duly incorporated and validly existing under the PRC law and has the power to own its assets and carry on its business as it is being conducted;

 

  (c) it has full right and power to enter into this Agreement and perform its obligations hereunder, and has taken or obtained all necessary corporate internal action and other action to authorize the execution and performance of this Agreement;

 

  (d) it has obtained all the authorizations, approvals, consents, registrations and filings as required in connection with the execution, validity and enforcement of this Agreement from the governmental agencies, other organizations, except that it shall obtain and complete such approval, registration and filing as provided in Clause 3 hereof;

 

  (e) neither the execution of this Agreement nor the performance of its obligations hereunder by the Pledgor will contravene (i) any applicable laws; (ii) its constitutional documents or (iii) the Articles of Association; or (iv) any document which is binding upon it or any of its assets;

 

  (f) no litigation, arbitration or administrative proceeding are current, pending or, to its knowledge, threatening against it or any of its assets which might, if adversely determined, have a material adverse effect on its ability to perform any of its obligations under this Agreement;

 

  (g) the Pledged Shares are free from any other pledge or security (except the pledge created hereunder) and subject to no attachment, seize or any other limitations;

 

  (h) except for the pledge created hereunder, it has not entered into any document to or cause to transfer, donate and/or in any other ways dispose of all or any part of the Pledged Shares and any rights or interests related thereto;

 

  (i) it has paid up the capital contributed by it in accordance with the Articles of Association;

 

  (j) all information, documents and materials provided by the Pledgor to the Pledgee in connection with this Agreement and the Pledged Shares is true and correct in any respect as at the date it is provided or as at the date (if any) at which it is stated; and

 

5

 

 

  (k) the payment obligations of the Pledgor hereunder constitute its direct and unsubordinated obligations and rank at least pari passu with its all present or future unsecured and unsubordinated payment obligations, except for obligations mandatorily preferred by law applying to companies generally.

 

  7.2 The Company hereby represents and warrants to the Pledgee throughout the continuance of this Agreement and so long as the Secured Liabilities or any part thereof remains owing that:

 

  (a) the Pledgor is the only legal and beneficial owner of the share interests in the Company; and

 

  (b) there is no security interest of any kind over the share interests (except as created under or pursuant to this Agreement).

 

  7.3 The Pledgor and the Company also represents and warrants to the Pledgee that the foregoing representations and warranties will be true and accurate throughout the continuance of this Agreement with reference to the facts and circumstances subsisting from time to time.

 

  7.4 The Pledgor and the Company acknowledges that the Pledgee has entered into this Agreement in reliance upon the representations and warranties contained in this Clause 7.

 

  8 Undertakings

 

  8.1 The Pledgor undertakes to the Pledgee that it shall:

 

  (a) promptly inform the Pledgee of any event that may affect any rights of the Pledgee hereunder or any litigation, arbitration and administrative proceedings in connection with the Pledgor or the Pledged Shares;

 

  (b) ensure the Pledged Shares or any part thereof free from any seize, attachment, supervision or from being involved in any litigation and judicial or administrative enforcement or limitation;

 

  (c) provide and/or procure the Company to provide all necessary assistance and support requested by the Pledgee and carry out all related formalities in relation to the enforcement;

 

  (d) duly observe and perform all the obligations on its part under the Articles of Association;

 

  (e) procure that the Company shall at all times comply with its obligations under Clause 6 (Company’s Acknowledgement);

 

  (f) strictly comply with the provisions of the PRC laws relating to the Pledge Shares, and fulfill all necessary formalities required for the pledge created hereunder (including but not limited to the approval, filing, registration stipulated under Clause 3 hereof);

 

6

 

 

  (g) take all necessary steps to keep the Articles of Association and other constitutional documents of the Company in full force and effect and preserve or protect the interests of the Pledgor and the Pledgee under the Articles of Association and such other constitutional documents; and

 

  (h) promptly on request by the Pledgee, supply to the Pledgee any other information in connection with this Agreement or the Company as the Pledgee may request.

 

  8.2 The Pledgor also undertakes with the Pledgee that, during the continuance of this Agreement, unless the Pledgee otherwise consents, the Pledgor shall not:

 

  (a) permit or agree to make any amendment to the Articles of Association and other constitutional documents of the Company which may adversely affect any interest of the Pledgee;

 

  (b) create any pledge or any other security interest (except the pledge created hereunder) over the Pledged Shares or any part thereof or any affiliated rights thereof;

 

  (c) dispose of the Pledged Shares or any part thereof or any affiliated rights thereto by way of sale, grant as gift, conversion into price, transfer or exchange;

 

  (d) take or permit any other person to take any action that may reduce the value of the Pledged Shares in any respect;or

 

  (e) do or cause or permit to be done anything which may prejudice the Pledgee’s rights hereunder.

 

  8.3 The Company undertakes to the Pledgee that it shall:

 

  (a) promptly inform the Pledgee of any event that may affect any rights of the Pledgee hereunder or any litigation, arbitration and administrative proceedings in connection with the Company or the Pledged Shares;

 

  (b) provide all necessary assistance and support requested by the Pledgee and carry out all related formalities in relation to the enforcement;

 

  (c) strictly comply with the provisions of the PRC laws relating to the Pledged Shares, and fulfill all necessary formalities required for the Pledge created hereunder (including but not limited to the filing, registration stipulated under Clause 3 hereof);

 

  (d) promptly on request by the Pledgee, supply to the Pledgee any other information in connection with this Agreement or the Company as the Pledgee may request.

 

9 Continuing Security

 

  9.1 The pledge created hereunder shall be a continuing security and will extend to the ultimate balance of the Secured Liabilities, regardless of any intermediate payment or discharge in whole or in part.

 

7

 

 

  9.2 If any discharge or arrangement is made in whole or in part on the faith of any payment, security or other disposition which is avoided or must be restored on insolvency, liquidation, judicial management or otherwise without limitation, the liability of the Pledgor hereunder will continue or be reinstated as if the discharge or arrangement had not occurred.

 

  9.3 Neither the pledge created hereunder nor any remedy of the Pledgee in respect thereof shall be prejudiced by:

 

  (a) the granting of any time or indulgence to the Pledgor or any other person;

 

  (b) any variation or modification of the Loan Agreement or any other documents referred to therein;

 

  (c) any incapacity, lack of power, authority or legal personality of or dissolution or change in the members or status of any person;

 

  (d) any insolvency or similar proceedings;

 

  (e) any unenforceability, illegality, invalidity or non-provability of any obligation of any person under the Loan Agreement or any other document or security to the extent permitted under the applicable laws;

 

  (f) any release of any person under the terms of any composition or arrangement; or

 

  (g) any other act, matter or thing whatsoever which, but for this Clause, might impair or discharge the rights of the Pledgee under this Agreement.

 

  9.4 To the extent as permitted by the applicable laws, the Pledgor waives any right it may have of first requiring the Pledgee to proceed against or enforce any other rights or security or claim payment from any person before exercising any of its rights under this Agreement.

 

  9.5 This Agreement and the pledge created hereunder is in addition to and not in any way prejudiced by any other security now or subsequently held by the Pledgee.

 

10 Enforcement of Pledge

 

  10.1 The pledge created hereunder will become immediately enforceable if an event of default under the Loan Agreement occurs and/or is outstanding.

 

  10.2 After the pledge created hereunder has become enforceable, the Pledgee shall be entitled to immediately enforce and exercise all the powers and remedies it may have as pledgee of the Pledged Shares when it thinks fit (either in its own name or delegate any other person or in the name of the Pledgor), which shall include without limitation (the Pledgee will inform the Pledgor of any such measures taken):

 

  (a) recover and collect all payments payable under or in respect of the Pledged Shares;

 

8

 

 

  (b) sell and convert into money all or any part of the Pledged Shares, by public auction or private contract, with all such powers in that respect as are conferred by PRC laws;

 

  (c) take over or institute all such proceedings in connection with all or any of the Pledged Shares as the Pledgee in its absolute discretion thinks fit and to discharge, compound, release or compromise any claim in respect of the Pledged Shares;

 

  (d) bring, take, defend, compromise, submit to arbitration or discontinue any actions, suits or proceedings whatsoever, in relation to the Pledged Shares;

 

  (e) exercise any right the Pledgor is entitled to in respect of the Pledged Shares under the Articles of Association and/or other constitutional documents of the Company; and/or

 

  (f) execute and do all such acts, deeds and things as the Pledgee may consider reasonably necessary or proper for or in relation to any of the above purposes.

 

  11 Application of Enforcement Proceeds

 

All monies received by the Pledgee in the disposal of the Pledged Shares shall be applied in the following order of priority:

 

  (a) in payment or satisfaction of all costs incurred by the Pledgee in the enforcement of the pledge created hereunder;

 

  (b) in payment or satisfaction of all other outstanding Secured Liabilities; and

 

  (c) the remaining balance (if any) shall be paid to the Pledgor or other person entitled thereto.

 

  12 Costs and Expenses

 

The Pledgor shall from time to time forthwith on demand pay to or reimburse the Pledgee for:

 

  (a) all costs and charges reasonably incurred by the Pledgee in connection with the preparation, execution, performance and perfection of this Agreement, any other documents required in connection herewith and any amendment to or extension of, or the giving of any consent or waiver in connection with this Agreement; and

 

  (b) all costs, charges and expenses (including legal and other fees and all other out-of-pocket expenses)incurred by the Pledgee in exercising any of its rights or powers hereunder or in suing for or seeking to recover any sums due and outstanding hereunder or otherwise preserving or enforcing its rights hereunder or in defending any claims brought against it in respect of this Agreement or releasing this Agreement upon payment of all monies hereby secured.

 

9

 

 

13 Indemnity

 

  13.1 The Pledgor shall indemnify the Pledgee against all demonstrated losses, liabilities, damages, taxes (if any), costs and expenses incurred by it and the Company in the execution or performance of this Agreement and against all actions, proceedings, claims, demands, costs, charges and expenses which may be incurred, sustained or arise in respect of the non-performance or non-observance of any of the undertakings and agreements on the part of the Pledgor and the Company herein contained, except as a result of any fraud, willful misconduct or gross negligence of the Pledgee.

 

  13.2 All sums due and payable by the Pledgor or the Company under this Agreement shall be paid in full without set-off or counterclaim or any restriction or condition and free and clear of any tax or other deductions or withholdings of any nature. If the Pledgor or the Company or any other person is required by any law or regulation to make any deduction or withholding (on account of tax or otherwise) from any payment for the account of the Pledgee, the Pledgor or the Company shall, together with such payment, pay such additional amount as will ensure that the Pledgee receives (free and clear of any tax or other deductions or withholdings) the full amount which it would have received if no such deduction or withholding had been required. The Pledgor or the Company shall promptly upon payment forward to the Pledgee copies of official receipts or other evidence showing that the full amount of any such deduction or withholding has been paid over to the relevant taxation or other authority.

 

14 Power of Attorney

 

The Pledgee may delegate by power of attorney or in any other manner to any person any right, power or discretion exercisable by it under this Agreement. The person so delegated shall present to the Pledgor or the Company such power of attorney while enforcing any right hereunder. Any such delegation may be made upon any terms which the Pledgee may think fit. The Pledgor and the Company ratifies whatever action taken by any attorney under its appointment under this Clause 14.

15 Release

 

Upon the full payment or discharge of the Secured Liabilities, the Pledgee shall, at the request and cost of the Pledgor, take all actions necessary to release the Pledged Shares from the pledge created by this Agreement.

 

16 Notices

 

  16.1 Any communication in connection with this Agreement must be in writing and, unless otherwise stated, may be given:

 

  (a) in person, by post or fax; or

 

  (b) by e-mail or other electronic communication, for the purpose hereof, an electronic communication will be treated as being in writing;

 

and may be deemed as received, if delivered in person, on the date when it is left at its address; if by post, on the third(3rd) day following the day of posting; or if sent by fax or electronic communication, on the day of dispatch.

 

10

 

 

  16.2 The contact details of the Pledgor, the Company and the Pledgee are listed in the execution page of this Agreement respectively.

 

  16.3 Any party may change its contact details by giving five (5) days' prior notice to the other party.

 

17 Assignment

 

  17.1 In case that the Pledgee assigns to any third party all or any part of its rights and/or obligations under the Loan Agreement, the pledge hereunder and all or any part of the Pledgee’s rights hereunder may be assigned to such third party without the Pledgor's or the Company’s consent. The Pledgor and the Company shall continue to perform all the obligations hereunder and assist the Pledgee and assignee in completing all process related to such assignment and executing all relevant documents required by the Pledgee and/or the assignee.

 

  17.2 The Pledgor and the Company shall not assign or transfer any of its rights and obligations hereunder without the Pledgee’s written consent.

 

18 Governing Law and Jurisdiction

 

This Agreement shall be governed by and construed in accordance with the laws of the PRC. If any disputes arise hereunder or in connection with this Agreement, the parties hereto agree to submit such disputes to the competent People’s Court at the domicile of the Company.

 

19 Miscellaneous

 

  19.1 Severability

 

If a provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect the validity or enforceability in that jurisdiction of any other provision of this Agreement, nor shall it affect the validity or enforceability in other jurisdictions of that or any other provision of this Agreement.

 

  19.2 Waiver

 

No failure or delay by the Pledgee in exercising any right, power or remedy hereunder shall impair such right, power or remedy or operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy. The rights, powers and remedies herein provided are cumulative and do not exclude any other rights, powers and remedies provided by law.

 

11

 

 

  19.3 Information Disclosure

 

The Pledgor and the Company consents and acknowledges that the Pledgee is entitled to disclose and transfer from time to time all information in connection with the Pledgor and the Company (including personal data) provided to the Pledgee by the Pledgor or the Company or otherwise known to the Pledgee to:

 

  (a) the Pledgee’s staff, accountants, auditors, internal and external legal counsel;

 

  (b) any agent, contractor or service providers that provide administrative, information technology, offshoring or other services to the Pledgee in connection with the operation of the business; or

 

  (c) any actual or proposed assignee, transferee, participant or sub-participant of the Pledgee under or in connection with the Loan Agreement.

 

The Pledgor and the Company further consents to the disclosure of any of their information by the Pledgee if required or permitted to do so by any applicable law, court order or any regulatory authority in any jurisdiction.

 

  19.4 Amendment

 

Any amendment to this Agreement shall only be made in writing by the Pledgee, the Company and the Pledgor.

 

  19.5 Language

 

This Agreement shall be prepared and executed in Chinese and English. If there is any inconsistency between the Chinese version and the English version, the Chinese version shall prevail.

 

  19.6 Counterparts

 

This Agreement may be executed in any number of counterparts and all of those counterparts taken together shall be deemed to constitute one and the same instrument.

 

  19.7 Effectiveness

 

This Agreement shall become effective upon the execution hereof by all parties hereto. The Pledge created by this Agreement shall be duly established upon registration of the Pledge with the Registration Authority in accordance with this Agreement.

 

In Witness whereof the parties have duly executed this Agreement on the day and year first above written.

 

12

 

 

Execution Page

 

BORQS Hong Kong Limited

 

(as Pledgor)

 

Address: Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

 

Fax: +86-10-5975-6363

 

T el. : +86-10-5975 6336

 

a ttention: Anthony K. Chan

 

SIGNED BY: /s/ Anthony K. Chan                         

 

Name: Anthony K. Chan

 

Title: Senior Vice President Corporate Finance & Chief Financial Officer

 

13

 

 

Execution Page

 

Borqs Communication Technology (Beijing) Ltd. (播思通讯技术(北京)有限公司)

 

(as Company)

 

Address: Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China

 

Fax: +86-10-5975-6363

 

T el. : +86-10-5975 6336

 

a ttention: Anthony K. Chan

 

SIGNED BY: /s/ Anthony K. Chan                           Company chop___________________

 

Name: Anthony K. Chan

 

Title: Senior Vice President Corporate Finance & Chief Financial Officer

 

14

 

 

Execution Page

 

PARTNERS FOR GROWTH V, L.P.

 

(as Pledgee)

 

Address: 1751 Tiburon Blvd., Tiburon, CA 94920

 

Fax: +1 (415) 781-0510

 

T el. : +1 (415) 912-5898

 

a ttention: Andrew Kahn

 

SIGNED BY: /s/ Geoffrey Allan                   

 

Name: Geoffrey Allan

 

Title: Manager, Partners for Growth V, LLC, managing member of Partners for Growth V, L.P.

 

 

15

 

 

Exhibit 10.6

 

Borqs Technologies, Inc.

(as the Chargor )

 

BOrqs International HOlding Corp

(as the Company )

 

and

 

Partners for growth v, L.P.

(as the Chargee)

  

 

 

EQUITABLE MORTGAGE

 

over registered shares in a Cayman Islands exempted company

 

 

 

WARNING

 

THE TAKING OR SENDING BY ANY PERSON OF AN ORIGINAL OF THIS DOCUMENT INTO THE
CAYMAN ISLANDS MAY GIVE RISE TO THE IMPOSITION OF CAYMAN ISLANDS STAMP DUTY

 

 

 

 

 

Content

 

1 Interpretation 1
     
2 Principal payment obligation 3
     
3 Creation of security 4
     
4 Representations 4
     
5 Covenants 7
     
6 Shares 8
     
7 When security becomes enforceable 11
     
8 Enforcement of security 11
     
9 Receiver 12
     
10 Powers of receiver 13
     
11 Application of proceeds 14
     
12 Expenses and indemnity 14
     
13 Delegation 14
     
14 Further assurances 15
     
15 Power of attorney 15
     
16 Preservation 16
     
17 Miscellaneous 17
     
18 Notices 19
     
19 Release 20
     
20 Set off 20
     
21 Third Party Rights 20
     
22 Jurisdiction 20
     
23 Governing law 21
     
SCHEDULE 1 22
   
SCHEDULE 2 24

 

 

 

 

THIS MORTGAGE is dated this March 8, 2019 and is made as a deed

 

BETWEEN:

 

1 Borqs Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410 and whose registered office is at the offices of Maples Corporate Services Limited, Ritter House, Kingston Chambers, PO BOX 173, Road Town, Tortola, British Virgin Islands (the Chargor );

 

2 BORQS International Holding Corp , an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127 with its registered office at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the Company ); and

 

3 Partners for Growth V, L.P. , whose address is 1751 Tiburon Blvd., Tiburon CA, 94920 (the Chargee ).

 

BACKGROUND

 

A The Chargor and the Company enter into this Mortgage to provide security for the continuing provision of credit facilities to the Borrower under the Loan Documents.

 

B It is intended that this document takes effect as a deed notwithstanding the fact that a party may only execute this document under hand.

 

IT IS AGREED as follows:

 

1 Interpretation

 

1.1 Definitions

 

In this Mortgage:

 

Borrower means BORQS Hong Kong Limited, BORQS Technologies (HK) Limited and any other borrower under a Loan Document.

 

Business Day means a day, other than a Saturday or a Sunday, on which banks are open for general business in the Cayman Islands, the British Virgin Islands and the United States of America.

 

BVI Act means the BVI Business Companies Act, 2004.

 

Companies Law means the Companies Law (2018 Revision) of the Cayman Islands.

 

Event of Default means any event of default under any Loan Document.

 

Initial Shares means the 1 ordinary share of US$0.001 par value each issued by the Company and owned by the Chargor on the date of this Mortgage.

 

Lender means the lender under a Loan Document, being Partners for Growth V, L.P.

 

Loan Document means each of:

 

(a) the amended and restated loan and security agreement dated on or about the date hereof between (i) the Chargee (ii) BORQS Hong Kong Limited and BORQS Technologies (HK) Limited as borrowers; and (ii) the Company and BORQS Technologies, Inc. as guarantors.

 

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(b) any other loan and security agreement designated as such by the Chargee.

 

Mortgage means this equitable share mortgage.

 

Obligations means all present and future obligations and liabilities of any kind (whether actual or contingent and whether owed jointly or severally as principal or surety or in any other capacity whatsoever) of any Obligor to any Lender under a Loan Document.

 

Obligor means the Chargor, the Company, each Borrower and each other person providing security in connection with a Loan Document.

 

Receiver means a receiver and manager or a receiver, in each case, appointed under this Mortgage.

 

Register of Charges means the register of charges of the Chargor maintained by the Chargor in accordance with the BVI Act.

 

Register of Members means the register of members of the Company maintained by the Company in accordance with the Companies Law.

 

Related Rights means the rights attached to the Shares described in Clause 3.2(b).

 

Security Assets means all the Shares and the Related Rights.

 

Security Interest means any mortgage, pledge, lien, charge, assignment, hypothecation or other security interest, any pre-emption rights or options, hold back or flawed asset arrangements or any other agreement or arrangement having a similar effect.

 

Security Period means the period beginning on the date of this Mortgage and ending on the date on which all the Obligations have been unconditionally and irrevocably paid and discharged in full.

 

Shares means the Initial Shares and any other shares issued by the Company owned by the Chargor or its nominee(s) from time to time.

 

Stamp Duty Law means the Stamp Duty Law (2019 Revision) of the Cayman Islands.

 

Third Parties Law means The Contracts (Rights of Third Parties) Law, 2014 of the Cayman Islands .

 

1.2 Construction

 

(a) Unless otherwise defined herein, capitalised terms used in this Mortgage have the meaning given to such terms in the Loan Document.

 

(b) In this Mortgage, unless the contrary intention appears, a reference to:

 

(i) any asset , unless the context otherwise requires, includes any present, future or contingent asset (including properties, revenues and rights of every description) whether tangible or intangible;

 

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(ii) an authorisation includes an authorisation, consent, approval, resolution, licence, exemption, filing and registration;

 

(iii) a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

(iv) Security means the security constituted by this Mortgage;

 

(v) tax shall be construed so as to include any tax, fund, levy, impost, duty or other charge of a similar nature (including, without limitation, any penalty or interest payable in connection with any failure to pay or any delay in paying of the same);

 

(vi) a provision of law is a reference to that provision as amended or re-enacted;

 

(vii) a Clause or a Schedule is a reference to a clause of or a schedule to this Mortgage;

 

(viii) a person includes its successors and assigns; and

 

(ix) a time of day is a reference to time in the Cayman Islands.

 

(c) If the Chargee considers in its sole discretion that an amount paid to it under the Loan Documents is capable of being avoided or otherwise set aside on the liquidation or administration of the payer or otherwise, then that amount shall not be considered to have been irrevocably paid for the purposes of this Mortgage.

 

(d) References to the singular include the plural, and vice versa.

 

(e) The index to and headings in this Mortgage are for convenience only and are to be ignored in construing this Mortgage.

 

1.3 Statutes

 

In this Mortgage a reference to a statute or statutory instrument is, unless otherwise specified, a reference to the most recent revision of the relevant statute or statutory instrument of the Cayman Islands and includes any statutory modification or re-enactment thereof for the time being in force.

 

2 Principal payment obligation

 

In consideration for the provision of credit to each Borrower under the Loan Documents and for other good and valuable consideration the receipt of which is hereby acknowledged by each party hereto, the Chargor hereby covenants with and undertakes to the Chargee to pay and discharge as principal obligor and not merely as surety all of the Obligations as and when the same are due on the first written demand of the Chargee.

 

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3 Creation of security

 

3.1 General

 

The security created under this Mortgage:

 

(a) is created in favour of the Chargee;

 

(b) is created over the Security Assets;

 

(c) is security for the irrevocable payment and satisfaction in full of all the Obligations; and

 

(d) is created by the Chargor as legal and beneficial owner.

 

The Chargee holds the benefit of this Mortgage on trust for the Lenders.

 

3.2 Securities

 

(a) The Chargor charges by way of first equitable mortgage all of its interest in all the Shares.

 

(b) The Chargor charges by way of first fixed charge all of its rights, title and interest including all benefits, present and future, actual and contingent accruing in respect of:

 

(i) any dividend or interest paid or payable in relation to the Shares; and

 

(ii) any right, money or property accruing or offered at any time in relation to the Shares by way of redemption, repurchase, substitution, exchange, bonus or preference, under option rights or otherwise, (the Related Rights ).

 

4 Representations

 

4.1 Representations

 

Each of the Chargor and the Company makes the following representations to each Lender:

 

4.2 Status

 

(a) The Company is an exempted company, duly incorporated validly existing under the laws of the Cayman Islands.

 

(b) The Chargor is a BVI business company, duly incorporated, validly existing under the laws of the British Virgin Islands and has and will at all times have the necessary power and authority to own its assets and carry on its business as it is being conducted and to enter into and perform its obligations under this Mortgage and has duly authorised the execution and delivery of this Mortgage.

 

(c) It has the power to own its assets and carry on its business as it is being conducted and it is in good standing.

 

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4.3 Binding obligations

 

The obligations expressed to be assumed by it in this Mortgage are its legal, valid, binding and enforceable obligations.

 

4.4 Non-conflict with other obligations

 

The entry into and performance by it of, and the transactions contemplated by, this Mortgage do not and will not conflict with any law or regulation applicable to it, its constitutional documents or any agreement or instrument binding upon it or any of its assets.

 

4.5 Power and authority

 

It has and it will at all times have the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, this Mortgage and the transactions contemplated by this Mortgage no limitation on its powers will be exceeded by doing so.

 

4.6 Validity and admissibility in evidence

 

Subject to the payment of stamp duty in accordance with Clause 5.4 (Taxes), all authorisations or consents required or desirable:

 

(a) to enable it lawfully to enter into and exercise its rights and comply with its obligations under this Mortgage; and

 

(b) to make this Mortgage admissible in evidence in the Cayman Islands and in the British Virgin Islands, have been obtained or effected and are in full force and effect.

 

4.7 Registration

 

(a) Subject to Clause 5.4 (Taxes) and Clause 5.5 (Filings and Registrations), it is not necessary or advisable that this Mortgage be filed, registered, recorded or enrolled with any court, public office or other authority in any jurisdiction or that any stamp, documentary, registration or similar tax or duty be paid on or in relation to this Mortgage.

 

(b) The execution, delivery, observance and performance of this Mortgage will not require it to obtain any licences, consents or approvals, except any such licences, consents and approvals as have been obtained, do not conflict with its constitutional documents and will not result in any material violation of any term of any law, statute, ordinance, rule or regulation applicable to it, or of any judgement, decree or order applicable to it or any other agreement, instrument or obligation to which it is a party or by which it is bound;

 

4.8 Litigation

 

No litigation, arbitration or administrative proceeding is current, pending or, to its knowledge, threatened which might, if adversely determined, have a material adverse effect on the business, assets, financial condition or results of operations of it, on its ability to perform its obligations under this Mortgage or which purport to affect the legality, validity or enforceability of this Mortgage. There has been no failure by it to make any payment resulting from a court order or judgment.

 

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4.9 Liquidation

 

It has not taken any corporate action and no other steps been taken or legal proceedings been started or are (to the best of its knowledge and belief) threatened against it for its winding-up (whether voluntary or by the courts of the Cayman Islands or the British Virgin Islands), liquidation, dissolution, strike off, administration, reorganisation (by way of voluntary arrangement, creditors’ arrangement, scheme of arrangement or otherwise), composition, compromise, assignment or arrangement with any creditor or for the appointment of a liquidator, provisional liquidator, receiver, administrator, administrative receiver or other similar officer of it or any or all of its assets or revenues.

 

4.10 Chargor Representations

 

The Chargor makes the following representations to the Chargee.

 

4.11 Legal and beneficial ownership

 

The Chargor is the sole absolute legal and beneficial owner of the Security Assets, free and clear of any security, encumbrances, trusts, equities and claims whatsoever or rights and interests in favour of third parties (save those under this Mortgage or otherwise permitted under the Loan Document).

 

4.12 Security

 

This Mortgage creates a first ranking equitable mortgage over all of the Shares and a first fixed charge over the Related Rights and is not liable to be avoided or otherwise set aside on the liquidation or administration of the Chargor or otherwise.

 

4.13 Shares

 

(a) The Shares are fully paid and non-assessable.

 

(b) The Shares represent 100% of the shares issued by the Company.

 

(c) The Company has not granted any warrants, options or other analogous rights to any person relating to shares issued by the Company.

 

(d) The Shares are freely transferable and no consents or approvals (including rights of pre-emption) are required in order to register a transfer of the Shares.

 

(e) The directors of the Company are not entitled (other than pursuant to the Company’s memorandum or articles of association, which entitlement is waived by the Company pursuant to Clause 6.9), to refuse to register any transfer of Shares comprising Security Assets into the name of the Chargee or its nominee.

 

(f) It has not received any notice of any adverse claim by any person in respect of the ownership of any Security Asset or any interest in it, nor has any acknowledgement been given to any person in respect of any Security Asset.

 

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4.14 No Trigger of Event of Default

 

The execution, delivery, observance and performance by the Chargor of this Mortgage will not constitute an event of default or trigger any enforcement under any security in the Chargor’s assets nor will it result in the creation of any security over or in respect of the present or future assets of the Company.

 

4.15 Times for making representations

 

(a) The representations set out in this Mortgage (including in this Clause 4) are made on the date of this Mortgage and are deemed to be repeated on each day of the Security Period.

 

(b) When a representation is repeated, it is applied to the circumstances existing at the time of repetition.

 

4.16 Estoppel

 

Each of the Chargor and the Company acknowledges and agrees that the representations in this Mortgage are made by way of deed, and that they shall be estopped from subsequently arguing that any representation was untrue when made or repeated.

 

5 Covenants

 

5.1 Security

 

The Chargor shall not create or permit to subsist any Security Interest on any Security Asset (except for this Security).

 

5.2 Disposals

 

The Chargor shall not sell, transfer, licence, lease or otherwise dispose of any Security Asset.

 

5.3 No Amendment of Articles

 

Save with the prior written consent of the Chargee, the Chargor shall not exercise its voting rights as sole shareholder of the Company to amend the memorandum or articles of association of the Company.

 

5.4 Taxes

 

(a) The Chargor will pay or procure for the stamping of an executed original of this Mortgage under the Stamp Duty Law and deliver the same to the Chargee within 20 Business Days after the date that this Mortgage is first brought into the Cayman Islands.

 

(b) The Chargor will pay or procure the payment when due of all present and future registration fees, other stamp duties and other similar tax which is or becomes payable in relation to this Mortgage and keep the Chargee indemnified against any failure or delay in paying them.

 

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5.5 Filings and Registrations

 

Without limiting the provisions of Clause 14 (Further assurances) or any other provisions of this Mortgage, the Chargor shall, immediately within 10 Business Days after the date of this Mortgage provide a copy of its updated Register of Charges recording the particulars of this Security therein pursuant to section 162 of the BVI Act.

 

6 Shares

 

6.1 Deposit

 

(a) The Chargor shall, on the date of this Mortgage:

 

(i) deliver to the Chargee an executed but undated share transfer instrument in the form set out in SCHEDULE 2 and other documents which may be requested by the Chargee in order to enable the Chargee or its nominees to be registered as the owner or otherwise obtain legal title to the Initial Shares; and

 

(ii) deliver to the Chargee copies of the corporate authorisations of the Chargor and the Company required to authorise the execution of this Mortgage.

 

(b) The Chargor shall, immediately after the issue of any Shares other than the Initial Shares, comply with sub-paragraphs (a)(ii) above in respect of such Shares.

 

6.2 Removal of directors

 

The Chargor shall procure that the Company delivers:

 

(a) signed but undated letters of resignation from the sole director of the Company in the form set out in SCHEDULE 1, Part I; and

 

(b) signed and dated letters of authorisation from the sole director of the Company in the form set out in SCHEDULE 1, Part II, to the Chargee on the date of this Mortgage and, where any person is appointed as a director of the Company after the date of this Mortgage, immediately after such appointment.

 

6.3 Changes to rights

 

Neither the Chargor nor the Company shall take or allow the taking of any action on their behalf which may result in the rights attaching to any of the Security Assets being altered or, save with the prior written consent of the Chargee, further shares in the Company in excess of the Initial Shares being issued (including by creating any instrument convertible into shares in the Company).

 

6.4 Payments on Shares

 

(a) The Chargor shall pay all calls or other payments due and payable in respect of any Shares.

 

(b) If the Chargor fails to do so, the Chargee may pay the calls or other payments in respect of any Shares on behalf of the Chargor. The Chargor shall immediately on request reimburse the Chargee for any payment made by the Chargee under this Subclause.

 

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6.5 Other obligations in respect of Security Assets

 

(a) The Chargor shall comply with all conditions and obligations assumed by it in respect of the Security Assets.

 

(b) The Chargee is not obliged to:

 

(i) perform any obligation of the Chargor;

 

(ii) make any payment;

 

(iii) make any enquiry as to the nature or sufficiency of any payment received by it or the Chargor; or

 

(iv) present or file any claim or take any other action to collect or enforce the payment of any amount to which it may be entitled under this Mortgage, in respect of any Security Asset.

 

6.6 Voting rights

 

(a) Before this Security becomes enforceable, the voting rights, powers and other rights in respect of the Security Assets may be exercised by the Chargor and shall, if exercisable by the Chargee, be exercised in any manner which the Chargor may direct in writing.

 

(b) The Chargor shall indemnify the Chargee against any loss or liability incurred by the Chargee as a consequence of the Chargee acting in respect of the Security Assets as permitted by this Mortgage or on the direction of the Chargor.

 

(c) After this Security has become enforceable, the Chargee may exercise (in the name of the Chargor and without any further consent or authority on the part of the Chargor) any voting rights and any powers or rights which may be exercised by the legal or beneficial owner of any Security Asset.

 

6.7 Dividends

 

(a) Before this Security becomes enforceable, the Chargor shall be entitled to receive and retain all cash dividends, interest and any other monies paid to it in respect of any Security Assets.

 

(b) Upon or at any time after this Security has become enforceable, all dividends, interest and other monies arising from the Security Assets shall be paid to the Chargee or to such account as it shall direct for application at its discretion.

 

6.8 Turnover

 

(a) If the Chargor or the Company receives or recovers any amount which, under the terms of this Mortgage, should have been paid to the Chargee, it will:

 

(i) hold an amount of that receipt or recovery equal to the Obligations (or if less, the amount received or recovered) on trust for the Chargee and promptly pay that amount to the Chargee for application in accordance with the terms of this Mortgage; and

 

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(ii) promptly pay an amount equal to the amount (if any) by which the receipt or recovery exceeds the Obligations to the Chargee for application in accordance with the terms of this Mortgage.

 

(b) If, for any reason, any of the trusts expressed to be created in this Clause should fail or be unenforceable, the Chargor or the Company, as the case may be, will promptly pay or distribute an amount equal to that receipt or recovery to the Chargee to be held on trust by the Chargee for application in accordance with the terms of this Mortgage.

 

6.9 Company obligations

 

The Company:

 

(a) irrevocably waives:

 

(i) any first and paramount lien; and

 

(ii) any rights of forfeiture,

 

which it may have, now or in the future, under its constitutional documents (including but not limited to under articles 4 and 5 of its articles of association), in relation to the Security Assets;

 

(b) irrevocably consents to the transfer of the Shares pursuant to the enforcement by the Chargee of any of its rights under this Mortgage and undertakes not to exercise its discretion to refuse to register the transfer of any Share pursuant to article 6.2 of its articles of association or to suspend registration under article 6.4 of its articles of association; and

 

(c) shall not register the transfer of any Share to any other person without the prior written consent of the Chargee.

 

6.10 Register of Members

 

The Company shall:

 

(a) Within 10 Business Days after the date of this Mortgage, provide the Chargee with a certified copy of the Register of Members containing the following annotation:

 

“All the ordinary shares issued as fully paid up and registered in the name of Borqs Technologies, Inc. are mortgaged and charged in favour of Partners for Growth V, L.P. pursuant to a share mortgage dated __, 2019, as amended from time to time”.

 

(b) promptly register any transfer of title to the Shares pursuant to any enforcement by the Chargee of its rights under this Mortgage.

 

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6.11 Legal Mortgage

 

At the request of the Chargee at any time prior to or after the occurrence of an Event of Default the Chargor shall promptly cause the Security Assets or any part of them to be registered in the name of the Chargee (or its nominee) thereupon to be held, as so registered, subject to the terms of this Mortgage.

 

7 When security becomes enforceable

 

7.1 Event of Default

 

Subject to the terms of the Subordination Agreement, this Security will become immediately enforceable if an Event of Default occurs and is continuing.

 

7.2 Discretion

 

After this Security has become enforceable, the Chargee may in its absolute discretion enforce all or any part of this Security in any manner it sees fit including, without limitation, dating and presenting to the Company or any other person any undated documents provided to it pursuant to Clauses 6.1 (Deposit) and 6.2 (Removal of directors) or any other provision of this Mortgage, including to remove the then existing directors and officers (with or without cause) by dating and presenting the undated, signed letters of resignation delivered pursuant to this Mortgage to appoint such persons as directors of the Company as it shall deem appropriate.

 

8 Enforcement of security

 

8.1 No liability as mortgagee in possession

 

Neither the Chargee nor any Receiver will be liable, by reason of entering into possession of a Security Asset, to account as mortgagee in possession or for any loss on realisation or for any default or omission for which a mortgagee in possession might be liable.

 

8.2 Protection of third parties

 

No person (including a purchaser) dealing with the Chargee or a Receiver or its or his agents will be concerned to enquire:

 

(a) whether the Obligations have become payable;

 

(b) whether any power which the Chargee or a Receiver is purporting to exercise has become exercisable or is being properly exercised;

 

(c) whether any money remains due under the Loan Documents; or

 

(d) how any money paid to the Chargee or to that Receiver is to be applied.

 

8.3 Redemption of prior mortgages

 

(a) At any time after this Security has become enforceable, the Chargee may:

 

(i) redeem any prior Security Interest against any Security Asset; and/or

 

(ii) procure the transfer of that Security Interest to itself; and/or

 

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(iii) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed will be, in the absence of manifest error, conclusive and binding on the Chargor.

 

(b) The Chargor shall pay to the Chargee, immediately on demand, the costs and expenses incurred by the Chargee in connection with any such redemption and/or transfer, including the payment of any principal or interest.

 

8.4 Contingencies

 

If this Security is enforced at a time when no amount is due under the Loan Documents but at a time when amounts may or will become due, the Chargee may pay the proceeds of any recoveries effected by it into a suspense account or other account selected by it.

 

9 Receiver

 

9.1 Appointment of Receiver

 

(a) The Chargee may appoint any one or more persons to be a Receiver of all or any part of the Security Assets if this Security has become enforceable.

 

(b) Any appointment under paragraph (a) above may be by deed, under seal or in writing under its hand.

 

9.2 Removal

 

The Chargee may remove any Receiver appointed by it and may, whenever it thinks fit, appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated.

 

9.3 Remuneration

 

The Chargee may fix the remuneration of any Receiver appointed by it.

 

9.4 Agent of the Chargor

 

(a) A Receiver will be deemed to be the agent of the Chargor for all purposes. The Chargor alone is responsible for the contracts, engagements, acts, omissions, defaults and losses of a Receiver and for liabilities incurred by a Receiver.

 

(b) No Lender will incur any liability (either to the Chargor or to any other person) by reason of the appointment of a Receiver or for any other reason.

 

9.5 Exercise of Receiver powers by the Chargee

 

To the fullest extent allowed by law, any right, power or discretion conferred by this Mortgage (either expressly or impliedly) or by law on a Receiver may after this Security becomes enforceable be exercised by the Chargee in relation to any Security Asset without first appointing a Receiver and notwithstanding the appointment of a Receiver.

 

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10 Powers of receiver

 

10.1 General

 

(a) A Receiver has all of the rights, powers and discretions set out below in this Clause.

 

(b) If there is more than one Receiver holding office at the same time, each Receiver may (unless the document appointing him states otherwise) exercise all of the powers conferred on a Receiver under this Mortgage individually and to the exclusion of any other Receiver.

 

10.2 Possession

 

A Receiver may take immediate possession of, get in and collect any Security Asset.

 

10.3 Employees

 

(a) A Receiver may appoint and discharge managers, officers, agents, accountants, servants, workmen and others for the purposes of this Mortgage upon such terms as to remuneration or otherwise as he thinks fit.

 

(b) A Receiver may discharge any person appointed by the Chargor.

 

10.4 Borrow money

 

A Receiver may raise and borrow money either unsecured or on the security of any Security Asset either in priority to this Security or otherwise and generally on any terms and for whatever purpose which he thinks fit.

 

10.5 Sale of assets

 

(a) A Receiver may sell, exchange, convert into money and realise any Security Asset by public auction or private contract and generally in any manner and on any terms which he thinks fit.

 

(b) The consideration for any such transaction may consist of cash, debentures or other obligations, shares, stock or other valuable consideration and any such consideration may be payable in a lump sum or by instalments spread over any period which he thinks fit.

 

10.6 Compromise

 

A Receiver may settle, adjust, refer to arbitration, compromise and arrange any claim, account, dispute, question or demand with or by any person who is or claims to be a creditor of the Chargor or relating in any way to any Security Asset.

 

10.7 Legal actions

 

A Receiver may bring, prosecute, enforce, defend and abandon any action, suit or proceedings in relation to any Security Asset which he thinks fit.

 

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10.8 Receipts

 

A Receiver may give a valid receipt for any moneys and execute any assurance or thing which may be proper or desirable for realising any Security Asset.

 

10.9 Delegation

 

A Receiver may delegate his powers in accordance with this Mortgage.

 

10.10 Other powers

 

A Receiver may:

 

(a) do all other acts and things which he may consider desirable or necessary for realising any Security Asset or incidental or conducive to any of the rights, powers or discretions conferred on a Receiver under or by virtue of this Mortgage or law;

 

(b) exercise in relation to any Security Asset all the powers, authorities and things which he would be capable of exercising if he were the absolute beneficial owner of that Security Asset; and

 

(c) use the name of the Chargor for any of the above purposes.

 

11 Application of proceeds

 

Any moneys received by the Chargee or any Receiver after this Security has become enforceable shall be applied in or towards payment of or provision for all costs and expenses incurred by the Chargee or any Receiver under or in connection with this Mortgage and of all remuneration due to any Receiver under or in connection with this Mortgage and thereafter at the discretion of the Chargee. Following the payment and discharge of the Obligations in full the surplus (if any) will be paid to the Chargor. This Clause is subject to the payment of any claims having priority over this Security. This Clause does not prejudice the right of any Lender to recover any shortfall from the Chargor.

 

12 Expenses and indemnity

 

The Chargor shall:

 

(a) immediately on demand pay all costs and expenses (including legal fees) incurred in connection with this Mortgage by any Lender or any Receiver, attorney, manager, agent or other person appointed by the Chargee under this Mortgage including any arising from any actual or alleged breach by any person of any law or regulation, whether relating to the environment or otherwise; and

 

(b) keep each of them indemnified against any failure or delay in paying those costs or expenses.

 

13 Delegation

 

13.1 Power of Attorney

 

The Chargee or any Receiver may delegate by power of attorney or in any other manner to any person any right, power or discretion exercisable by it under this Mortgage.

 

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13.2 Terms

 

Any such delegation may be made upon any terms (including power to sub-delegate) which the Chargee or any Receiver may think fit.

 

13.3 Liability

 

Neither the Chargee nor any Receiver will be in any way liable or responsible to the Chargor or the Company for any loss or liability arising from any act, default, omission or misconduct on the part of any delegate or sub-delegate.

 

14 Further assurances

 

The Chargor shall, at its own expense, take whatever action the Chargee or a Receiver may require for:

 

(a) creating, perfecting or protecting any security intended to be created by this Mortgage; or

 

(b) facilitating the realisation of any Security Asset, or the exercise of any right, power or discretion exercisable, by the Chargee or any Receiver or any of its delegates or sub delegates in respect of any Security Asset.

 

This includes:

 

(i) the execution of any transfer, conveyance, assignment or assurance of any property, whether to the Chargee or to its nominee; or

 

(ii) the giving of any notice, order or direction and the making of any registration, which, in any such case, the Chargee may think expedient.

 

15 Power of attorney

 

15.1 Appointment

 

The Chargor hereby irrevocably appoints the Chargee and any Receiver appointed hereunder (in each case with full power to appoint substitutes and to sub-delegate) jointly and also severally to be the attorney or attorneys of the Chargor and in its name and otherwise on its behalf to sign, seal, execute, deliver, perfect and do all deeds, instruments, acts and things which may be required (or which the Chargee or any Receiver appointed hereunder shall consider desirable) for carrying out any obligation imposed on the Chargor by or pursuant to this Mortgage, for getting in the Security Assets, and generally for enabling the Chargee and the Receiver to exercise the respective powers conferred on them by or pursuant to this Mortgage or by law.

 

15.2 Ratification

 

The Chargor shall ratify and confirm all transactions and documents entered into by the Chargee or such Receiver or delegate of the Chargee or such Receiver acting under the power of attorney granted under Clause 15.1.

 

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15.3 Irrevocable

 

The power of attorney granted under Clause 15.1 is granted irrevocably and for value as part of the security constituted by this Mortgage to secure proprietary interests of, and the performance of obligations owed to, the Chargee.

 

16 Preservation

 

16.1 Continuing security

 

(a) This Security is continuing and will extend to the ultimate balance of all the Obligations, regardless of any intermediate payment or discharge in whole or in part.

 

(b) This Security is in addition to and shall not merge with or otherwise prejudice or affect any other security now or subsequently held by the Chargee for any of the Obligations.

 

16.2 Tacking

 

This Mortgage is made to secure any further advances or other facilities made available by the Lenders under the Loan Documents.

 

16.3 New Accounts

 

(a) If any subsequent charge or other interest affects any Security Asset, the Chargee may open a new account for the Chargor.

 

(b) If the Chargee does not open a new account, it will nevertheless be treated as if it had done so at the time when it received or was deemed to have received notice of that charge or other account.

 

(c) As from that time all payments made to the Chargee will be credited or be treated as having been credited to the new account and will not operate to reduce any Secured Liability.

 

16.4 Waiver of defences

 

The obligations of the Chargor and the Company under this Mortgage will not be affected by any circumstance, act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of their obligations under this Mortgage and this Security and whether or not known to the Chargor, the Company or a Lender including:

 

(a) any time, waiver or consent granted to, or composition with, an Obligor or other person;

 

(b) the release of an Obligor or any other person under the terms of any composition or arrangement with any creditor or an Obligor;

 

(c) the taking, variation, compromise, exchange, renewal or release of, refusal or neglect to perfect, take up or enforce, any rights against, or Security Interest or other rights over or relating to assets of, an Obligor or other person or any non-presentment or non-observance of any formality or other requirement in respect of any instruments or any failure to realise the full value of any Security Interest;

 

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(d) any incapacity or lack of powers, authority or legal personality of or dissolution or change in the members or status of, an Obligor or other person;

 

(e) any amendment (however fundamental) or replacement of any Loan Document or other document;

 

(f) any change in the identity of the Chargee;

 

(g) any right of set-off that the Chargor or the Company may have against the Chargee;

 

(h) any unenforceability, illegality or invalidity or any obligation of any person under any Loan Document or other document; or

 

(i) any insolvency or similar proceedings.

 

16.5 Immediate recourse

 

The Chargor waives any right it may have of first requiring a Lender to proceed against or enforce any other rights or Security Interest or claim payment from or file any proof or claim in any insolvency, administration, winding up or liquidation proceedings relating to any Obligor or any other person before claiming from the Chargor under this Mortgage.

 

16.6 Non-competition

 

Until the end of the Security Period, neither the Chargor nor the Company will exercise any rights which they may have by reason of performance of their obligations under this Mortgage:

 

(a) to be indemnified by an Obligor;

 

(b) to claim any contribution from any guarantor of an Obligor’s obligations; and/or

 

(c) to take the benefit of (in whole or in part and whether by subrogation or otherwise) of any right of a Lender under this Mortgage or of any other guarantee or Security Interest taken pursuant to, or in connection with, the Loan Document by the any Lender.

 

16.7 Reinstatement

 

(a) Where any discharge (whether in respect of the obligations of any Obligor, any security for such obligations or otherwise) is made in whole or in part or any arrangement is made on the faith of any payment, security or other disposition which is avoided or must be repaid on insolvency, administration, liquidation or otherwise without limitation, the liability of the Chargor or the Compny under this Mortgage shall continue as if there had been no such discharge or arrangement.

 

(b) The Chargee shall be entitled to concede or compromise any claim that any such payment, security or other disposition is liable to avoidance or repayment.

 

17 Miscellaneous

 

17.1 Waivers and remedies cumulative

 

(a) The rights of the Chargee under this Mortgage:

 

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(i) may be exercised as often as necessary;

 

(ii) are cumulative and not exclusive of its rights under general law; and

 

(iii) may be waived only in writing and specifically.

 

(b) Delay in exercising or non-exercise of any such right is not a waiver of that right.

 

17.2 Transfers

 

(a) Neither the Chargor nor the Company may assign or otherwise transfer any of their rights and/or obligations under this Mortgage.

 

(b) The Chargee may assign, transfer, novate or dispose of all or any part of its rights and/or obligations under this Mortgage.

 

17.3 Severability

 

If a provision of this Mortgage is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

 

(a) the validity or enforceability in that jurisdiction of any other provision of this Mortgage; or

 

(b) the validity or enforceability in any other jurisdiction of that or any other provision of this Mortgage.

 

17.4 Amendments

 

This Mortgage may only be amended by an instrument in writing signed by each party to this Mortgage.

 

17.5 Waiver

 

(a) No waiver of any right or rights arising under this Mortgage shall be effective unless such waiver is in writing and signed by the party whose rights are being waived.

 

(b) No waiver by a party of a failure by the other party to perform any provision of this Mortgage shall operate or be construed as a waiver in respect of any other failure whether of a like or different character.

 

17.6 Counterparts

 

This Mortgage may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Mortgage.

 

17.7 Certificate

 

A certificate of the Chargee as to any amount due from an Obligor in respect of the Obligations or any of them shall, in the absence of manifest error, be prima facie evidence of such amount as against the Chargor or the Company.

 

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17.8 Language

 

All documents and notices provided or given in connection with this Mortgage shall be:

 

(a) in English; or

 

(b) if not in English, accompanied by a certified English translation and, in this case, the English translation shall prevail unless the document is a statutory or other official document.

 

17.9 Payments

 

All payments made by the Chargor and the Company under this Mortgage shall be made free of any deductions or withholding (whether in respect of tax or otherwise). If the Chargor or the Company is compelled by law to make such deductions, it shall pay such additional amounts as to ensure that the net amount received by the Chargee would be the same as if no such deductions had been made.

 

18 Notices

 

Each party’s address for notices is as set out below:

 

Chargor

Borqs Technologies, Inc.

Tower A, Building B23

Universal Business Park

No. 10 Jiuxiangqiao Road

Chaoyang District, Beijing 100015, China

Attn: Pat Chan, CEO

Facsimile No.: 86-10-5975-6363

Telephone No: 86-10-5975-6336

Email: pat.chan@borqs.com

 

Company

Borqs International Holding Corp.

Tower A, Building B23

Universal Business Park

No. 10 Jiuxiangqiao Road

Chaoyang District, Beijing 100015, China

Attn: Pat Chan, CEO

Facsimile No.: 86-10-5975-6363

Telephone No: 86-10-5975-6336

Email: pat.chan@borqs.com

 

AND TO :

 

Borqs International Holding Corp.

c/o Maples Corporate Services Limited

PO Box 309

Ugland House

Grand Cayman, KY1-1104

Cayman Islands

 

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Chargee

Partners for Growth V, L.P.

Address: 1751 Tiburon Blvd., Tiburon, CA 94920

Facsimile no: +1-415-781-0510

Electronic mail address: notices@pfgrowth.com

For the attention of: Geoff Allen / Tracy Pappas

 

With a copy (not constituting notice) to:

 

Greenspan Law Office

620 Laguna Rd, Mill Valley, CA 94941

Email: ben@greenspan-law.com

 

19 Release

 

At the end of the Security Period, the Chargee shall, at the request and cost of the Chargor, take whatever action is necessary to release the Security Assets from this Security.

 

20 Set off

 

A Lender may set off any matured obligation due from the Chargor or the Company under this Mortgage (to the extent beneficially owned by that Lender) against any matured obligation owed by that Lender to the Chargor or the Company, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

21 Third Party Rights

 

(a) Subject to paragraph (b), a person who is not a party to this Mortgage has no right under the Third Parties Law to enforce any provision of this Mortgage in its own right.

 

(b) A Receiver may enforce any provision of this Mortgage conferring a right on it.

 

22 Jurisdiction

 

22.1 Submission

 

For the benefit of the Lenders, the Chargor and the Company each agree that the courts of the Cayman Islands have jurisdiction to hear and determine any action, suit or proceeding, and settle any disputes, in connection with this Mortgage and accordingly submit to the jurisdiction of the Cayman Islands courts.

 

22.2 Forum convenience and enforcement abroad

 

Each of the Chargor and the Company:

 

(a) waive any objection which they may have to the Cayman Islands courts on the grounds of inconvenient forum or otherwise as regards proceedings in connection with this Mortgage, and agree not to argue before any court or tribunal that such courts are an inappropriate or inconvenient forum; and

 

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(b) agree that a judgment or order of such courts in connection with this is conclusive and binding on each of them and may be enforced in the courts of any other jurisdiction.

 

22.3 Non-exclusivity

 

Nothing in this Clause 21 limits the right of the Chargee to bring proceedings against the the Chargor or the Company in connection with this Mortgage or the Obligations:

 

(a) in any other court of competent jurisdiction; or

 

(b) concurrently in more than one jurisdiction, to the extent permitted by law.

 

22.4 Agent for Service of Process

 

Without prejudice to the Chargee’s rights to serve notice in any other manner permitted by law, the Chargor hereby irrevocably appoints the Company as its agent for service of process in relation to any proceedings before the Cayman Islands courts in connection with this Mortgage and agrees that failure by the Company to notify the Chargor shall not invalidate any proceedings concerned.

 

22.5 Security for costs

 

To the extent that the Chargor or the Company may, in any suit, action or proceeding brought in a court in any jurisdiction arising out of or in connection with this Mortgage or the Obligations be entitled to the benefit of any provision of law requiring any Lender in such suit, action or proceeding to post security for the costs of the Chargor or the Company, or to post a bond or take similar action, the Chargor or the Company hereby irrevocably waive any such benefit, in each case to the fullest extent now or hereafter permitted under the laws of such jurisdiction.

 

23 Governing law

 

23.1 This Mortgage is governed by Cayman Islands law.

 

23.2 The Chargor irrevocably agrees for the exclusive benefit of the Chargee that the courts of the Cayman Islands shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which may arise out of or in connection with this Mortgage and for such purposes irrevocably submits to the jurisdiction of such courts.

 

23.3 Nothing contained in this Clause shall limit the right of the Chargee to take proceedings which may arise out of or in connection with this Mortgage in any other court of competent jurisdiction nor shall the taking of any such proceedings in one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not (unless precluded by applicable law).

 

This Mortgage has been entered into on the date stated on the first page of this Mortgage.

 

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SCHEDULE 1

 

Part I - Form of Directors’ Letter of Resignation

 

Date: _____________________________________P.O. Box 309, Ugland House, Grand Cayman, KY1-1104

 

For the attention of the Board of Directors of the Company

 

Dear Sirs

 

Resignation as a director of BORQS International Holding Corp (the Company )

 

I hereby resign with immediate effect as a director of the Company.

 

I confirm that I have no claims against the Company for compensation in relation to my loss of office or otherwise, but to the extent that I may have any such claim, I hereby irrevocably waive the same.

 

Yours faithfully

 

   
Pat Sek Yuen Chan  

 

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Part II - Form of Directors’ Letter of Authority

 

Date: ______________________

 

Partners for Growth V, L.P. (the Chargee )

1751 Tiburon Blvd.,

Tiburon, CA 94920

For the attention of: Geoff Allen / Tracy Pappas

 

Dear Sir

 

Resignation letter - directorship of Borqs International Holdings Corp (the Company )

 

Please find enclosed a signed but undated letter from me resigning my position as a director of the Company.

 

I hereby irrevocably authorise you, whenever an Event of Default has occurred and is continuing for the purpose of the equitable share mortgage dated __------------------, 2019 made between the Chargor, the Company and the Chargee (the Mortgage ), to date the letter and send it to the Company’s registered office thereby terminating my directorship of the Company without compensation for loss of office. I acknowledge and agree that your discretion to act in this regard is to be exercised solely in your interests as Chargee under the Mortgage.

 

I confirm that you may delegate the authority conferred by this letter to any of your successors and assigns as Chargee in relation to the Mortgage.

 

Yours faithfully

 

   
Pat Sek Yuen Chan  

 

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SCHEDULE 2

 

Form of Share Transfer

 

BORQS International Holding Corp

(the Company )

 

SHARE TRANSFER

 

We, Borqs Technologies, Inc. (the Transferor ), for good and valuable consideration received by us from _______________________ (the Transferee ), do hereby:

 

(1) transfer to the Transferee _________ shares of US$0.001 par value each standing in our name in the Register of Members of the Company, free of any liens, encumbrances or other restrictions thereon; and

 

(2) consent that our name remains on the Register of Members of the Company until such time as the Company enters the Transferee’s name in the Register of Members of the Company.

 

This Share Transfer is governed by Cayman Islands law.

 

 

   
SIGNED BY  

 

Name: Pat Sek Yuen Chan

A duly authorised director acting for and on behalf of

Borqs Technologies, Inc.

 

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EXECUTION PAGE

 

The parties have executed and this Deed on the day and year first above written

 

Chargor    
     
EXECUTED and DELIVERED as a deed by )  
Borqs Technologies, Inc. ) /s/ Pat Sek Yuen Chan
acting by its duly authorised director ) (Director)

In the presence of:

 

/s/ Anthony K. Chan  

 

Name of Witness: Anthony K. Chan

 

Address of Witness:

 

Company

 

EXECUTED and DELIVERED as a deed by )  
BORQS International Holding Corp ) /s/ Pat Sek Yuen Chan
acting by its duly authorised director ) (Director)

 

Chargee    
     
EXECUTED and DELIVERED as a deed by )  
Partners for Growth V, L.P. ) /s/ Geoffrey Allan
acting by its duly authorised signatory ) Authorised Signatory

In the presence of:

 

/s/ Amy Spencer  

 

Name of Witness: Amy Spencer

 

Address of Witness:

 

 

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Exhibit 10.7

 

SHARE PLEDGE AGREEMENT

 

THIS SHARE PLEDGE AGREEMENT (“ Agreement ”) is made as of March 8, 2019 (the “ Effective Date ”), by each of BORQS Hong Kong Limited, a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 1151010, with its address as of the Effective Date at Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong (“ HK Debtor ”), and BORQS International Holding Corp, an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127, with its registered address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“ Cayman Debtor ” and, collectively with HK Debtor, “ Debtor ”), and Debtor’s subsidiary, BORQS Software Solutions Private Limited, a company formed under the laws of India with company registration number U72200KA2009PTC050460 and with its principal place of business at Prestige Al-Kareem, NO.3 Edward Road, Civil Station, Corporation Division NO.72, Bangalore, Karnataka, INDIA 560052 (“ Subsidiary ”), in favor of Partners for Growth V, L.P., a Delaware limited partnership with its principal place of business at the date hereof at 1751 Tiburon Blvd., Tiburon, CA 94920 (“ Lender ”) in respect Debtor’s Ownership Interests (as defined herein) in Subsidiary.

 

RECITALS

 

A. Lender proposes to make certain loans to HK Debtor that are guaranteed (inter alia) by Cayman Debtor pursuant to that certain Amended and Restated Loan and Security Agreement of even date herewith between Debtor and Lender (the “ Loan Agreement ”) for the direct benefit of Debtor and the direct and indirect benefit of each of Debtor’s parent entities and subsidiaries, including the Subsidiary, which receives direct financial support from HK Debtor and Cayman Debtor, including from proceeds of such loans.

 

B. To secure the “Obligations”, as defined in the Loan Agreement, Debtor has agreed, subject to receipt of necessary regulatory approvals in accordance with the laws of India, to pledge to Lender the shares in Subsidiary’s equity, voting or non-voting, however expressed or denominated, and all other equity interests of each Subsidiary which Debtor now legally and beneficially owns, directly or indirectly, as initially specified in Exhibit A , or hereafter acquires an interest (the “ Ownership Interests ”).

 

C. Concurrently, Lender and Debtor are entering into a Custody Agreement with respect to Ownership Interests Debtor owns in the India Subsidiary. Any capitalized terms used without definition herein shall have the meanings assigned to them in the Loan Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and intending to be legally bound thereby, Debtor hereby agrees as follows:

 

1.  Pledge of Collateral. To secure the prompt performance of Debtor’s Obligations (as defined in the Loan Agreement), and Debtor’s obligations hereunder, expressly subject to Section 12(g) of this Agreement, Debtor hereby transfers, assigns and pledges to Lender and grants Lender a security interest in and to (a) 100% of its Ownership Interests in all the Subsidiary (the “ Pledged Interests ”), (b) all cash, property, share dividends, share splits, securities, proceeds, and other property paid, distributed or distributable with respect to or received on account of the Pledged Interests, and (c) except as otherwise provided in this Agreement, all rights and privileges of Debtor with respect to each of the foregoing (collectively, the “ Pledged Collateral ”).

 

 

 

 

2.  Certification of Ownership Interests; Delivery of the Pledged Interests . Debtor shall procure that, to the extent not prohibited by applicable law, all Ownership Interests shall be certificated and reflected in the books and records of Subsidiary, including any registers of members or shareholders required to be maintained by Subsidiary, its corporate agents, or filed with any Governmental Body. Upon demand by Lender, Debtor shall deliver to Lender (i) share certificates, certified ownership registers or such other legal evidence of ownership as is customary and legally sufficient in India, together with, as applicable under Applicable Law (ii) an Irrevocable Stock Power, instrument of transfer, registration of transfer or other legally sufficient evidence of the transfer of the Pledged Interests to Lender as security hereunder, in the forms set forth as Exhibit B to be held by Lender subject to the terms and conditions of this Agreement, provided , however , with respect to share certificates representing Ownership Interests in the Subsidiary, Debtor shall deliver such certificates to the Custodian (and such delivery shall be deemed to discharge Debtor’s certificate delivery obligations hereunder to Lender unless Lender otherwise so notifies Debtor in writing. Notwithstanding any registration of the Pledged Interests in the name of Lender, Lender holds the Pledged Interests only as security for the Obligations as described herein unless Lender acquires the Pledged Interests pursuant to Section 12 of this Agreement. Debtor shall, and Debtor shall procure that each of its Subsidiaries, duly records the pledge of the Pledged Interests to Lender in its books and records.

 

3.  Warrants, Rights and Share Adjustments.

 

(a) In the event that, during the term of this Agreement, subscription warrants or other rights or options shall be issued in respect of the Pledged Interests, such rights, warrants and options shall be the property of Debtor and part of the Pledged Collateral and, if exercised by Debtor, all new stock or other securities so acquired by Debtor as they relate to the Pledged Interests then held by Debtor shall be promptly delivered to Lender (or the Custodian, as the case may be) and shall be deemed to be included within the definition of “Pledged Interests”, to be held under the terms of this Agreement in the same manner as the Pledged Interests.

 

(b) In the event that, during the term of this Agreement, any share dividend, reclassification, readjustment or other changes are declared or made in Subsidiary or additional shares of Subsidiary is issued to Debtor, all new, substituted and additional Ownership Interests issued by reason of any such change shall be delivered to and held by Lender or recorded under the name of Lender under the terms of this Agreement in the same manner as the Pledged Interests. In the event of substitution of such securities, Debtor and Lender shall cooperate and execute such documents as are reasonable so as to provide for the substitution of such Pledged Collateral and, upon such substitution, references to “Pledged Interests” in this Agreement shall be deemed to include the substituted Ownership Interests of each Subsidiary held by Debtor as a result thereof.

 

(c) In the in the event of any consolidation or merger involving Subsidiary and in which such Subsidiary is not the surviving Person, the Ownership Interests of the successor Person formed by or resulting from such consolidation or merger shall be promptly delivered to Lender and shall be deemed to be included within the definition of “Pledged Interests,” to be held under the terms of this Agreement in the same manner as the Pledged Interests.

 

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4.  Limitations on Lender’s Obligations. It is expressly agreed by Debtor that, anything herein to the contrary notwithstanding, Lender shall have no obligation or liability for the performance by Debtor of its rights or obligations as a shareholder of Subsidiary by reason of or arising out of this Agreement or the granting to Lender of the security interests provided for herein or the receipt by Lender of any payment relating hereto, nor shall Lender be required or obligated in any manner to perform or fulfill any of the rights or obligations of Debtor in its capacity as a shareholder of Subsidiary or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any other party of any obligation owed to Subsidiary, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Pledged Collateral in its possession shall be to deal with it in the same manner as Lender deals with similar securities and property for its own account. Neither Lender nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Pledged Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Pledged Collateral upon the request of Debtor or otherwise, provided that Lender shall be liable for the gross negligence and willful misconduct of its directors, officers, employees and agents.

 

5.  Representations, Warranties and Covenants. Debtor represents, warrants to and covenants with Lender that on the Effective Date and at all times any Obligations are outstanding: (a) Debtor has full power and authority to enter into this Agreement; (b) any consent or approval which is required as a condition to the validity of this Agreement has or will been obtained; (c) this Agreement constitutes the valid and legally binding agreement of Debtor in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to creditors’ rights generally) and does not constitute a prohibited transfer under any law, statute, regulation or ordinance, including the Securities Act of 1933, as amended or other applicable securities Legal Requirement of any other jurisdiction applicable to Debtor or Subsidiary; (d) there is no provision of (i) any existing material mortgage, indenture, contract, subscription agreement or other agreement binding on Debtor or affecting the Ownership Interests or (ii) any Legal Requirement applicable to Debtor or Subsidiary which would materially conflict with or in any way prevent the execution, delivery or performance of the terms of this Agreement, except for any such provision which has been expressly waived or with respect to which consent has been given; (e) Debtor has good title to the Pledged Collateral and the Pledged Collateral is owned free and clear of liens and encumbrances, other than the lien created in favor of Lender under the Loan Agreement and other Permitted Liens (as defined in the Loan Agreement; (f) there are no proceedings pending or, to Debtor’s knowledge, threatened before any court or administrative agency which, in the reasonable opinion of Debtor, will materially adversely affect the authority of Debtor to enter into, or the validity or enforceability of, this Agreement; (g) Debtor will not create, incur, assume or suffer to exist any material mortgage, pledge, lien or other encumbrance of any kind, or any security interest in any of the Pledged Collateral now owned or hereafter acquired, other than Permitted Liens, without the prior written consent of Lender; (h) the share certificates for the shares of Subsidiary are the only certificates for such shares and Debtor does not hold and has not applied to Subsidiary for, duplicate stock certificates with respect to the said shares; and (i) the Pledged Interests are fully paid up and Subsidiary has no lien and will not have any lien on the Pledged Interests for so long as any Obligations remain outstanding or unperfomed.

 

6.  Other Documents. Debtor will execute and deliver to Lender and, where required in order to effect Lender’s rights under this Agreement, will cause each Subsidiary to execute, deliver to and procure for Lender, all assignments, endorsements, powers, hypothecations, approvals, governmental registrations, consents and other documents reasonably required at any time and from time to time by Lender to perfect and maintain its perfected security interest in the Pledged Collateral. Debtor shall (and shall cause each Subsidiary), at its expense, do, make, procure and execute and deliver all acts, things, writings and assurances as Lender may at any time reasonably request to protect, assure or enforce its rights, interests and remedies created by, provided in or emanating from this Agreement. Debtor authorizes Lender to file financing statements covering the Pledged Collateral and containing such legends as Lender shall deem reasonably necessary or customary in secured lending in the jurisdictions in which the Ownership Interests reside or are deemed to reside in order to protect Lender’s security interest in the Pledged Collateral. Debtor agrees, subject to the terms of the Loan Agreement, to pay all taxes, fees and costs (including reasonable attorneys’ fees) paid or incurred by Lender in connection with the preparation, filing or recordation thereof. Debtor shall not file any amendments, correction statements or termination statements concerning the Pledged Collateral without the prior written consent of Lender.

 

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7.  Continued Possession of Collateral. To the extent that Lender has possession of the Pledged Interests, Lender shall hold possession of the Pledged Interests so long as any of the Obligations are outstanding (other than inchoate indemnification obligations). Upon the payment in full in cash and the performance of all of the Obligations (other than inchoate indemnification obligations), Lender shall release any remaining Pledged Interests to Debtor. Promptly after payment (or other performance) in full of the Obligations (other than inchoate indemnification obligations), Lender shall (at its option), at Debtor’s expense, either (a) terminate or send Debtor or its designee appropriate authority to terminate any financing statements filed in favor of Lender or other governmental registrations with respect to the Pledged Collateral, or (b) authorize Debtor or its designee to terminate any such financing statements or governmental registrations. To the extent that Lender has possession of the Pledged Interests, upon the payment (or other performance) in full of the Obligations (other than inchoate indemnification obligations), Lender shall deliver to Debtor or its designee the Pledged Interests.

 

8.  Covenants.

 

(a)  Debtor . Debtor agrees that, so long as this Agreement is in effect, Debtor will not, without Lender’s prior written consent or as otherwise expressly permitted by the Loan Agreement, withdraw, sell, assign, transfer, pledge or otherwise encumber the Pledged Collateral or any part thereof. If Debtor at any time becomes entitled to receive any shares or other property (other than cash) as additions to, in substitution of or in exchange for any of the Pledged Collateral, Debtor shall accept the same as Lender’s agent, shall promptly notify Lender and upon request of Lender deliver the same to Lender (or the Custodian, as appropriate) in the exact form received, with all necessary transfer instruments or stock powers, to be held as further security for the Obligations; provided that so long as no Event of Default has occurred and is continuing, Debtor shall be entitled to receive and retain any and all cash distributions and dividends and other cash otherwise received with respect to, or otherwise in connection with, the Pledged Collateral. Debtor shall procure and use its best commercial efforts in assisting Lender to secure the approval of the Reserve Bank of India (to the satisfaction of Lender) for giving effect to the pledge created under this Agreement.

 

(b)  Subsidiary . While any Obligations remain outstanding and unperformed, Subsidiary: (i) shall comply with the provisions of the Loan Documents and shall take no action which is inconsistent with the provisions of the Loan Documents; (ii) shall not, without the prior written approval of Lender, permit the transfer or otherwise disposal of any shares or securities that are pledged and/or undertaken to not be disposed or encumbered under the finance documents, or any legal or beneficial interest in relation thereto; (iii) shall permit Lender to freely transfer the pledged shares pursuant to any enforcement by Lender in accordance with the terms of the Loan Documents, and the Board of Directors of Subsidiary shall register any transfer of pledged securities effected as a result of the enforcement of any of the rights of Lenders in accordance with the terms of this Agreement and the Deed of Undertaking; (iv) shall not borrow any monies prior to procuring Lender’s consent; (v) shall not issue any equity or any securities or other instruments that are convertible into equity, unless such equity or convertible securities or instruments are issued to the holders of the Pledged Interests and all indicia of such equity (such as share certificates) are delivered to Lender as custodian and otherwise pursuant to the Loan Documents, and Subsidiary shall reflect the interest of Lender in its books and records pertaining to such securities; (vi) except as otherwise approved by Lender in writing, Subsidiary shall not amend or modify its articles in any manner which would be inconsistent with the provisions of any of the Loan Documents or which will result in a change of ownership or change of control of Subsidiary; (vii) except as otherwise approved by Lender in writing Subsidiary shall not make pay or declare any Dividends except in accordance with the Financing Documents; and (viii) within fifteen (15) Business Days from the Effective Date, Subsidiary shall amend its Constitutional Documents (including articles of association) in form and substance acceptable to Lender to reflect the covenants and restrictions set forth in clauses (ii) through (vii), inclusive.

 

4

 

 

9.  Care of Collateral. Debtor shall have all risk of loss of the Pledged Collateral. Lender shall have no liability or duty, absent gross negligence or intentional misconduct, either before or after the occurrence of an Event of Default, on account of loss of or damage to, or to collect or enforce any of its rights against, the Pledged Collateral, to collect any income accruing on the Pledged Collateral, or to preserve rights against other parties. If Lender actually receives any notices requiring action with respect to Pledged Collateral in Lender’s possession, Lender shall take reasonable steps to forward such notices to Debtor. Debtor is responsible for responding to notices concerning the Pledged Collateral, voting the Pledged Collateral, and exercising rights and options, calls and conversions of the Pledged Collateral. Except as aforesaid, Lender’s sole responsibility shall be to take such action as is reasonably requested by Debtor in writing, however, Lender is not responsible to take any action that, in Lender’s reasonable judgment, would adversely affect (other than de minimis) the value of the Pledged Collateral as security for the Obligations. While Lender is not required to take certain actions, if action is needed, in Lender’s reasonable discretion, to preserve and maintain its lien on the Pledged Collateral, Debtor authorizes Lender to take such actions, but Lender is not obligated to do so.

 

10.  Assignment of Collateral. In addition to all other rights available to it under applicable laws or otherwise, should Lender assign or transfer the loans extended to Debtor under the Loan Agreement, Lender shall have the right to assign therewith Lender’s rights in any of the Pledged Collateral, and, subject to applicable law, any assignee or transferee shall have the rights of Lender hereunder with respect to the Pledged Collateral so assigned or transferred, and Lender shall be thereafter relieved from all duties with respect to any such Pledged Collateral to the extent of such assignment or transfer.

 

11.  Event of Default. The occurrence of any one or more of the following events shall constitute an event of default (an “ Event of Default ”) under this Agreement: (a) an Event of Default under and as defined in the Loan Agreement shall have occurred; (b) any amendment to or termination of a financing statement naming Debtor as debtor and Lender as secured party, or any correction statement with respect thereto, is filed in any jurisdiction by Debtor without the prior consent of Lender prior to the payment in full in cash and the performance of all of the Obligations (other than inchoate indemnification obligations), if such amendment or termination or correction statement would, in Lender’s reasonable business judgment, have an adverse effect on Lender as a secured party with respect to the Pledged Collateral secured thereby, (c) any registration or other recording of Lender’s security interest, lien or transfer or assignment for security is amended or terminated without Lender’s prior written consent, prior to the payment in full in cash and the performance of all of the Obligations (other than inchoate indemnification obligations), if such amendment or termination would, in Lender’s reasonable business judgment, have an adverse effect on Lender as a secured party with respect to the Collateral secured thereby; or (d) the breach of any material provision of this Agreement by Debtor or the failure by Debtor or Subsidiary to observe or perform (or the failure of Debtor to procure the performance by Subsidiary) of any of the material provisions of this Agreement, following written notice thereof (to the extent that Lender would have knowledge of such breach) and the greater of ten (10) calendar days or the applicable cure period specified in the Loan Agreement in which to cure such breach or failure; provided, however, that if such failure is reasonably susceptible of cure but cannot by its nature be cured within such ten (10) day period or cannot, after diligent attempts by Debtor, be cured within such ten (10) calendar day period, and such default is likely to be cured within a reasonable time, then Debtor shall have an additional period (which shall not in any case exceed thirty (30) calendar days) to cure such failure; provided, however, that Debtor’s right to such additional cure periods shall be conditioned upon (i) Debtor having provided Lender prompt notice of such failure, together with details as to the steps taken and proposed to be taken to cure such failure, (ii) Debtor’s undertaking to cure such failure within such additional cure periods, and (iii) Debtor providing to Lender its factual basis for believing such failure will be cured within such additional periods, and subject to Debtor’s compliance with the foregoing clauses (i) through (iii), the failure during such period to cure the default shall not be deemed an Event of Default hereunder.

 

5

 

 

12.  Remedies. Subject to Section 12(g):

 

(a) Upon the occurrence and during the continuance of an Event of Default hereunder, Lender may, at its option, proceed to enforce this Agreement and in connection therewith may (i) declare all or any part of the unpaid Loan, together with all accrued and unpaid interest thereon, to be immediately due and payable, (ii) retain or sell all or any portion of the Pledged Collateral and apply such Pledged Collateral or the proceeds thereof against the Loan up to the limits expressly provided herein, (iii) exercise any remedies available to it under the Loan Documents and (iv) otherwise exercise all of the rights and remedies of a secured party under the Code and under other applicable laws. Without limiting the foregoing, upon the occurrence and during the continuance of an Event of Default , Lender shall have the right (i) to transfer the whole or any part of the Pledged Collateral into the name of Lender or its nominee, (ii) to notify any person obligated on any of the Pledged Collateral to make payment directly to Lender or its nominee of any amounts due or to become due thereon and (iii) to vote the Pledged Collateral.

 

(b) Any written notice of the sale, disposition or other intended action by Lender with respect to the Pledged Collateral which is sent by certified mail, return receipt requested or by overnight courier to Debtor at Debtor’s address specified in the introductory paragraph hereof, or such other address of Debtor as Debtor may from time to time provide in writing to Lender, at least ten (10) days prior to such sale, disposition or action, shall constitute reasonable notice to Debtor, unless applicable law requires a longer period. However, this provision shall not be construed to impose any obligation on Lender to notify Debtor of Lender’s intent to sell, dispose of or take other action with respect to the Pledged Collateral, except to the extent applicable law requires such notice or notice is otherwise expressly required herein.

 

(c) Debtor recognizes that Lender may be unable to effect a public sale of all or a part of the Pledged Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, or applicable state or provincial securities laws, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire all or a part of the Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Debtor acknowledges and agrees that any private sale so made may be at prices and on other terms less favorable to the seller than if such Pledged Collateral were sold at public sale, and that Lender has no obligation to delay the sale of such Pledged Collateral for the period of time necessary to permit registration of such Pledged Collateral for public sale under any securities laws. Debtor agrees that a private sale or sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. If any consent, approval or authorization of any federal, state, provincial, municipal or other governmental department, agency or authority should be necessary to effect any sale or other disposition of the Pledged Collateral, or any partial sale or other disposition of the Pledged Collateral, Debtor will execute all such applications and other instruments as may be required in connection with securing any such consent, approval or authorization, and will otherwise use its best commercial efforts to secure the same.

 

6

 

 

(d) All costs and expenses, including, without limitation, attorneys’ fees and expenses, incurred by or on behalf of Lender in connection with the taking, holding, preparing for sale or other disposition, selling, managing, collecting or otherwise disposing of the Pledged Collateral, and when overdue and representing an Event of Default, at the election of Lender in its sole discretion, together with interest thereon at a per annum rate of interest which is equal to the then highest rate of interest charged on the Obligations during an Event of Default under the Loan Agreement from the earlier of the date paid or demanded until repaid in full (the “ Liquidation Costs ”), shall be paid by Debtor to Lender on demand and shall constitute and become a part of the Obligations secured hereby. Any retained Pledged Collateral and any proceeds of sale or other disposition of the Pledged Collateral (up to the limits expressly set forth above) will be applied by Lender to the payment of the Liquidation Costs, and the balance of such proceeds (if any) will be applied by Lender toward the payment of the Obligations (whether then due or not) in such order and manner of application as Lender may from time to time in its sole discretion determine. Except as may be otherwise specifically provided in this Agreement, all Pledged Collateral and proceeds of Pledged Collateral coming into Lender’s possession may be applied by Lender to any of the Obligations, whether matured or unmatured, as Lender shall determine in its sole discretion. Lender may defer the application of non-cash proceeds of Pledged Collateral to the Obligations until cash proceeds are actually received by Lender.

 

(e) Each right, power and remedy of Lender as provided for in this Agreement, now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Lender of any one or more such rights, powers or remedies shall not preclude the simultaneous or later exercise by Lender of any or all such other rights, powers or remedies.

 

(f) No failure or delay by Lender to insist upon the strict performance of any term, condition, covenant or agreement of this Agreement, or to exercise any right, power or remedy consequent upon a breach thereof, shall constitute or be deemed to constitute a waiver of any such term, condition, covenant or agreement or of any such breach, or preclude Lender from exercising any such right, power or remedy at any later time or times.

 

(g) The rights of Lender to exercise remedies hereunder with respect to Subsidiary that would, under the laws of India, constitute a “transfer” of the Ownership Interests of Debtor in Subsidiary shall not be exercised by Lender until such time as it has received the registration or approval of the transfer (for security) of such Ownership Interests from the Reserve Bank of India; provided, however, the custody of the share certificates representing such Ownership Interests with Lender is not intended by the parties to effect a transfer of such Ownership Interests.

 

13.  Voting Rights. Unless an Event of Default has occurred and is continuing, Debtor shall be permitted to exercise all voting and shareholder rights with respect to the Pledged Interests; provided, however, that no vote shall be cast or shareholder right exercised or other action taken which, in Lender’s reasonable judgment, would be reasonably likely to impair the Pledged Collateral or which would be inconsistent with or result in any violation of any provision of the Loan Documents, including, without limitation, dissolution. Lender shall reasonably cooperate with Debtor in helping Debtor exercise its voting and shareholder rights with respect to the Pledged Interests consistent with this Section 13; provided, however, that such cooperation by Lender (or any lack thereof) shall have no impact on the limitations on Lender’s obligations established by Section 4 above. In support of the conditionally-exercisable voting rights granted to Lender hereunder, as permitted and customary under Applicable Law, Debtor hereby shall execute and deliver the Proxies appended hereto as Exhibits C and D .

 

7

 

 

14.  Debtor Waivers. To the extent not prohibited by applicable law, Debtor waives any right to require Lender to (a) proceed against Subsidiary, any guarantor or any other person; (b) proceed against or exhaust any security held from Subsidiary, if any; (c) marshal any assets of Subsidiary; or (d) pursue any other remedy in Lender's power whatsoever. Following the occurrence and during the continuance of an Event of Default, Lender may, at its election, exercise, decline or fail to exercise any right or remedy it may have against Subsidiary or any security held by Lender, including without limitation the right to foreclose upon any such security by judicial or no judicial sale, without affecting or impairing in any way the liability of Debtor hereunder. To the extent not prohibited by applicable law, Debtor waives (i) any defense arising by reason of any disability or other defense of Subsidiary or by reason of the cessation from any cause whatsoever of the liability of Subsidiary, (ii) any setoff, defense or counterclaim that Subsidiary may have against Lender, (iii) until payment in full of the Obligations, any right of subrogation or reimbursement, contribution or other rights against Subsidiary, and Debtor waives any right to enforce any remedy that Lender now has or may hereafter have against Subsidiary, (iv) any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against Subsidiary, and (v) all presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, notice of acceptance of this Agreement, notice of any default, notice of payment and nonpayment whenever occurring, notice of release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Debtor may in any way be liable, and notice of the existence, creation, or incurring of new or additional indebtedness.

 

15.  Power of Attorney. Debtor hereby grants Lender an irrevocable power of attorney, coupled with an interest, with full power of substitution and full power and authority to: (i) prepare, execute and deliver on behalf of Debtor any and all such instruments, assignments, stock or bond powers, financing statements, certificates and other documents as Lender deems reasonably necessary in order to perfect and protect its interests in the Pledged Collateral, (ii) upon the occurrence and during the continuance of an Event of Default, execute on behalf of Debtor any and all such instruments, assignments, stock or bond powers, financing statements, certificates and other documents as Lender deems reasonably necessary in order to perfect and protect its interests in the Pledged Collateral, (iii) upon the occurrence and during the continuance of an Event of Default, endorse Debtor’s name on requests to other secured parties of Debtor for accountings, confirmations of collateral and confirmations of statements of account, and (iii) upon the occurrence and during the continuance of an Event of Default, without any advance notice, but with prompt advice to Debtor, (A) to liquidate any Pledged Collateral and apply the proceeds thereof directly to the Obligations, (B) to transfer ownership of any Pledged Collateral to an account designated by Lender and (C) to take such other actions with respect to the Pledged Collateral as Lender, in its sole discretion, shall deem necessary or appropriate in order to protect its interest in the Pledged Collateral. This power of attorney is made pursuant to this Agreement, is coupled with an interest and may not be revoked or cancelled before all of the Obligations have been paid or otherwise satisfied (other than inchoate indemnification obligations).

 

16.  Insolvency of Debtor . If Debtor becomes insolvent or is adjudicated bankrupt or files a petition for reorganization, arrangement, composition or similar relief or is the subject of any other Insolvency Proceeding (as defined in the Loan Agreement) under any present or future provision of the United States Bankruptcy Code, the Hong Kong Legal Requirements relating to insolvency (including but not limited to Companies Ordinance (Cap 32), the Companies (Winding Up) Rules (Cap 32H) and the Bankruptcy Ordinance (Cap 6) or equivalent Legal Requirements in any other jurisdiction, or if such a petition is filed involuntarily against any Debtor, and in any such proceeding part or all of any Indebtedness or Obligations under the Loan Agreement are terminated or rejected or any obligation of Debtor is modified or abrogated, or if Debtor's Obligations are otherwise avoided for insolvency, bankruptcy or any similar reason, Debtor irrevocably agrees that its liability hereunder shall not thereby be affected or modified and such liability shall continue in full force and effect as if no such action or proceeding had occurred. This Agreement shall continue to be effective or be reinstated, as the case may be, if any payment on the Obligations is required to be returned by Lender upon the insolvency, bankruptcy or reorganization of Debtor, or otherwise, as though such payment had not been made.

 

8

 

 

17.  Governing Law; Venue; Service . This Agreement and all acts and transactions hereunder and all rights and obligations of Lender and Debtor shall be governed by the laws of the State of California, provided that Debtor and Subsidiary obligations hereunder may be perfected under the laws of the jurisdiction of Debtor and Subsidiary. As a material part of the consideration to Lender to enter into this Agreement, Debtor (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Lender's option, be litigated in courts located within California, and that the exclusive venue therefor shall be Santa Clara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; (iii) irrevocably agrees that service upon it at its principal business address as specified in the Loan Agreement shall constitute valid and effective service upon Debtor and Subsidiary for all matters arising out of this Agreement; and (iv) waives any and all rights Debtor may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding. Without limiting the foregoing, certain Loan Documents creating Lender security interests and Lender’s perfection and/or registration of the same may specify a governing law other than California law and may specify a jurisdiction for enforcement of security interests or other actions in connection with such other Loan Documents. In such cases, the terms of such other Loan Documents shall be construed as supplemental to the terms of this Section and Lender rights thereunder may be exercised on the terms set forth in such other Loan Documents.

 

18.  Further Assurances. Subsidiary acknowledges the pledge of its Ownership Interests contemplated in this Agreement and Debtor shall, and shall direct Subsidiary to, promptly execute and cause to be delivered to Lender such instruments and other documents, and shall take such other lawful actions, as Lender may reasonably request for the purpose of ensuring that the pledge of Subsidiary Ownership Interests set forth herein are compliant with the laws of the jurisdictions applicable to Subsidiary.

 

19.  Miscellaneous. Neither this Agreement nor any term, condition, covenant, or agreement herein may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. This Agreement shall be binding upon the heirs, personal representatives, successors and assigns of Debtor and shall inure to the benefit of the successors and assigns of Lender. As used herein the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine or neuter gender shall include all genders as the context may require, and the term “person” shall include an individual, a corporation, an association, a partnership, a trust, a limited liability company, an organization, a government or political subdivision thereof and a governmental agency. Unless varied by this Agreement, all terms used herein which are defined by the Code shall have the same meanings hereunder as assigned to them by the Code, as in effect on the Effective Date. The Loan is not a “consumer transaction” as defined in the Code and none of the Collateral was or will be purchased primarily for personal, family or household purposes. References to “Debtor” herein mean “each Debtor”. Except to the extent otherwise expressly specified in this Agreement, capitalized terms used but not defined herein have their meanings as set forth in the Loan Agreement.

 

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20.  Integration . This Agreement and the other Loan Documents (as defined in the Loan Agreement) are the final, entire and complete agreement between Debtor and Lender with respect to the Pledged Interests and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement.

 

21.  MUTUAL JURY TRIAL WAIVER. DEBTOR AND Lender EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN Lender AND DEBTOR, OR ANY CONDUCT, ACTS OR OMISSIONS OF Lender OR DEBTOR OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH Lender OR DEBTOR, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

 

IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to be duly executed and delivered as a Deed (as applicable) by their authorized representative(s) as of the Effective Date.

 

[SIGNATURE PAGE FOLLOWS]

 

10

 

 

HK debtor :

Executed and Delivered as a Deed by     )

Borqs Hong Kong Limited                            )

Acting by:

 

/s/ Pat Sek Yuen Chan                           

Name: Pat Sek Yuen Chan

Title: Sole Director

 

in the presence of :

 

/s/ Anthony Chan                                 

Witness name: Anthony Chan

Witness occupation:

 

Cayman Debtor :

 

Executed and Delivered as a Deed by         )

BORQS International Holding Corp          )

 

Acting by:

 

/s/ Anthony Chan                                 

 

Name: Pat Sek Yuen Chan

 

Title: Sole Director

 

in the presence of :

 

/s/ Anthony Chan                                   

Witness name: Anthony Chan

Witness occupation: CFO

Lender :

P ARTNERS FOR GROWTH V, L.P.

 

By /s/ Geoffrey Allan                                      

 

Name: Geoffrey Allan

 

Title: Manager, Partners for Growth V, LLC

Its General Partner

 

ACKNOWLEDGED BY:

Subsidiary:

 

Borqs Software Solutions Private Limited

 

 

 

/s/ Pat Sek Yuen Chan                           

Director

Name: Pat Sek Yuen Chan

 

__________________________

Director

Name: _______________________

 

 

 

Signature Page to Share Pledge Agreement (BORQS India)

 

 

 

 

EXHIBIT A

 

PLEDGED INTERESTS

 

The Pledged Interests consist of all of Debtor’s right, title and interest in and to the following whether owned now or hereafter arising and whether the Debtor has rights now or hereafter has rights therein and wherever located:

 

All Ownership Interests (as defined in the Agreement) in the Pledged Collateral, including those identified as:

 

With respect to HK Debtor, Certificate No. ______________ for one (1) share, and

 

With respect to Cayman Debtor, Certificate No. _______________ for Nine Thousand Nine Hundred Ninety-Nine (9,999) shares, and

 

all of Pledgor's books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof.

 

Exhibit A to BORQS (India Subsidiary) Share Pledge Agreement

 

A- 1

 

 

EXHIBIT B

 

IRREVOCABLE STOCK POWER

 

FOR VALUE RECEIVED, the undersigned (“Debtor”) does hereby sell, assign and transfer to ______________________________________________ all of its Ownership Interests (as defined in the Share Pledge Agreement to which this Irrevocable Stock Power is exhibited), which are, as of the date of this Irrevocable Stock Power, represented by share certificate No. _______________for [one (1)] share in Borqs Software Solutions Private Limited, a company formed under the laws of India, standing in the name of Debtor on the books of said Person. The undersigned does hereby irrevocably constitute and appoint ________________________, attorney, to transfer said Ownership Interests in such Person on the books of said Person, with full power of substitution of the premises. Said power of attorney shall not effect a transfer of the specified Ownership Interests until such time as the Reserve Bank of India has approved and/or registered the transfer (for security) of such Ownership Interests.

 

____________ __, 2019

 

  Debtor:  
     
  EXECUTED AND DELIVERED AS A DEED BY )       
  BORQS HONG KONG LIMITED    )
  ACTING BY:  
   

 

   
  _________________________________
   
  NAME: _______________________
   
  TITLE: SOLE DIRECTOR
   
  IN THE PRESENCE OF :
   
  ________________
   
  WITNESS NAME: ________________________
   
  WITNESS OCCUPATION: _________________

 

B- 1

 

  

EXHIBIT B

 

IRREVOCABLE STOCK POWER

 

FOR VALUE RECEIVED, the undersigned (“Debtor”) does hereby sell, assign and transfer to ______________________________________________ all of its Ownership Interests (as defined in the Share Pledge Agreement to which this Irrevocable Stock Power is exhibited), which are, as of the date of this Irrevocable Stock Power, represented by share certificate No. _______________for [one (1)] share in Borqs Software Solutions Private Limited, a company formed under the laws of India, standing in the name of Debtor on the books of said Person. The undersigned does hereby irrevocably constitute and appoint ________________________, attorney, to transfer said Ownership Interests in such Person on the books of said Person, with full power of substitution of the premises. Said power of attorney shall not effect a transfer of the specified Ownership Interests until such time as the Reserve Bank of India has approved and/or registered the transfer (for security) of such Ownership Interests.

 

______________ __, 2019

 

  Debtor:  
     
  EXECUTED AND DELIVERED AS A DEED BY )
  BORQS INTERNATIONAL HOLDING CORP )
  ACTING BY:
   
   
  _________________________________
   
  NAME: _______________________
  TITLE: SOLE DIRECTOR
   
  IN THE PRESENCE OF :
   
  ________________
   
  WITNESS NAME: ________________________
   
  WITNESS OCCUPATION: _________________

 

B- 2

 

 

EXHIBIT C

 

IRREVOCABLE PROXY

 

The undersigned (“ Grantor ”), the holder of Ownership Interests (as hereinafter defined) in its subsidiary specified below (“ Subsidiary ”), hereby irrevocably appoints Partners for Growth V, L.P., a Delaware limited partnership (“ Lender ”), as its agent, to vote all such Ownership Interests (as defined in the Share Pledge Agreement to which this Proxy is exhibited on the books of Subsidiary as of the Effective Date (and as of any future date if additional Ownership Interests are held by Grantor), at all meetings of equity holders and adjournments thereof, and in all written consents of equity holders, with respect to all matters that are or are required to be submitted to equity holders for approval. The foregoing appointment of Lender as its agent shall continue from the date of this Proxy until such time as all Obligations (other than inchoate indemnity obligations) under that certain Loan and Security Agreement between the undersigned and Lender (the “ Loan Agreement ”) have been paid and performed. Lender shall have all the power the undersigned possesses as an equity holder in each Subsidiary. The undersigned hereby ratifies and confirms all acts Lender may do or cause to be done by virtue of this Proxy. The rights granted under this Irrevocably Proxy shall be exercised by Lender only upon the occurrence of an Event of Default under the Loan Agreement that is continuing.

 

The undersigned hereby revokes all previous proxies given by the undersigned with respect to such Ownership Interests in Subsidiary. The undersigned hereby waives all right to cancel this Proxy at any time during the period set forth above. This Proxy is coupled with an interest.

 

Subsidiary : Borqs Software Solutions Private Limited, a company formed under the laws of India

 

In witness whereof, the undersigned has executed this Proxy as of _____________ __, 2019.

 

  Grantor:  
     
  EXECUTED AND DELIVERED AS A DEED BY )
  BORQS HONG KONG LIMITED )
  ACTING BY:
   
   
  _________________________________
   
  NAME: _______________________
  TITLE: SOLE DIRECTOR
   
  IN THE PRESENCE OF :
   
  ________________
   
  WITNESS NAME: ________________________
   
  WITNESS OCCUPATION: _________________

 

C- 1

 

 

EXHIBIT C

 

IRREVOCABLE PROXY

 

The undersigned (“ Grantor ”), the holder of Ownership Interests (as hereinafter defined) in its subsidiary specified below (“ Subsidiary ”), hereby irrevocably appoints Partners for Growth V, L.P., a Delaware limited partnership (“ Lender ”), as its agent, to vote all such Ownership Interests (as defined in the Share Pledge Agreement to which this Proxy is exhibited on the books of Subsidiary as of the Effective Date (and as of any future date if additional Ownership Interests are held by Grantor), at all meetings of equity holders and adjournments thereof, and in all written consents of equity holders, with respect to all matters that are or are required to be submitted to equity holders for approval. The foregoing appointment of Lender as its agent shall continue from the date of this Proxy until such time as all Obligations (other than inchoate indemnity obligations) under that certain Loan and Security Agreement between the undersigned and Lender (the “ Loan Agreement ”) have been paid and performed. Lender shall have all the power the undersigned possesses as an equity holder in each Subsidiary. The undersigned hereby ratifies and confirms all acts Lender may do or cause to be done by virtue of this Proxy. The rights granted under this Irrevocably Proxy shall be exercised by Lender only upon the occurrence of an Event of Default under the Loan Agreement that is continuing.

 

The undersigned hereby revokes all previous proxies given by the undersigned with respect to such Ownership Interests in Subsidiary. The undersigned hereby waives all right to cancel this Proxy at any time during the period set forth above. This Proxy is coupled with an interest.

 

Subsidiary : Borqs Software Solutions Private Limited, a company formed under the laws of India

 

In witness whereof, the undersigned has executed this Proxy as of ____________ __, 2019.

 

  Grantor:  
     
  EXECUTED AND DELIVERED AS A DEED BY )
  BORQS INTERNATIONAL HOLDING CORP )
  ACTING BY:
   
  _________________________________
   
  NAME: _______________________
   
  TITLE: SOLE DIRECTOR
   
  IN THE PRESENCE OF :
   
  ________________
   
  WITNESS NAME: ________________________
   
  WITNESS OCCUPATION: _________________

 

C- 2

 

 

EXHIBIT D

 

Form MGT-11 Proxy – Borqs International Holding Corp

 

Attached.

 

D- 1

 

 

EXHIBIT D

 

Form MGT-11 Proxy – Borqs Hong Kong Limited

 

Attached.

 

 

 

D-2

 

Exhibit 10.8

 

Custody and Control Agreement

 

This Custody and Control Agreement (“ Agreement ”) is entered into as of March 8, 2019 (the “ Effective Date ”) among (i) PARTNERS FOR GROWTH V, L.P. (“ Secured Party ”), whose address is 1751 Tiburon Blvd., Tiburon CA 94920, (ii) PFG Managers, LLC, whose address 1751 Tiburon Blvd., Tiburon CA 94920 (“ Custodian ”), (iii) each of (A) BORQS Hong Kong Limited, a private company limited by shares under Hong Kong law, registered with the Companies Registry under number 1151010, with its address as of the Effective Date at Office B, 21/F, Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong (“ HK Pledgor ”) and (B) BORQS International Holding Corp, an exempted company limited by shares incorporated under the laws of the Cayman Islands with registered number 192127, with its registered address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“ Cayman Pledgor ” and, collectively with HK Pledgor, “ Pledgor ”), and (iv) HK Pledgor’s subsidiary, Borqs Software Solutions Private Limited, a Private Limited Company formed under the laws of India with registration number U72200KA2009PTC050460 and with its principal place of business at Prestige Al-Kareem, NO.3 Edward Road, Civil Station, Corporation Division NO.72, Bangalore, Karnataka, INDIA 560052 (“ Subsidiary ”), in connection with a Loan and Security Agreement of even date herewith between Secured Party, Pledgor and certain of its Affiliates (the “ Loan Agreement ”), a Share Pledge Agreement (“ Share Charge ”) and other Security Documents executed and delivered in connection with the Loan Agreement (such Agreements and other documents, together with the Loan Agreement and Security Documents, the “ Loan Documents ”). Defined terms used herein but not defined have their meanings as set forth in the Loan Documents.

 

RECITALS

 

A.  Each Pledgor owns certain shares in Subsidiary as identified in the Share Pledge Agreement, together with such other share ownership as may result from the cancelation and reissue of the charged securities and acquisition of new Ownership Interests (the “ Charged Securities ” and the certificates representing the foregoing, the “ Share Certificates ”).

 

B.  The parties anticipate making application to the Reserve Bank of India for approval of the “transfer” that may be implied under Indian law based on the pledge of the Charged Securities by Pledgor to Secured Party.

 

C.  Custodian, in order to effect the intention of the parties in the Loan Agreement and Share Charge will have dominion and control over the Share Certificates, which (under applicable California law) Secured Party may perfect its security interest in by possession.

 

D.  It is intended under the Loan Agreement and Share Charge that Secured Party have a first-priority security interest and Lien in and to all of Borrower’s assets, including the Charged Securities.

 

E.   As a result of the foregoing, Secured Party has conditioned the transactions contemplated by the Loan Agreement upon Custodian acting as the custodian and agent of Secured Party in respect of the Share Certificates until the Reserve Bank of India approves the pledge of the Charged Securities to the Secured Party.

 

 

 

NOW, THEREFORE, for and in consideration of the covenants and premises set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

1. Custodian shall hold the Share Certificates in accordance with the terms of the Parent Debenture and upon Secured Party’s instruction.

 

2.  Custodian shall hold the Share Certificates as custodian, upon an informal trust for the benefit of Secured Party, until the earlier of (i) approval of the Reserve Bank of India of the pledge of the Charged Securities to Secured Party (and Secured Party’s request for custody of the Share Certificates directly) and (ii) all Obligations (other than inchoate indemnity obligations) being paid and performed in full.

 

3.  Custodian shall secure and care for the Share Certificates with no less care than it would care for negotiable instruments.

 

4. Custodian is authorized to accept, act upon and rely upon each of the following: (i) all signed, written instructions given by one or more of the officers, employees or agents Secured Party; and (ii) all statements received by telephone, electronic mail, facsimile transmission, bank wire or other teleprocess which Custodian believes in good faith to have been given by such authorized person. Custodian shall incur no liability to Borrower or Subsidiary or otherwise, as a result of any act by Custodian in accordance with instructions on which Custodian is authorized to rely pursuant to the provisions of this paragraph.

 

5. Custodian shall be responsible for the performance of only such duties as are set forth herein or in the Parent Debenture or contained in instructions given to Custodian which are not contrary to the provisions of this Agreement, the Loan Agreement or the Share Charge.

 

6.  Upon receipt of a notice from Secured Party that a Default or Event of Default has occurred and is continuing under the Loan Agreement and that Secured Party is exercising its right of exclusive control over the Charged Securities (a “ Notice of Exclusive Control ”), Custodian shall hold all Share Certificates to Secured Party’s order and instruction or, in its discretion, deliver over control of the Share Certificates to Secured Party.

 

7.  This Agreement may not be terminated by Custodian without the written consent of Secured Party, which consent may be withheld by Secured Party. This Agreement shall automatically terminate upon the earlier to occur of the date possession and control of the Share Certificates representing the Charged Securities are delivered to Secured Party and when all Obligations (other than inchoate indemnity obligations) have been paid and performed in full by Borrower.

 

8.  This Agreement, the Loan Agreement, the Share Charge and the other Loan Documents embody the entire agreement and understanding between the parties relating to the subject matter hereof and supersedes all prior agreements between such parties, and all oral and written statements by either party, that relate to such subject matter. No modification, amendment or waiver of any provision of this Agreement, or consent to any departure therefrom, shall be effective unless executed by the party against whom such change is asserted, and any consent or waiver shall be effective only in the specific instance and for the purpose for which given. The Recitals are incorporated by reference herein and made a part hereof. References to “Pledgor” herein mean “each Pledgor”.

 

11.  This Agreement shall be governed by and construed in accordance with the laws of the State of California (without reference to choice of law doctrine) and shall be binding upon, and inure to the benefit of, the parties and their successors and assigns.

 

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12.  If any provision of this Agreement is deemed to be invalid or unenforceable, such determination shall not affect the validity or enforceability of any other provisions of this Agreement.

 

13. Each of the parties hereto represents, warrants and covenants that it has the corporate power and capacity to enter into, and to perform its obligations under this Agreement, that this Agreement has been duly authorized, executed and delivered by it (including, without limitation, receipt of all requisite director and shareholder approvals) and that this Agreement when executed and delivered will constitute its valid and binding obligation enforceable in accordance with its terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies. The execution and delivery of this Agreement by Subsidiary represents such Person’s acknowledgment of the custody arrangement specified herein in respect of the Share Certificate(s) and its agreement not to take any actions in respect of the Share Certificate(s), any substitutions or replacements therefor or otherwise contrary to the agreements of the parties set forth herein.

 

[Signature Page Follows]

 

3

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed in their names by their duly authorized officers as of the date first above-written.

 

EXECUTED AND DELIVERED AS A DEED BY    ) PARTNERS FOR GROWTH V, L.P.
BORQS HONG KONG LIMITED                              )  
     
ACTING BY:   By /s/ Geoffrey Allan                                    
    Name: Geoffrey Allan
/s/ Pat Sek Yuen Chan                              Title: Manager, Partners for Growth V, LLC
NAME: Pat Sek Yuen Chan   Its General Partner
TITLE: SOLE DIRECTOR    
     
IN THE PRESENCE OF :    
     
/s/ Anthony Chan                                       
     

WITNESS NAME: Anthony Chan

   
     
WITNESS OCCUPATION: CFO    
     
EXECUTED AND DELIVERED AS A DEED BY ) CUSTODIAN:
BORQS INTERNATIONAL HOLDING CORP      )  
    PFG MANAGERS, LLC 
ACTING BY:    
    By: /s/ Geoffrey Allan                                 
/s/ Pat Sek Yuen Chan                              Name: Geoffrey Allan
NAME: Pat Sek Yuen Chan   Title: Manager
TITLE: SOLE DIRECTOR    
     
IN THE PRESENCE OF :    
     
/s/ Anthony Chan                                       
     
WITNESS NAME: Anthony Chan    
     
WITNESS OCCUPATION: CFO     
     
Executed and delivered as a Deed by:    
     
Borqs Software Solutions Private Limited     
     
/s/ Pat Sek Yuen Chan                               
Director    
Name : Pat Sek Yuen Chan    
     
/s/ Hareesh Ramanna                                  
Director    
Name: Hareesh Ramanna    

 

4

 

 

Exhibit 10.9

 

DEED OF UNDERTAKING

 

This Deed of Undertaking (“Deed”) is executed as of March 8, 2019 (the “ Effective Date ”), by Borqs Software Solutions Private Limited, a Private Limited Company formed under the laws of India with registration number U72200KA2009PTC050460 and with its principal place of business at Prestige Al-Kareem, NO.3 Edward Road, Civil Station, Corporation Division NO.72, Bangalore, Karnataka, INDIA 560052 (“ Subsidiary ”) in respect of the obligations of (i) BORQS Hong Kong limited, a Hong Kong company named as Borrower and (ii) Borqs International Holding Corp, a Cayman Islands company and Guarantor (Borrower and Guarantor, collectively, “ Obligor ”), each under the terms of that certain Amended and Restated Loan and Security Agreement and other Loan Documents of even date with this Deed between Borrower and Partners for Growth V, L.P. (“ Lender ”), in favor of Lender (such agreements, collectively, the “ Loan Agreement ”). Capitalized terms used but not defined herein have their meanings given in the Loan Agreement.

 

RECITALS

 

WHEREAS, Subsidiary is “BORQS India” under the Loan Agreement;

 

WHEREAS, Subsidiary has been provided a copy of the Loan Agreement, the Intellectual Property Security Agreement, the Share Pledge Agreement, the Custody Agreement and all other documents executed in connection the foregoing (collectively, the “Loan Documents”) and has reviewed the terms and restrictions relevant to it as the India Subsidiary, in particular the negative and affirmative covenants applicable to Obligor in relation to it and actions (or failure to take required action) that may result in a Default or Event of Default;

 

WHEREAS, Subsidiary is currently financed and able to maintain its operations through financing provided on a recurring basis by Obligor and Subsidiary will enjoy direct and indirect benefit from the loans being made to Obligor under the Loan Agreement;

 

WHEREAS, Lender has the right under the Loan Agreement to require Subsidiary and any other subsidiary of Obligor to become party to the Loan Agreement as a principal obligor, co-Obligor and a cross-corporate guarantor of Obligor’s Obligations;

 

WHEREAS, Lender has the right under the Loan Agreement to require Obligor to pledge, subject to compliance with the laws of India, up to all of its Ownership Interests in Subsidiary as security for the loans provided under the Loan Agreement with the result that if an Event of Default has occurred under the Loan Agreement, Lender would have the right to act in the name of Obligor, with the right to exercise its voting and other rights, subject to applicable Indian law, to appoint and remove the Board of Directors and other management of Subsidiary and to effect the transfer of such Ownership Interests from Obligor to Lender;

 

In consideration of the foregoing, Subsidiary hereby represents, warrants, covenants, guarantees and agrees with Lender, as a continuing obligation:

 

1.  Information . Subsidiary shall provide Lender with such information from time to time as Lender may request with respect to Subsidiary and its business. Appended as Exhibit A hereto is (i) a listing of all equity issued in Subsidiary, together with details of the share certificates and number of shares represented by each, and (ii) a listing of all Indebtedness of Subsidiary to any Person, other than ordinary course trade debt. As at the Effective Date, Subsidiary is wholly-owned by Obligor.

 

Borqs India Subsidiary Undertaking (PFG)

 

 

 

 

2.  Performance of Obligations . Subsidiary hereby unconditionally undertakes to Lender to perform all obligations, accrued and executory, fixed or contingent, due or to become due, direct or indirect, now existing or hereafter and howsoever arising or incurred under the Loan Agreement which Obligor presently or hereafter may have to Lender under the Loan Agreement and which are, directly or indirectly, applicable to Subsidiary as the India Subsidiary under the Loan Agreement or over which Subsidiary has any influence or control, provided that the foregoing shall not be construed as an obligation of Subsidiary to repay or guaranty the repayment of the Loan.

 

3.  Negative and Affirmative Covenants . So long as Obligations remain outstanding or unperformed, Subsidiary shall comply with its obligations under the Share Pledge Agreement applicable to it, including under Section 8(b) of the Share Pledge Agreement, all of which are incorporated herein by reference.

 

4.  Amendments Binding . Subsidiary has read and consents to the execution of the Loan Documents by Obligor. Subsidiary further agrees that Obligor shall have the full right, without any notice to or consent from Subsidiary, to make any and all modifications or amendments to the Loan Agreement without affecting, impairing, or discharging, in whole or in part, the liability of Subsidiary hereunder.

 

5.  Waivers . This Agreement shall be valid and unconditionally binding upon Subsidiary regardless of (i) the reorganization, merger, or consolidation of Obligor into or with another entity, corporate or otherwise, or the liquidation or dissolution of Obligor, or the sale or other disposition of all or substantially all of the capital stock, business or assets of Obligor to any other person or party, or (ii) the institution of any bankruptcy, reorganization, insolvency, debt agreement, or receivership proceedings by or against Obligor, or adjudication of Obligor as a bankrupt, or (iii) the assertion by Lender against Obligor of any of Lender's rights and remedies provided for under the Loan Agreement, including any modifications or amendments thereto, or under any other document(s) or instrument(s) executed by Obligor, or existing in Lender's favor in law, equity, or bankruptcy.

 

6.  Primary Liability . Subsidiary further agrees that its liability under this Deed shall be continuing, absolute, primary, and direct, and that Lender shall not be required to pursue any right or remedy it may have against Obligor in relation to the Ownership Interests but may seek enforcement of Subsidiary’s obligations under this Deed. Subsidiary affirms that it shall, upon demand, perform any obligations relevant to Subsidiary under the Loan Agreement to the extent within its reasonable control.

 

7.  Successors . Subsidiary agrees to assure that it shall cause this Deed to be unconditionally binding upon any successor(s) to its interests regardless of (i) the reorganization, merger, or consolidation of Subsidiary into or with another entity, corporate or otherwise, or the liquidation or dissolution of Subsidiary, or the sale or other disposition of all or substantially all of the capital stock, business, or assets of Subsidiary to any other person or party, or (ii) the institution of any bankruptcy, reorganization, insolvency, debt agreement, or receivership proceedings by or against Subsidiary, or adjudication of Subsidiary as insolvent, unless such proceedings terminate or set aside Subsidiary’s obligations hereunder.

 

Borqs India Subsidiary Undertaking (PFG)

 

2

 

 

8.  Authority, Etc . Subsidiary further warrants and represents to Lender that the execution and delivery of this Deed is not in contravention of Subsidiary's Constitutional Documents or applicable law (provided no such representation is made under Indian law with respect to a deemed transfer of the Ownership Interests prior to the approval or registration of a pledge (for security) by the Reserve Bank of India); that the execution and delivery of this Deed, and the performance thereof, has been duly authorized by Subsidiary's Board of Directors or any other applicable corporate office or body which is required to authorize the execution, delivery and performance of this Deed; and that the execution, delivery, and performance of this Deed will not result in a breach of, or constitute a default under, any loan agreement, indenture, or contract to which Subsidiary is a party or by or under which it is bound.

 

9.  No Third Party Rights . No express or implied provision, warranty, representation or term of this Deed is intended, or is to be construed, to confer upon any third person(s) any rights or remedies whatsoever, except as expressly provided in this Deed.

 

10.  Governing Law; Service of Process; Costs . This instrument and all acts and transactions pursuant or relating hereto and all rights and obligations of the parties hereto shall be governed, construed, and interpreted in accordance with the internal laws of the State of California. In order to induce Lender to accept this Deed and enter into the Loan Agreement, and as a material part of the consideration therefor, Subsidiary (i) consents to the non-exclusive jurisdiction of the state and federal courts sitting in Santa Clara County, California, USA, (ii) irrevocably appoints Obligor as its agent for service of process in connection with any action or proceeding brought under or in connection with the Loan Agreement or this Deed, and (iii) shall pay upon demand any and all Lender costs and expenses incurred in enforcing this Deed (without duplication for any such costs and expenses paid by Obligor).

 

11.  Further Assurances and Cooperation . Subsidiary will as a continuing obligation execute and deliver all such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby and otherwise facilitate compliance with the terms of the Loan Agreement, including execution and delivery of such instruments as may be required to perfect Lender’s security interest in Obligor’s Ownership Interests in Subsidiary.

 

12.  Issue of Shares/Other Equity Interests . Subsidiary hereby covenants that while this Deed is in effect, it shall not permit Obligor’s ownership of Subsidiary to be less than the lesser of 100% or Obligor’s ownership on the date hereof.

 

13.  Headings; Construction . The headings to the Sections and clauses hereof are descriptive only and shall not be used in construing the terms of this Deed. Any rule of construction to the effect that an agreement is to be construed against the party drafting the agreement is expressly disclaimed by Subsidiary.

 

Borqs India Subsidiary Undertaking (PFG)

 

3

 

 

14.  Specific Performance . Because of the difficulty of measuring economic losses to Lender as a result of a breach of Subsidiary’s obligations set forth in this Deed, and because of the immediate and irreparable damage that would be caused to Lender for which monetary damages would not be a sufficient remedy, the parties hereto agree that Lender shall be entitled to specific performance of the terms hereof, in addition to any other remedies at law or in equity. Subsidiary irrevocably waives any defense or claim in connection with Lender’s pursuit of such relief that an adequate remedy exists at law and the posting of any security (such as a bond) as a condition to seeking or securing such relief.

 

16.  Entire Agreement . This Agreement, the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement) constitutes the entire agreement between Subsidiary and Lender with respect to the subject matter hereof.

 

In witness whereof, Subsidiary has caused this Deed to be executed as of Effective Date by its duly authorized directors as a Deed.

 

Borqs Software Solutions Private Limited

 

/s/ Pat Sek Yuen Chan                              

Director

Name: Pat Sek Yuen Chan

 

/s/ Hareesh Ramanna                                 

Director

Name: Hareesh Ramanna

 

Borqs India Subsidiary Undertaking (PFG)

 

 

4

 

Exhibit 10.10

 

Date: March 8, 2019

 

 

 

 

BORQS International Holding Corp

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEED OF CHARGE OF SHARES

 

( over all shares in the capital of

BORQS Hong Kong Limited)

 

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS INTERNATIONAL HOLDING CORP , an exempted company duly incorporated and validly existing under the laws of the Cayman Islands, registered under company number 192127 with its registered address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Charged Assets ” means:

 

(a) the Shares;

 

(b) any further shares in the Company issued to the Chargor after the date of this Deed;

 

(c) all stocks, shares, securities, rights, monies or other assets accruing, offered or issued at any time (whether by way of bonus, redemption, exchange, purchase, substitution, conversion, preference, option or otherwise) to or in respect of any of the Shares or the shares referred to in paragraph (b) above; and

 

(d) all dividends, interest and other income at any time deriving from the Shares or the shares referred to in paragraph (b) above or any asset referred to in paragraph (c) above;

 

Company ” means BORQS Hong Kong Limited, a company incorporated under the laws of Hong Kong with registration number 1151010 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

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Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Chargor and BORQS Technologies, Inc. as guarantors and the Company and BORQS Technologies (HK) Limited as borrowers;

 

Party ” means a party to this Deed;

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Related Rights ” means:

 

(a) any dividend, distribution or interest paid or payable in relation to the Shares; and

 

(b) any right, money or property (including any shares, stocks, debentures, bonds or other securities or investments) accruing or offered at any time in relation to the Shares by way of redemption, substitution, exchange, bonus or preference, under option rights or otherwise;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means 1 ordinary share in the share capital of the Company which represent the entire issued share capital of the Company at the date of this Deed.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

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(c) this Deed , the Loan Agreement , the other Loan Documents or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 20.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the Laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Charge

 

As continuing security for the payment and discharge of the Secured Obligations until such time as the Secured Obligations are fully and finally paid and discharged, the Chargor as beneficial owner agrees to charge and hereby charges to the Lender by way of fixed charge, all of its present and future rights, title, benefit and interest in and to the Charged Assets.

 

2.3. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following:

 

(a) on the date of the execution of this Deed, valid and duly issued share certificate(s) in the name of the Chargor in respect of the Shares and any other Charged Assets then held by the Chargor to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender (or its nominee);

 

(b) on the date of the execution of this Deed, undated duly executed instrument(s) of transfer and sold note(s) in respect of the Shares and such other Charged Assets, all substantially in the form set out in Schedule 1 hereto;

 

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(c) on the date of the execution of this Deed duly signed but undated letters of resignation of all the directors of the Company and an undated written resolution of all the directors of the Company to accept the directors’ resignations, appoint person(s) as the Lender may nominate as new director(s) and approve the transfer of the Charged Assets, together with an authority to complete the same following an Event of Default, all in the forms set out in Schedule 1 hereto; and

 

(d) all other documents requested by the Lender in order to register such Charged Assets in its name or in the name of its nominee(s) or to effect a valid transfer of any Charged Assets.

 

2.4. Registration

 

The Chargor shall immediately after the execution of this Deed, enter particulars of the security created pursuant to this Deed in its register of mortgages and charges (“ Register of Mortgages and Charges ”) maintained at its registered office in the Cayman Islands pursuant to section 54 of the Companies Law (2018 Revision) of the Cayman Islands, and promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure to be delivered to the Lender a certified copy of the updated Register of Mortgages and Charges recording the particulars of the security created pursuant to this Deed.

 

2.5. Continuing Obligations

 

The Chargor covenants to and agrees with the Lender that it will at its own cost:

 

(a) deposit promptly with the Lender valid and duly issued share certificate(s) in respect of any Charged Assets and all other securities in the share capital of the Company which become subject to this Deed after the date of this Deed to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender or its nominee, together with an undated duly executed instrument of transfer and sold note in respect thereof, all substantially in the form set out in Schedule 1 hereto and such other documents as the Lender may reasonably require for perfecting its title to the Charged Assets;

 

(b) procure the prompt delivery of those documents referred to in Clause 2.3(c) in respect of any directors of the Company appointed after the date of this Deed; and

 

(c) on demand made by the Lender following an Event of Default, procure that the Shares and such other Charged Assets as the Lender may stipulate in writing are transferred into the name of the Lender and/or its nominee(s) who shall hold the Shares upon and subject to the terms of this Deed and such transfers are registered in the books of the Company and that new share certificates in respect thereof in the name of the Lender and/or its nominee(s) are issued and delivered to the Lender.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

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(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

4. Covenants

 

4.1. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset;

 

(c) take or permit the taking of any action which may result in (i) the rights attaching to any Charged Asset being altered or (ii) further securities in the Company being issued, provided that such restriction does not apply to:

 

(A) any alteration which is necessary for effecting any action or step permitted under the Loan Documents and which would not result in any Material Adverse Change or otherwise prejudice any right or remedy of the Lender under the Loan Documents, provided that the Chargor shall notify the Lender in writing promptly upon any such alteration; and

 

(B) any further issuance of securities in the Company to the Chargor permitted under the Loan Documents and provided that the Chargor shall promptly deliver to the Lender all documents referred to in Clause 2.5(a) above in relation to the newly issued shares; or

 

(d) vote in favour of a resolution to amend, modify or change the articles of association of the Company;

 

(e) unless directed in writing to do so by the Lender it shall not prove in a liquidation or winding up of the Company until all the Secured Obligations are paid in full and if directed to prove by the Lender, the Chargor shall hold all monies received by it on trust for the Lender to satisfy the Secured Obligations; or

 

(f) continue its existence in a jurisdiction outside of the Cayman Islands or attempt or resolve to do so.

 

4.2. Notification

 

The Chargor shall notify the Lender within 14 days of receipt of every notice received by it in relation to the Charged Assets; and (if required by the Lender) shall immediately provide it with a copy of that notice and either (A) comply with such notice or (B) make such objections to it as the Lender may reasonably require or approve.

 

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4.3. Calls

 

The Chargor shall punctually pay, or procure the punctual payment of all calls, instalments and other payments that may become due in respect of the Charged Assets and agrees that if the Chargor fails to do so, the Lender may, in its absolute discretion, make such payments on its behalf. Any sums so paid by the Lender shall be repayable by the Chargor to the Lender on demand together with interest at the Default Rate (both before and after judgment) from the date on which those payments were made by the Lender.

 

4.4. Compliance with laws

 

The Chargor shall comply in all material respects with all obligations in relation to the Charged Assets under any present or future law, regulation, order or instrument or under bye-laws, regulations or requirements of any competent authority or other approvals, licences and consents.

 

4.5. Not prejudice

 

The Chargor shall not do, cause or permit to be done anything which may in any way depreciate, jeopardise or otherwise prejudice the value or marketability of any Charged Asset (or make any omission which has such an effect).

 

5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

(A) the re-execution of this Deed or such Loan Document;

 

(B) the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

(C) the giving of any notice, order or direction and the making of any filing or registration,

 

which, in any such case, the Lender may think expedient.

 

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5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

6. Rights and obligations in respect of Shares

 

6.1. Before Event of Default

 

Until an Event of Default occurs, the Chargor shall be entitled to:

 

(a) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(b) exercise all voting and all other rights and powers attaching to the Shares, provided that it must not do so in a manner which is prejudicial to the interests of the Lender.

 

6.2. Following an Event of Default

 

At any time following the occurrence of an Event of Default, the Lender may date, complete and deliver the instrument(s) of transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

6.3. Exoneration of the Lender

 

At any time when any Share is registered in the name of the Lender or its nominee, the Lender shall be under no duty to:

 

(a) ensure that any dividends, distributions or other monies payable in respect of such Share are duly and promptly paid or received by it or its nominee; or

 

(b) verify that the correct amounts are paid or received; or

 

(c) take any action in connection with the taking up of any (or any offer of any) Related Rights in respect of or in substitution for such Share.

 

7. Power to remedy

 

7.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

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7.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 7 shall not render it liable as a mortgagee in possession.

 

7.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 7 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

8. Representations and Warranties

 

8.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as an exempted company with limited liability with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has and will at all times have the power and authority to enter into and perform its obligations under this this Deed, and has duly authorised the execution and delivery of this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

(e) it has obtained all the necessary authorisations and consents to enable it to enter into this Deed and the necessary authorisations and consents will remain in full force and effect at all times during the substance of the security constituted by this Deed;

 

(f) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(g) the Shares are fully paid and constitute the entire issued share capital of the Company;

 

(h) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

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(i) as at the date of this Deed, the information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(j) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

8.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 8 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 8.1(i), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

8.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 8.1.

 

9. Enforcement of Security

 

9.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default.

 

9.2. Statutory powers

 

The power of sale and other powers conferred to the Lender pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

9.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

9.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

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(b) implement the resignations of the directors of the Company and appoint the Lender’s nominees in their stead and/or, if it has not already done so, effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of the Company; and/or

 

(c) apply all dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

9.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrance shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

9.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

9.7. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 9.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

9.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

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9.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 9.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

9.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 9.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

9.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

10. Receivership

 

10.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor, appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

10.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

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10.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

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(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 8.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

10.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

11. Power of Attorney

 

11.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

11.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

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12. Expenses and Indemnity

 

12.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

12.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 
(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

12.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

12.4. Default Interest

 

The amounts payable under this Clause 12 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

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13. Application of Proceeds

 

13.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 

(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) to the Chargor and/or the claims of those entitled to any surplus.

 

13.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 13.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

13.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order,

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 13.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 13.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

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14. Protection of Lender

 

14.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

14.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

14.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

14.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

14.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

16

 

 

15. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

16. Redemption of Prior Encumbrances

 

On or at any time after the Security becomes enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor;

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

17. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

18. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

19. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

17

 

 

20. Assignment

 

20.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each party to this Deed and its successors in title and permitted assigns.

 

20.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

20.3. Assignment by the Lender

 

The Lender may assign or otherwise transfer all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

21. Notices

 

21.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement, provided that for purposes of this Deed, any notice, demand or other communication may also be sent to the registered office of Chargor as set forth on page 1 of this Deed.

 

21.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

22. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

23. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

24. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by all the Parties.

 

25. Governing Law and Jurisdiction

 

25.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

18

 

 

25.2. Hong Kong Jurisdiction

 

The parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

25.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

 

25. Process Agent

 

The service of any process connected with proceedings in the Hong Kong courts and relating to this Deed will be deemed to have been validly served on the Chargor if it is received by the Company at its registered address or the address specified in Section 8.5 (Notices) of the Loan Agreement and service will be deemed to have been acknowledged by the Chargor if it is acknowledged by the Company.

 

19

 

 

schedule 1

 

Part 1

Authority

 

To: Partners For Growth V, L.P. (the “ Lender ”)

Date: [●] 2019

Dear Sirs,

 

BORQS HONG KONG LIMITED (the “ Company ”)

 

We refer to the deed of charge of shares dated [●] 2019 (as may be amended from time to time, the “ Share Charge ”) by BORQS International Holding Corp and the Lender.

 

The undersigned irrevocably authorises the Lender or any of its directors or duly authorised officers, to complete, date and put into effect and/or otherwise use the following at any time after the Share Charge has become enforceable pursuant to its terms as the Lender considers fit in the Lender’s absolute discretion:

 

(a) the annexed signed resignation letter and acknowledgment;

 

(b) the attached signed instrument(s) of transfer and signed sold notes by the Chargor; and

 

(c) the attached signed written resolutions of all directors of the Company.

 

IN WITNESS of which this Authority has been executed by the undersigned as a deed and has been delivered.

 

SIGNED, SEALED AND DELIVERED

by [◆]

 

)

)

)

)

)

 

20

 

 

Part 2

Resignation of Directors

 

To: The Board of Directors

 

BORQS HONG KONG LIMITED

 

Date: ____________

Dear Sirs,

 

BORQS HONG KONG LIMITED (“Company”)

 

I, ________________________ [ Name of Director ], hereby tender my unconditional and irrevocable resignation as director of the Company effective as of today’s date.

 

I confirm that I have no claim against the Company for fees, compensation for loss of office or otherwise and that there is no outstanding agreement or arrangement under which the Company or any of its subsidiaries or associated company has or would have any obligation to me or under which I would derive any benefit in my capacity as the director of the Company.

 

Yours faithfully,

 

SIGNED, SEALED AND DELIVERED

by [◆]

)

)
)

 

 

 

__________________________________________________________________________________

[on Duplicate Copy ]

 

To: Registrar of Companies

 

Certificate

pursuant to Section 464(3)

Companies Ordinance

 

I hereby confirm that the original copy of this letter was left at the Registered Office of the Company on                                      .

 

Signed: _____________________________

[ Name of Director ]

 

21

 

 

Part 3

Resolutions

 

BORQS HONG KONG LIMITED

( “Company” )

 

Written Resolutions of the Sole Director of the Company in accordance with

the Company’s Articles of Association

__________________________________________________________________________________

 

1. Transfer of Shares

 

That the following transfer(s) be approved, subject to stamping, and that the original share certificate(s) be cancelled and new share certificate(s) be issued in favour of the transferee(s) and such transfer(s) be registered and entered in the Register of Members of the Company:

 

  Transferor Transferee(s) No. of Share(s)
 

 

[◆]

 

 

[◆]

 

2. Waiver of Rights of Refusal

 

That any rights of refusal which we may have under the constitutional documents of the Company for the transfer of shares referred to in paragraph 1 above or otherwise are hereby waived by us.

 

3. Waiver of Lien

 

That any lien on any share of the Company under the constitutional documents of the Company or otherwise is hereby waived by each of us.

 

4. Appointment of Director(s)

 

That the following person(s) be appointed as Director(s) of the Company with immediate effect:

 

5. Resignation of Director(s)

 

That the unconditional and irrevocable resignation of each of the following Director(s) of the Company be accepted with immediate effect.

 

Dated: ________________

 

[ signed by Directors ]    
     
     
[ Name of Director ]   [ Name of Director ]

 

22

 

 

Part 4

Instrument of Transfer

 

 

BORQS HONG KONG LIMITED

 

 

 

We, BORQS INTERNATIONAL HOLDING CORP, a company duly organized and existing under and by virtue of the Laws of The Cayman Islands, registered under company number 192127 and with registered office address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands ( Transferor ),

 

for good and valuable consideration

 

paid to us by ______________________________________________________________________ ( Transferee ), do hereby transfer to the said Transferee the ___ ordinary share(s) standing in our name in the Register of

 

BORQS HONG KONG LIMITED

 

to hold unto the said Transferee his/its Executors, Administrators or Assigns, subject to the several conditions upon which we hold the same at the time of execution hereof.

 

And we the said Transferee do hereby agree to take the said share subject to the same conditions.

 

Witness to our hands

 

Witness to the signature(s) of    

 

Witness signature

   

 

Witness name

   

 

 

   

 

Witness address

  (Transferor)
   

 

 

   

 

Place of execution

 

Place of execution

   

 

Witness to the signature(s) of    

 

Witness signature

   

 

Witness name

   

 

 

 

 

 

 

Witness address

 

 

(Transferee)

 

 

   

 

 

 

 

Place of execution

 

Place of execution

   

 

23

 

 

Part 5

Bought and Sold Notes

SOLD NOTE

 

Buyer  
Address  
Occupation  

 

Name of company in which the share(s) to be transferred -

 

BORQS HONG KONG LIMITED

 

Number of share(s)        
Consideration received  
           

  (Seller)

For and on behalf of BORQS INTERNATIONAL HOLDING CORP

 

 

    Director

 

Dated

 

 

 

 

BOUGHT NOTE

 

Seller BORQS International Holding Corp
Address PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands
Occupation Corporation

 

Name of company in which the share(s) to be transferred -

 

BORQS HONG KONG LIMITED

 

Number of share(s)        
Consideration paid  

 

  (Buyer)

 

 

    Director

 

Dated

 

24

 

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender on the day and year first above written.

 

EXECUTED and DELIVERED )
as a DEED by BORQS INTERNATIONAL HOLDING CORP )

 

Acting by: /s/ Pat Sek Yuen Chan

 

Name: Pat Sek Yuen Chan

Title: Director

 

in the presence of :

 

/s/ Anthony Chan                           

Witness name: Anthony Chan

Witness Address

Witness occupation: CFO

 

EXECUTED and DELIVERED

as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer                                    

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

25 

 

Exhibit 10.11

 

Date: March 8, 2019

 

 

 

 

BORQS International Holding Corp

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

DEED OF CHARGE OF SHARES

 

( over 9,999 ordinary shares in the capital of

BORQS Software Solutions Private Limited)

 

 

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS INTERNATIONAL HOLDING CORP , an exempted company duly incorporated and validly existing under and by virtue of the laws of the Cayman Islands, registered under company number 192127 with its registered office at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “ Chargor” ); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender” ).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Charged Assets ” means:

 

(a) the Shares;

 

(b) any further shares in the Company issued to the Chargor after the date of this Deed;

 

(c) all stocks, shares, securities, rights, monies or other assets accruing, offered or issued at any time (whether by way of bonus, redemption, exchange, purchase, substitution, conversion, preference, option or otherwise) to or in respect of any of the Shares or the shares referred to in paragraph (b) above; and

 

(d) all dividends, interest and other income at any time deriving from the Shares or the shares referred to in paragraph (b) above or any asset referred to in paragraph (c) above;

 

Company ” means BORQS Software Solutions Private Limited, a company formed under the laws of India with its principal place of business at Prestige Al-Kareem, No. 3 Edward Road, Civil Station, Corporation Division NO.72, Bangalore, Karnataka, INDIA 560052;

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

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Loan Agreement” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between (i) the Lender as lender; (ii) the Chargor and BORQS Technologies Inc. as guarantors; and (iii) the Company and BORQS Technologies (HK) Limited as borrowers;

 

Party ” means a party to this Deed;

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Related Rights ” means:

 

(a) any dividend, distribution or interest paid or payable in relation to the Shares; and

 

(b) any right, money or property (including any shares, stocks, debentures, bonds or other securities or investments) accruing or offered at any time in relation to the Shares by way of redemption, substitution, exchange, bonus or preference, under option rights or otherwise;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means 9,999 ordinary shares in the share capital of the Company.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

2

 

 

(c) this Deed , the Loan Agreement , the other Loan Documents or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 20.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Law, 2014 of the Cayman Islands to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

Subject to the Chargor receiving required approval from the Reserve Bank of India (to the complete satisfaction of the Lender) and such other regulatory approvals as may be required in accordance with the laws of India, the Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Charge

 

Subject to the Chargor receiving required approvals from the Reserve Bank of India (to the complete satisfaction of the Lender) and any other regulatory approvals as may be required in accordance with the laws of India, for the creation of this charge as continuing security for the payment and discharge of the Secured Obligations until such time as the Secured Obligations are fully and utterly paid up by the Chargor to the Lender, in accordance with the provisions of the Loan Agreement, the Chargor as beneficial owner agrees to charge and hereby charges to the Lender by way of fixed charge, all of its present and future rights, title, benefit and interest in and to the Charged Assets.

 

3

 

 

2.3. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following:

 

(a) on the date of the execution of this Deed, valid and duly issued share certificate(s) in the name of the Chargor in respect of the Shares and any other Charged Assets then held by the Chargor to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender (or its nominee);

 

(b) on the date of the execution of this Deed, undated duly executed instrument(s) of transfer and sold note(s) in respect of the Shares and such other Charged Assets, all substantially in the form set out in Schedule 1 hereto;

 

(c) on the date of the execution of this Deed duly signed but undated letters of resignation of all the directors of the Company and an undated written resolution of all the directors of the Company to accept the directors’ resignations, appoint person(s) as the Lender may nominate as new director(s) and approve the transfer of the Charged Assets, together with an authority to complete the same following an Event of Default, all in the forms set out in Schedule 1 hereto; and

 

(d) all other documents requested by the Lender in order to register such Charged Assets in its name or in the name of its nominee(s) or to effect a valid transfer of any Charged Assets.

 

2.4. Registration

 

The Chargor shall immediately after the execution of this Deed, enter particulars of the security created pursuant to this Deed in its register of mortgages and charges (“ Register of Mortgages and Charges ”) maintained at its registered office in the Cayman Islands pursuant to section 54 of the Companies Law (2018 Revision) of the Cayman Islands, and promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure to be delivered to the Lender a certified copy of the updated Register of Mortgages and Charges recording the particulars of the security created pursuant to this Deed.

 

2.5. Continuing Obligations

 

The Chargor covenants to and agrees with the Lender that it will at its own cost:

 

(a) deposit promptly with the Lender valid and duly issued share certificate(s) in respect of any Charged Assets and all other securities in the share capital of the Company which become subject to this Deed after the date of this Deed to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender or its nominee, together with an undated duly executed instrument of transfer and sold note in respect thereof, all substantially in the form set out in Schedule 1 hereto and such other documents as the Lender may reasonably require for perfecting its title to the Charged Assets;

 

4

 

 

(b) procure the prompt delivery of those documents referred to in Clause 2.3(c) in respect of any directors of the Company appointed after the date of this Deed; and

 

(c) on demand made by the Lender following an Event of Default, procure that the Shares and such other Charged Assets as the Lender may stipulate in writing are transferred into the name of the Lender and/or its nominee(s) who shall hold the Shares upon and subject to the terms of this Deed and such transfers are registered in the books of the Company and that new share certificates in respect thereof in the name of the Lender and/or its nominee(s) are issued and delivered to the Lender.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part or any other matter or thing whatsoever. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

4. Covenants

 

4.1. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset;

 

(c) take or permit the taking of any action which may result in (i) the rights attaching to any Charged Asset being altered or (ii) further securities in the Company being issued, provided that such restriction does not apply to:

 

5

 

 

(A) any alteration which is necessary for effecting any action or step permitted under the Loan Documents and which would not result in any Material Adverse Change or otherwise prejudice any right or remedy of the Lender under the Loan Documents, provided that the Chargor shall notify the Lender in writing promptly upon any such alteration; and

 

(B) any further issuance of securities in the Company to the Chargor permitted under the Loan Documents and provided that the Chargor shall promptly deliver to the Lender all documents referred to in Clause 2.5(a) above in relation to the newly issued shares; or

 

(d) vote in favour of a resolution to amend, modify or change the memorandum and articles of association of the Company;

 

(e) unless directed in writing to do so by the Lender it shall not prove in a liquidation or winding up of the Company until all the Secured Obligations are paid in full and if directed to prove by the Lender, the Chargor shall hold all monies received by it on trust for the Lender to satisfy the Secured Obligations.

 

(f) continue its existence in a jurisdiction outside of the Cayman Islands or attempt or resolve to do so.

 

4.2. Notification

 

The Chargor shall notify the Lender within 14 days of receipt of every notice received by it in relation to the Charged Assets; and (if required by the Lender) shall immediately provide it with a copy of that notice and either (A) comply with such notice or (B) make such objections to it as the Lender may reasonably require or approve.

 

4.3. Calls

 

The Chargor shall punctually pay, or procure the punctual payment of all calls, instalments and other payments that may become due in respect of the Charged Assets and agrees that if the Chargor fails to do so, the Lender may, in its absolute discretion, make such payments on its behalf. Any sums so paid by the Lender shall be repayable by the Chargor to the Lender on demand together with interest at the Default Rate (both before and after judgment) from the date on which those payments were made by the Lender.

 

4.4. Compliance with laws

 

The Chargor shall comply in all material respects with all obligations in relation to the Charged Assets under any present or future law, regulation, order or instrument or under bye-laws, regulations or requirements of any competent authority or other approvals, licences and consents and in particular shall take all required steps to procure the approval from the Reserve Bank of India (to the complete satisfaction of the Lender) and any other regulatory approvals as may be required in accordance with the laws of India for the creation of this charge.

 

4.5. Not prejudice

 

The Chargor shall not do, cause or permit to be done anything which may in any way depreciate, jeopardise or otherwise prejudice the value or marketability of any Charged Asset (or make any omission which has such an effect).

 

6

 

 

5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside the Cayman Islands equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

(A) the re-execution of this Deed or such Loan Document;

 

(B) the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

(C) the giving of any notice, order or direction and the making of any filing or registration, which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

6. Rights and obligations in respect of Shares

 

6.1. Before Event of Default

 

Until an Event of Default occurs, the Chargor shall be entitled to:

 

(a) receive and retain all dividends, distributions and other monies paid on or derived from the Shares and any such dividends and other distributions received by the Chargor after such time shall be held in trust by the Chargor for the Lender and be paid or transferred to the Lender on demand to be applied towards the discharge of the Secured Obligations; and

 

7

 

 

(b) solely and exclusively to exercise all voting and all other rights and powers attaching to the Shares, in such manner as the Lender may in its absolute discretion determine provided that it must not do so in a manner which is prejudicial to the interests of the Lender.

 

6.2. Following an Event of Default

 

At any time following the occurrence of an Event of Default, the Lender may date, complete and deliver the instrument(s) of transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

6.3. Exoneration of the Lender

 

At any time when any Share is registered in the name of the Lender or its nominee, the Lender shall be under no duty to:

 

(a) ensure that any dividends, distributions or other monies payable in respect of such Share are duly and promptly paid or received by it or its nominee; or

 

(b) verify that the correct amounts are paid or received; or

 

(c) take any action in connection with the taking up of any (or any offer of any) Related Rights in respect of or in substitution for such Share.

 

7. Power to remedy

 

7.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

7.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 7 shall not render it liable as a mortgagee in possession.

 

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7.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 7 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

8. Representations and Warranties

 

8.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as an exempted company with limited liability with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has and will at all times have the power and authority to enter into and perform its obligations under this this Deed, and has duly authorised the execution and delivery of this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;
(e) it has obtained all the necessary authorisations and consents to enable it to enter into this Deed and the necessary authorisations and consents will remain in full force and effect at all times during the substance of the security constituted by this Deed;

 

(f) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(g) the Shares are fully paid and constitute the entire issued share capital of the Company;

 

(h) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

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(i) as at the date of this Deed, the information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(j) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

8.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 8 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 8.1(i), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

8.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 8.1.

 

9. Enforcement of Security

 

9.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default PROVIDED that the rights of Lender to exercise remedies hereunder with respect to the Company that would, under the laws of India, constitute a “transfer” of the ownership interests of debtor in a subsidiary shall not be exercised by the Lender until such time as it has received the registration or approval of the transfer (for security) of such ownership interests from the Reserve Bank of India PROVIDED further that the custody of the share certificates representing such ownership interests with Lender is not intended by the parties to effect a transfer of such ownership interests.

 

9.2. Statutory powers

 

The power of sale and other powers conferred to the Lender pursuant to the this Deed shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

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9.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

9.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) implement the resignations of the directors of the Company and appoint the Lender’s nominees in their stead and/or, if it has not already done so, effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of the Company; and/or

 

(c) apply all dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

9.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrance shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

9.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

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9.7. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 9.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

9.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

9.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 9.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

9.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 9.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

9.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

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(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

10. Receivership

 

10.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor, appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

10.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

10.3. Rights of the Receiver

 

Each Receiver shall have the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

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(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 8.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

10.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

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11. Power of Attorney

 

11.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

11.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

12. Expenses and Indemnity

 

12.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

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12.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 

(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

12.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

12.4. Default Interest

 

The amounts payable under this Clause 12 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

13. Application of Proceeds

 

13.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 

(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

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(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) to the Chargor and/or the claims of those entitled to any surplus.

 

13.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 13.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

13.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order, the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

  

Any amount due from the Chargor under this Clause 13.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 13.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

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14. Protection of Lender

 

14.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

14.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

14.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

14.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

14.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

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For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

15. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

16. Redemption of Prior Encumbrances

 

On or at any time after the Security becomes enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor;

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

17. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

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18. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

19. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

20. Assignment

 

20.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each party to this Deed and its successors in title and permitted assigns.

 

20.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

20.3. Assignment by the Lender

 

The Lender may assign or otherwise transfer all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

21. Notices

 

21.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement and where notices are to be sent to the Chargor such notices must also be sent to the Chargor at its registered office as noted in this Deed.

 

21.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

22. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

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23. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

24. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by all the Parties.

 

25. Governing Law and Jurisdiction

 

25.1. Governing Law

 

This Deed is governed by and will be construed in accordance with the laws of the Cayman Islands.

 

25.2. Cayman Islands Jurisdiction

 

The parties submit to the non-exclusive jurisdiction of the Cayman Islands courts and each party waives any objection to proceedings in the Cayman Islands on the grounds of venue or inconvenient forum.

 

25.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

 

25. Process Agent

 

The service of any process connected with proceedings in the Cayman Islands courts and relating to this Deed will be deemed to have been validly served on the Chargor if it is received by the Company at its registered address or the address specified in Section 8.5 (Notices) of the Loan Agreement and service will be deemed to have been acknowledged by the Chargor if it is acknowledged by the Company.

 

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schedule 1

 

Part 1

Authority

 

 

To: Partners For Growth V, L.P. (the “ Lender ”)

 

Date: ____________ 2019

 

Dear Sirs,

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED (the “ Company ”)

 

We refer to the Deed of Charge of shares dated __________________ 2019 (as may be amended from time to time, the “ Share Charge ”) by BORQS International Holding Corp and the Lender.

 

The undersigned irrevocably authorises the Lender or any of its directors or duly authorised officers, to complete, date and put into effect and/or otherwise use the following at any time after the Share Charge has become enforceable pursuant to its terms as the Lender considers fit in the Lender’s absolute discretion:

 

(a) the annexed signed resignation letter and acknowledgment;

 

(b) the attached signed instrument(s) of transfer and signed sold notes by the Chargor; and

 

(c) the attached signed written resolutions of all directors of the Company.

 

IN WITNESS of which this Authority has been executed by the undersigned as a deed and has been delivered.

 

SIGNED, SEALED AND DELIVERED

by ___________________________

 

)

)

)

)

)

 

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Part 2

Resignation of Directors

 

 

To: The Board of Directors

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

 

Date: ____________

Dear Sirs,

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED (“Company”)

 

I, ________________________ [ Name of Director ], hereby tender my unconditional and irrevocable resignation as director of the Company effective as of today’s date.

 

I confirm that I have no claim against the Company for fees, compensation for loss of office or otherwise and that there is no outstanding agreement or arrangement under which the Company or any of its subsidiaries or associated company has or would have any obligation to me or under which I would derive any benefit in my capacity as the director of the Company.

 

Yours faithfully,

 

SIGNED, SEALED AND DELIVERED

by ___________________________

)

)
)

 

 

 

[on Duplicate Copy ]

 

To: Registrar of Companies

Certificate

pursuant to Section 464(3)

Companies Ordinance

 

I hereby confirm that the original copy of this letter was left at the Registered Office of the Company on .

 

Signed: _____________________________

[ Name of Director ]

 

23

 

 

Part 3

Resolutions

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

( “Company” )

 

Written Resolutions of the Sole Director of the Company in accordance with

the Company’s Articles of Association

 

 

 

1. Transfer of Shares

 

That the following transfer(s) be approved, subject to stamping, and that the original share certificate(s) be cancelled and new share certificate(s) be issued in favour of the transferee(s) and such transfer(s) be registered and entered in the Register of Members of the Company:

 

Transferor Transferee(s) No. of Share(s)

 

[◆]

 

 

[◆]

 

2. Waiver of Rights of Refusal

 

That any rights of refusal which we may have under the constitutional documents of the Company for the transfer of shares referred to in paragraph 1 above or otherwise are hereby waived by us.

 

3. Waiver of Lien

 

That any lien on any share of the Company under the constitutional documents of the Company or otherwise is hereby waived by each of us.

 

4. Appointment of Director(s)

 

That the following person(s) be appointed as Director(s) of the Company with immediate effect:

 

5. Resignation of Director(s)

 

That the unconditional and irrevocable resignation of each of the following Director(s) of the Company be accepted with immediate effect.

 

Dated: ________________

 

[ signed by Directors ]

_______________________________ ________________________________
[ Name of Director ] [ Name of Director ]

 

24

 

 

Part 4

Instrument of Transfer

 

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

 

 

 

We, BORQS INTERNATIONAL HOLDING CORP, a company duly organized and existing under and by virtue of the Laws of The Cayman Islands, registered under company number 192127 and with registered office address at PO Box 309, Ugland House, Grand Cayman, KY1-1104 ( Transferor ),

 

for good and valuable consideration

 

paid to us by ______________________________________________________________________ ( Transferee ),

 

do hereby transfer to the said Transferee the ___ ordinary share(s) standing in our name in the Register of

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

 

to hold unto the said Transferee his/its Executors, Administrators or Assigns, subject to the several conditions upon which we hold the same at the time of execution hereof.

 

And we the said Transferee do hereby agree to take the said share subject to the same conditions.

 

Witness to our hands

 

Witness to the signature(s) of    

 

Witness signature

   

 

Witness name

   

 

 

   

 

Witness address

  (Transferor)
   

 

 

   

 

Place of execution

 

Place of execution

   

 

Witness to the signature(s) of    

 

Witness signature

   

 

Witness name

   

 

 

 

 

 

 

Witness address

 

 

(Transferee)

 

 

   

 

 

 

 

Place of execution

 

Place of execution

   

 

25

 

 

Part 5

Bought and Sold Notes

 

 


SOLD NOTE

 

 

Buyer  
Address  
Occupation  

 

Name of company in which the share(s) to be transferred -

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

 

Number of share(s)        
Consideration received  
           

 

  (Seller)

For and on behalf of BORQS INTERNATIONAL HOLDING CORP

 

 

    Director

Dated

 

 

BOUGHT NOTE

 

 

Seller BORQS International Holding Corp
Address P.O. Box 309, Ugland House, Grand Cayman, KY1-1104
Occupation Corporation

 

Name of company in which the share(s) to be transferred -

 

BORQS SOFTWARE SOLUTIONS PRIVATE LIMITED

 

Number of share(s)        
Consideration paid  

 

  (Buyer)

 

 

    Director

 

Dated

 

26

 

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender on the day and year first above written.

 

EXECUTED and DELIVERED )
as a DEED by BORQS INTERNATIONAL HOLDING CORP )
   
Acting by: /s/ Pat Sek Yuen Chan  
   
Name: Pat Sek Yuen Chan  
Title: Director  
   
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of:

 

/s/ Amy Spencer                              

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

27

 

 

 

Exhibit 10.12

 

 

 

 

Date: March 8, 2019
 
 
 
BORQS International Holding Corp
as Chargor
 
Partners for Growth V, L.P.
as Lender
 
 
 
 
 
 
 
 
 
 
DEED OF CHARGE OF SHARES
 
( over all shares in the capital of  
BORQS Technologies (HK) Limited)

 

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS INTERNATIONAL HOLDING CORP , an exempted company duly incorporated and validly existing under the laws of the Cayman Islands, registered under company number 192127 with its registered address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Charged Assets ” means:

 

(a) the Shares;

 

(b) any further shares in the Company issued to the Chargor after the date of this Deed;

 

(c) all stocks, shares, securities, rights, monies or other assets accruing, offered or issued at any time (whether by way of bonus, redemption, exchange, purchase, substitution, conversion, preference, option or otherwise) to or in respect of any of the Shares or the shares referred to in paragraph (b) above; and

 

(d) all dividends, interest and other income at any time deriving from the Shares or the shares referred to in paragraph (b) above or any asset referred to in paragraph (c) above;

 

Company ” means BORQS Technologies (HK) Limited, a company incorporated under the laws of Hong Kong with registration number 2688549 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

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Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Chargor and BORQS Technologies, Inc. as guarantors and the Company and BORQS Hong Kong Limited as borrowers;

 

Party ” means a party to this Deed;

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Related Rights ” means:

 

(a) any dividend, distribution or interest paid or payable in relation to the Shares; and

 

(b) any right, money or property (including any shares, stocks, debentures, bonds or other securities or investments) accruing or offered at any time in relation to the Shares by way of redemption, substitution, exchange, bonus or preference, under option rights or otherwise;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means 1 ordinary share in the share capital of the Company which represent the entire issued share capital of the Company at the date of this Deed.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

2

 

 

(c) this Deed , the Loan Agreement , the other Loan Documents or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 20.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the Laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Charge

 

As continuing security for the payment and discharge of the Secured Obligations until such time as the Secured Obligations are fully and utterly paid up by the Chargor to the Lender, in accordance with the provisions of the Loan Agreement, the Chargor as beneficial owner agrees to charge and hereby charges to the Lender by way of fixed charge, all of its present and future rights, title, benefit and interest in and to the Charged Assets.

 

2.3. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following:

 

(a) on the date of the execution of this Deed, valid and duly issued share certificate(s) in the name of the Chargor in respect of the Shares and any other Charged Assets then held by the Chargor to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender (or its nominee);

 

3

 

 

(b) on the date of the execution of this Deed, undated duly executed instrument(s) of transfer and sold note(s) in respect of the Shares and such other Charged Assets, all substantially in the form set out in Schedule 1 hereto;

 

(c) on the date of the execution of this Deed duly signed but undated letters of resignation of all the directors of the Company and an undated written resolution of all the directors of the Company to accept the directors’ resignations, appoint person(s) as the Lender may nominate as new director(s) and approve the transfer of the Charged Assets, together with an authority to complete the same following an Event of Default, all in the forms set out in Schedule 1 hereto; and

 

(d) all other documents requested by the Lender in order to register such Charged Assets in its name or in the name of its nominee(s) or to effect a valid transfer of any Charged Assets.

 

2.4. Registration

 

The Chargor shall immediately after the execution of this Deed, enter particulars of the security created pursuant to this Deed in its register of mortgages and charges (“ Register of Mortgages and Charges ”) maintained at its registered office in the Cayman Islands pursuant to section 54 of the Companies Law (2018 Revision) of the Cayman Islands, and promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure to be delivered to the Lender a certified copy of the updated Register of Mortgages and Charges recording the particulars of the security created pursuant to this Deed.

 

2.5. Continuing Obligations

 

The Chargor covenants to and agrees with the Lender that it will at its own cost:

 

(a) deposit promptly with the Lender valid and duly issued share certificate(s) in respect of any Charged Assets and all other securities in the share capital of the Company which become subject to this Deed after the date of this Deed to the intent that the same shall be, following an Event of Default, immediately registered in the name of the Lender or its nominee, together with an undated duly executed instrument of transfer and sold note in respect thereof, all substantially in the form set out in Schedule 1 hereto and such other documents as the Lender may reasonably require for perfecting its title to the Charged Assets;

 

(b) procure the prompt delivery of those documents referred to in Clause 2.3(c) in respect of any directors of the Company appointed after the date of this Deed; and

 

(c) on demand made by the Lender following an Event of Default, procure that the Shares and such other Charged Assets as the Lender may stipulate in writing are transferred into the name of the Lender and/or its nominee(s) who shall hold the Shares upon and subject to the terms of this Deed and such transfers are registered in the books of the Company and that new share certificates in respect thereof in the name of the Lender and/or its nominee(s) are issued and delivered to the Lender.

 

4

 

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

4. Covenants

 

4.1. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset;

 

(c) take or permit the taking of any action which may result in (i) the rights attaching to any Charged Asset being altered or (ii) further securities in the Company being issued, provided that such restriction does not apply to:

 

(A) any alteration which is necessary for effecting any action or step permitted under the Loan Documents and which would not result in any Material Adverse Change or otherwise prejudice any right or remedy of the Lender under the Loan Documents, provided that the Chargor shall notify the Lender in writing promptly upon any such alteration; and

 

(B) any further issuance of securities in the Company to the Chargor permitted under the Loan Documents and provided that the Chargor shall promptly deliver to the Lender all documents referred to in Clause 2.5(a) above in relation to the newly issued shares; or

 

(d) vote in favour of a resolution to amend, modify or change the articles of association of the Company;

 

(e) unless directed in writing to do so by the Lender it shall not prove in a liquidation or winding up of the Company until all the Secured Obligations are paid in full and if directed to prove by the Lender, the Chargor shall hold all monies received by it on trust for the Lender to satisfy the Secured Obligations; or

 

(f) continue its existence in a jurisdiction outside of the Cayman Islands or attempt or resolve to do so.

 

5

 

 

4.2. Notification

 

The Chargor shall notify the Lender within 14 days of receipt of every notice received by it in relation to the Charged Assets; and (if required by the Lender) shall immediately provide it with a copy of that notice and either (A) comply with such notice or (B) make such objections to it as the Lender may reasonably require or approve.

 

4.3. Calls

 

The Chargor shall punctually pay, or procure the punctual payment of all calls, instalments and other payments that may become due in respect of the Charged Assets and agrees that if the Chargor fails to do so, the Lender may, in its absolute discretion, make such payments on its behalf. Any sums so paid by the Lender shall be repayable by the Chargor to the Lender on demand together with interest at the Default Rate (both before and after judgment) from the date on which those payments were made by the Lender.

 

4.4. Compliance with laws

 

The Chargor shall comply in all material respects with all obligations in relation to the Charged Assets under any present or future law, regulation, order or instrument or under bye-laws, regulations or requirements of any competent authority or other approvals, licences and consents.

 

4.5. Not prejudice

 

The Chargor shall not do, cause or permit to be done anything which may in any way depreciate, jeopardise or otherwise prejudice the value or marketability of any Charged Asset (or make any omission which has such an effect).

 

5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

(A) the re-execution of this Deed or such Loan Document;

 

6

 

 

(B) the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

(C) the giving of any notice, order or direction and the making of any filing or registration,

 

which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

6. Rights and obligations in respect of Shares

 

6.1. Before Event of Default

 

Until an Event of Default occurs, the Chargor shall be entitled to:

 

(a) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(b) exercise all voting and all other rights and powers attaching to the Shares, provided that it must not do so in a manner which is prejudicial to the interests of the Lender.

 

6.2. Following an Event of Default

 

At any time following the occurrence of an Event of Default, the Lender may date, complete and deliver the instrument(s) of transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

6.3. Exoneration of the Lender

 

At any time when any Share is registered in the name of the Lender or its nominee, the Lender shall be under no duty to:

 

(a) ensure that any dividends, distributions or other monies payable in respect of such Share are duly and promptly paid or received by it or its nominee; or

 

(b) verify that the correct amounts are paid or received; or

 

(c) take any action in connection with the taking up of any (or any offer of any) Related Rights in respect of or in substitution for such Share.

 

7

 

 

7. Power to remedy

 

7.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

7.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 7 shall not render it liable as a mortgagee in possession.

 

7.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 7 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

8. Representations and Warranties

 

8.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as an exempted company with limited liability with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has and will at all times have the power and authority to enter into and perform its obligations under this this Deed, and has duly authorised the execution and delivery of this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

(e) it has obtained all the necessary authorisations and consents to enable it to enter into this Deed and the necessary authorisations and consents will remain in full force and effect at all times during the substance of the security constituted by this Deed;

 

(f) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(g) the Shares are fully paid and constitute the entire issued share capital of the Company;

 

8

 

 

(h) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

(i) as at the date of this Deed, the information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(j) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

8.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 8 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 8.1(i), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

8.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 8.1.

 

9. Enforcement of Security

 

9.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default.

 

9.2. Statutory powers

 

The power of sale and other powers conferred to the Lender pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

9.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

9

 

 

9.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) implement the resignations of the directors of the Company and appoint the Lender’s nominees in their stead and/or, if it has not already done so, effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of the Company; and/or

 

(c) apply all dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

9.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrance shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

9.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

9.7. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 9.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

9.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

10

 

 

(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

9.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 9.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

9.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 9.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

9.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

10. Receivership

 

10.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor, appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

10.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

11

 

 

10.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

12

 

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 8.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

10.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

11. Power of Attorney

 

11.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

11.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

13

 

 

12. Expenses and Indemnity

 

12.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

12.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 

(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

12.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

12.4. Default Interest

 

The amounts payable under this Clause 12 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

14

 

 

13. Application of Proceeds

 

13.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 

(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) to the Chargor and/or the claims of those entitled to any surplus.

 

13.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 13.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

13.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order,

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 13.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 13.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

15

 

 

14. Protection of Lender

 

14.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

14.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

14.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

14.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

14.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

16

 

 

15. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

16. Redemption of Prior Encumbrances

 

On or at any time after the Security becomes enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor;

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

17. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

18. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

19. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

17

 

 

20. Assignment

 

20.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each party to this Deed and its successors in title and permitted assigns.

 

20.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

20.3. Assignment by the Lender

 

The Lender may assign or otherwise transfer all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

21. Notices

 

21.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement, provided that for purposes of this Deed, any notice, demand or other communication may also be sent to the registered office of Chargor as set forth on page 1 of this Deed.

 

21.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

22. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

23. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

24. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by all the Parties.

 

25. Governing Law and Jurisdiction

 

25.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

18

 

 

25.2. Hong Kong Jurisdiction

 

The parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

25.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

 

25. Process Agent

 

The service of any process connected with proceedings in the Hong Kong courts and relating to this Deed will be deemed to have been validly served on the Chargor if it is received by the Company at its registered address or the address specified in Section 8.5 (Notices) of the Loan Agreement and service will be deemed to have been acknowledged by the Chargor if it is acknowledged by the Company.

 

19

 

 

schedule 1

 

Part 1

Authority

 

To: Partners For Growth V, L.P. (the “ Lender ”)

Date: [●] 2019

Dear Sirs,

 

BORQS TECHNOLOGIES (HK) LIMITED (the “ Company ”)

 

We refer to the deed of charge of shares dated [●] 2019 (as may be amended from time to time, the “ Share Charge ”) by BORQS International Holding Corp and the Lender.

 

The undersigned irrevocably authorises the Lender or any of its directors or duly authorised officers, to complete, date and put into effect and/or otherwise use the following at any time after the Share Charge has become enforceable pursuant to its terms as the Lender considers fit in the Lender’s absolute discretion:

 

(a)        the annexed signed resignation letter and acknowledgment;

 

(b) the attached signed instrument(s) of transfer and signed sold notes by the Chargor; and

 

(c) the attached signed written resolutions of all directors of the Company.

 

IN WITNESS of which this Authority has been executed by the undersigned as a deed and has been delivered.

 

SIGNED, SEALED AND DELIVERED
by [◆]                             
)
)
)
)
)

 

20

 

 

Part 2

Resignation of Directors

 

To: The Board of Directors

 

BORQS TECHNOLOGIES (HK) LIMITED

 

Date: ____________

Dear Sirs,

 

BORQS TECHNOLOGIES (HK) LIMITED (“Company”)

 

I, ________________________ [ Name of Director ], hereby tender my unconditional and irrevocable resignation as director of the Company effective as of today’s date.

 

I confirm that I have no claim against the Company for fees, compensation for loss of office or otherwise and that there is no outstanding agreement or arrangement under which the Company or any of its subsidiaries or associated company has or would have any obligation to me or under which I would derive any benefit in my capacity as the director of the Company.

 

Yours faithfully,

 

SIGNED, SEALED AND DELIVERED
by [◆]
)
)
)
 
 
   
 
 
 
 

 

 

 

[on Duplicate Copy ]

 

To: Registrar of Companies

 

Certificate

pursuant to Section 464(3)

Companies Ordinance

 

I hereby confirm that the original copy of this letter was left at the Registered Office of the Company on                  .

 

Signed:               
         [ Name of Director ]  

 

21

 

 

Part 3

Resolutions

BORQS TECHNOLOGIES (HK) LIMITED

( “Company” )

 

Written Resolutions of the Sole Director of the Company in accordance with

the Company’s Articles of Association

 

 

 

1. Transfer of Shares

 

That the following transfer(s) be approved, subject to stamping, and that the original share certificate(s) be cancelled and new share certificate(s) be issued in favour of the transferee(s) and such transfer(s) be registered and entered in the Register of Members of the Company:

 

  Transferor   Transferee(s)   No. of Share(s)
           
  [◆]       [◆]

 

2. Waiver of Rights of Refusal

 

That any rights of refusal which we may have under the constitutional documents of the Company for the transfer of shares referred to in paragraph 1 above or otherwise are hereby waived by us.

 

3. Waiver of Lien

 

That any lien on any share of the Company under the constitutional documents of the Company or otherwise is hereby waived by each of us.

 

4. Appointment of Director(s)

 

That the following person(s) be appointed as Director(s) of the Company with immediate effect:

 

5. Resignation of Director(s)

 

That the unconditional and irrevocable resignation of each of the following Director(s) of the Company be accepted with immediate effect.

 

Dated: ________________

 

[ signed by Directors ]

 

       
[ Name of Director ]   [ Name of Director ]  

 

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Part 4

Instrument of Transfer

 

 

 

BORQS TECHNOLOGIES (HK) LIMITED

 

 

 

We, BORQS INTERNATIONAL HOLDING CORP, a company duly organized and existing under and by virtue of the Laws of The Cayman Islands, registered under company number 192127 and with registered office address at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands ( Transferor ),

 

for good and valuable consideration

 

paid to us by ______________________________________________________________________ ( Transferee ),

 

do hereby transfer to the said Transferee the ___ ordinary share(s) standing in our name in the Register of

 

BORQS TECHNOLOGIES (HK) LIMITED

 

to hold unto the said Transferee his/its Executors, Administrators or Assigns, subject to the several conditions upon which we hold the same at the time of execution hereof.

 

And we the said Transferee do hereby agree to take the said share subject to the same conditions.

 

Witness to our hands

 

Witness to the signature(s) of    
     
Witness signature    
     
Witness name    
     
     
    (Transferor)
Witness address    
     
     
     
    Place of execution
     
Place of execution    
     
Witness to the signature(s) of    
     
Witness signature    
     
Witness name    
     
     
     
Witness address   (Transferee)
     
     
     
    Place of execution
     
Place of execution    

 

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Part 5

Bought and Sold Notes

 

  SOLD NOTE  

 

Buyer  
Address  
Occupation   

 

Name of company in which the share(s) to be transferred -

 

BORQS TECHNOLOGIES (HK) LIMITED

 

Number of share(s)        
Consideration received   

 

  (Seller) For and on behalf of
BORQS INTERNATIONAL HOLDING CORP
     
            
    Director

 

Dated

 

 

 

  BOUGHT NOTE  

 

 

Seller BORQS International Holding Corp
Address PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands
Occupation  Corporation

 

Name of company in which the share(s) to be transferred -

 

BORQS TECHNOLOGIES (HK) LIMITED

 

Number of share(s)  
Consideration paid   

 

  (Buyer)  
     
            
    Director

 

Dated

 

24

 

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender on the day and year first above written.

 

EXECUTED and DELIVERED )
as a DEED by   BORQS INTERNATIONAL HOLDING CORP )

 

Acting by: /s/ Pat Sek Yuen Chan

 

Name: Pat Sek Yuen Chan

Title: Director

 

in the presence of :

 

/s/ Anthony Chan

 

Witness name: Anthony Chan

Witness Address

Witness occupation: CFO

 

EXECUTED and DELIVERED  
as a DEED by   PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer

 

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

25

 

Exhibit 10.13

 

Date: March 8, 2019

 

 

 

 

 

BORQS International Holding Corp

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

DEBENTURE

 

(constituting a fixed and floating charge over all the assets of

BORQS International Holding Corp )

 

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this 8th day of March 2019,

 

BETWEEN:

 

(1) BORQS INTERNATIONAL HOLDING CORP , a company duly incorporated and validly existing under and by virtue of the Laws of The Cayman Islands, registered under company number 192127 and with registered office address at P.O. Box 309, Ugland House, Grand Cayman KY1-1104 (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920 USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed unless the context otherwise requires, the following expressions shall have the following meanings:

 

Bank Accounts ” means all present and future bank accounts held in the name of the Chargor from time to time, including but not limited to the bank accounts listed in Schedule 1 hereto;

 

Charged Assets ” means all assets listed in Clause 2.3;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, BORQS Hong Kong Limited and BORQS Technologies (HK) Limited as borrowers and BORQS Technologies, Inc. and the Chargor as guarantors;

 

Party ” means a party to this Deed;

 

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Receivables ” means all present and future book and other debts, receivables, monies, revenues, royalties, claims and choses in action due or owing to or purchased or otherwise acquired by the Chargor (including all credit balances and deposits of the Chargor with the Lender or any other bank or financial institution and any monies credited to any suspense account by the Lender, together with the debts represented by them, and any surplus arising on a realisation of any Encumbrance whether in favour of the Lender or any other person), the proceeds of the same, all legal, beneficial or equitable interests and rights in trust (including any beneficial interest, claim or entitlement in or to the assets of any occupational retirement scheme belonging to or held by the Chargor, the benefit of all discretionary payments and the proceeds of any claim or receivable of the Chargor not itself capable of being charged and the full benefit of all guarantees, indemnities, Encumbrances, rights of set-off, security reservations of proprietary rights, rights of tracing and all other rights and remedies in respect of the same or otherwise);

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, the Guarantee, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means the assets listed in Clause 2.3(a)(ii), including but not limited to the shares listed in Schedule 1 hereto.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

(c) this Deed , the Loan Agreement , other Loan Documents, the Guarantee or any other agreement or document is a reference to this Deed, the Loan Agreement, the other Loan Documents or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

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(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3 Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 19.2, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Assignment

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor as beneficial owner agrees to assign and hereby assigns absolutely (subject to a proviso for reassignment on redemption) to the Lender the Receivables.

 

2.3. Charge

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor agrees to charge and hereby charges to the Lender:

 

(a) by way of first fixed charge:

 

(i) to the extent that any of the Receivables are not effectively assigned under Clause 2.2 (Assignment) or such rights have been effectively assigned but such assignment has not been perfected by the service of the appropriate notice, those Receivables;

 

(ii) all present and future shares, namely all right, title and interest held by the Chargor in and to all stocks, shares, debentures, bonds or other securities or investments and all other interests of the Chargor in any person and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iii) all present and future uncalled capital, goodwill and all patents, patent applications, inventions, trademarks and service marks and applications therefor, trade names, registered designs, copyrights, know-how and other intellectual property rights held by the Chargor and all licences and all rights, benefits and advantages arising in respect of or incidental to the same;

 

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(iv) all present and future real property and all rights and interests in or affecting land (or the proceeds of sale of land or the documents of title to land) of the Chargor and all buildings, structures, fixtures (including trade fixtures), owned by the Chargor, including the full benefit of all Encumbrances, options, agreements, rights and interests of the Chargor over or affecting land of the Chargor and all fixed plant, other plant, machinery, fittings and equipment and all other chattels now or at any time after the date of this Deed belonging to the Chargor and its interest in any plant, machinery, equipment or chattels in its possession, including the benefit of all contracts and warranties relating to the same (excluding any of the same for the time being forming part of its stock in trade or work in progress);

 

(v) all present and future rights under any sale or purchase agreements and distributorship or any similar agreements entered into by it, any letters of credit issued in its favour and all bills of exchange and other negotiable instruments held by it;

 

(vi) all present and future benefits of all licences, quota, consents and authorities (statutory or otherwise) held in connection with its business or the use of any asset charged by any other sub-paragraph in this Clause 2.3 and the right to recover and receive all proceeds and/or compensation which may be payable to it in respect of them; and

 

(vii) all present and future benefits in respect of all contracts and policies of insurance of whatever nature which are from time to time taken out by or on behalf of the Chargor or (to the extent of such interest) in which the Chargor has an interest and all claims and returns of premiums in respect of them; and

 

(b) by way of first floating charge, the undertaking and all present and future property, assets and rights of the Chargor, whatsoever and wheresoever not otherwise effectively charged by way of first fixed charge by Clause 2.3(a),

 

in each case, and provided that if any asset cannot be secured without consent of a third party, and such consent is not obtained, this Agreement will constitute security over all proceeds and other amounts receivable from such asset.

 

2.4. Crystallisation

 

The Lender may, by notice in writing to the Chargor, convert the floating charge referred to in Clause 2.3(b) into a specific fixed charge as regards all or part of the Charged Assets , if an Event of Default has occurred and is continuing, or the Lender considers those assets to be in danger of being seized or sold under any distress, execution or sequestration or to be otherwise in jeopardy.

 

The floating charge referred to in Clause 2.3(b) shall (in addition to the circumstances in which the same shall occur under general law) automatically be converted into a specific fixed charge:

 

(a) if the Chargor takes steps to create any subsequent Encumbrance (other than Permitted Liens) on any of the Charged Assets without the prior approval of the Lender;

 

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(b) on the convening of any meeting of the members of the Chargor to consider a resolution to wind up the Chargor (or not to wind up the Chargor);

 

(c) immediately prior to the presentation of a petition (other than a frivolous or vexatious petition) to wind up the Chargor; or

 

(d) if any person levies or attempts to levy distress, execution or sequestration against any of the Charged Assets.

 

2.5. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following (in each case, in form and substance satisfactory to the Lender):

 

(a) any documents necessary or conducive to enable the Lender to register such Charged Assets in its name or in the name of its nominee(s); and

 

(b) all documents necessary and satisfactory to the Lender in order to effect a valid transfer of any Charged Assets following an Event of Default.

 

2.6. Registration

 

The Chargor shall at its own cost:

 

(a) immediately after the execution of this Deed, enter particulars of the Security in its register of mortgages and charges (“ Register of Mortgages and Charges ”) maintained at its registered office in the Cayman Islands pursuant to section 54 of the Companies Law (2018 Revision) of the Cayman Islands;

 

(b) promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure that there shall be delivered to the Lender:

 

(i) a certified copy of the updated Register of Mortgages and Charges recording the particulars of the Security; and

 

(ii) a copy of the written notice of charge to each bank where Bank Accounts are held substantially in the form as set out in Schedule 2 hereto; and

 

(c) use its best efforts to obtain written acknowledgement of the notice(s) sent in accordance with Clause 2.6(b)(ii) by each relevant bank as soon as practical after the date of execution of this Deed.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

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4. Covenants

 

4.1. General Covenants

 

The Chargor covenants that it shall observe and perform each of the following covenants and undertakings in relation to its business, property and assets or (as the case may be) the Charged Assets:

 

(a) conduct and carry on its business in a proper and efficient manner and not make any substantial alteration in the nature or mode of conduct of its business;

 

(b) keep or cause to be kept proper books of accounts relating to its business and from time to time within a reasonable time after being requested by the Lender, furnish the Lender with such information about the assets, business and financial condition of the Chargor as the Lender may require;

 

(c) use commercially reasonable endeavours to duly and punctually pay and discharge all debts, obligations and liabilities, and all rents, rates, taxes, outgoings and impositions payable in respect of any premises now or from time to time after the date of this Deed owned, tenanted, occupied or used by the Chargor and, when required, produce to the Lender receipts or other evidence satisfactory to the Lender that such payments have been made, or (as the case may be) such obligations and liabilities have been discharged;

 

(d) (i) use commercially reasonable endeavours to take all steps to maintain, preserve and protect its revenues and assets (tangible and intangible) and maintain and (where applicable) take out insurances in respect of its business, undertaking, property and assets and against such risks and contingencies as is prudent (given the industry practice in relation to the business, undertaking, property or asset concerned) with the interest of the Lender noted on the policies and with the policies containing such provisions for the benefit of the Lender as the Lender may require; (ii) on demand produce to the Lender the policies of such insurances and proof of payment of all premiums and other monies necessary for effecting and keeping such insurances; and (iii) immediately upon receipt pay to the Lender and pending such payment hold on trust for the Lender all monies received by the Chargor by virtue of any insurances maintained or effected by it (whether or not effected pursuant to the above) for application in making good the loss or damage in respect of which such monies are received or, at the option of the Lender, for payment to such account(s) as the Lender may specify;

 

(e) if so required by the Lender, give notice (in such form as the Lender may require) to any person requiring payment into such account(s) as the Lender may specify of all monies due or to become due to the Chargor from that person;

 

(f) deposit with the Lender all certificates and documents of title, duly executed transfers and any other documents relating to the Charged Assets as the Lender may from time to time require;

 

(g) use its commercially reasonable endeavours to observe and perform all covenants and stipulations (under any agreement, law, regulation or otherwise) from time to time affecting any of the Charged Assets, take such action as may from time to time be necessary or desirable to preserve and maintain the Charged Assets or any registration thereof, and not do or omit to be done any act, matter or thing whereby any provision of any applicable law, decree, order or regulation from time to time affecting any of the Charged Assets is infringed;

 

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(h) if requested to do so by the Lender, make entries in any public register or give such notices as the Lender may consider appropriate to record the existence of this Deed, any security created by it or the restrictions contained in it;

 

(i) not declare any dividends or pay any similar distribution to shareholders or redeem or purchase its own shares unless explicitly permitted under the Loan Agreement or with the prior written consent of the Lender;

 

(j) inform the Lender immediately on contracting to purchase any estate or interest in real property and provide to the Lender such information in relation to the same as the Lender may from time to time require;

 

(k) keep all its buildings and erections and all the plant, machinery, equipment, accessories, fixtures, fittings, vehicles and other effects and every part of them in good and substantial repair and in good working order and condition, and not to pull down or remove any of the same without the prior written consent of the Lender;

 

(l) not make any application under the Buildings Ordinance (Cap. 123 of the Laws of Hong Kong) to carry out any development of any of the immovable property for the time being owned by the Chargor;

 

(m) not call up or receive in advance of calls any of the uncalled capital for the time being of the Chargor;

 

(n) not continue its existence in a jurisdiction outside of the Cayman Islands or attempt or resolve to do so; and

 

(o) generally not to do or cause or permit to be done anything which may in any way jeopardise or otherwise prejudice the value of the Charged Assets as a whole or the Security and not (without the prior written consent of the Lender) incur any expenditure or liabilities of an exceptional or unusual nature.

 

4.2. Trade Receivables

 

The Chargor shall on a monthly basis and immediately on demand by the Lender provide the Lender with a list of its then outstanding trade receivables, specifying the full name and address details of the relevant customer or other trade debtor and the amount and due date of the relevant receivable.

 

4.3. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender, except as expressly permitted under the Loan Documents:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset (other than the Charged Assets subject to the floating charge under Clause 2.3(b)); or

 

(c) take or permit the taking of any action which may result in the rights attaching to any Charged Asset being altered.

 

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4.4. Subsequent Encumbrances

 

If the Lender receives notice (actual or otherwise) of any subsequent Encumbrance, assignment or other disposition affecting the Charged Assets or any interest in the Charged Assets or the proceeds of sale thereof, the Lender shall be deemed to have opened a new account when such notice was received and as from that time all payments in respect of or on account of the Secured Obligations shall be deemed to have been credited to the new account and shall not, as between the Chargor and the Lender, operate to reduce the amount of the Secured Obligations outstanding when such notice was received.

 

4.5. Lien

 

The Lender shall have and shall be authorised to exercise a lien over all property of the Chargor coming into the possession or control of the Lender, for custody or any other reason and whether or not in the ordinary course of banking business, with power for the Lender to sell such property to satisfy the Secured Obligations if an Event of Default has occurred and is continuing.

 

4.6. Voting Rights and Dividends

 

(a) Until an Event of Default occurs, the Chargor shall be entitled to:

 

(i) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(ii) exercise all voting and other rights and powers attaching to the Shares, provided that it must not do so in a manner which has the effect of changing the terms of the Shares (or any class of them) or of any related rights or is prejudicial to the interests of the Lender.

 

(b) At any time following the occurrence of an Event of Default, the Lender may effectuate the transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

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(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or
     
(b) facilitating the realisation of any Charged Asset;

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

(i) the re-execution of this Deed or such Loan Document;

 

(ii) the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

(iii) the giving of any notice, order or direction and the making of any filing or registration, which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

6. Power to remedy

 

6.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

6.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 6 shall not render it liable as a mortgagee in possession.

 

6.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 6 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

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7. Representations and Warranties

 

7.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as a limited liability company with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has the power and authority to enter into and perform this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

(e) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(f) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

(g) as at the date of this Deed, the contents of Schedule 1 hereto, and the other information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(h) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

7.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 7 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 7.1(g), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

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7.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 7.1.

 

8. Enforcement of Security

 

8.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default.

 

8.2. Statutory powers

 

The power of sale and other powers conferred to tLender pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default.

 

8.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

8.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of any subsidiary companies; and/or

 

(c) apply all payments, dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

8.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrance shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

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8.6. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

8.7. Valid Receipt

 

Upon any such sale or other disposition referred to in clause 8.6 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other monies paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

8.8. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

8.9. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 8.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

8.10. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 8.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

8.11. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

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(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

9. Receivership

 

9.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

9.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

9.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO (as extended and/or revised by this Deed) as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

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(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 9.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

9.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

10. Power of Attorney

 

10.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

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(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

10.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

11. Expenses and Indemnity

 

11.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

11.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 

(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

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11.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

11.4. Default Interest

 

The amounts payable under this Clause 11 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

12. Application of Proceeds

 

12.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 

(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) the Chargor and/or the claims of those entitled to any surplus.

 

12.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 12.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

12.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

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(c) enforcing a judgment or order,
     
(b) obtaining a judgment or order; or

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 12.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 12.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

13. Protection of Lender

 

13.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

13.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

13.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

13.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

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13.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

14. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

15. Redemption of Prior Encumbrances

 

On or at any time after the Security has become enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor;

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

16. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

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(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

17. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

18. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

19. Assignment

 

19.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and inure to the benefit of each Party and its successors in title and permitted assigns.

 

19.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

19.3. Assignment by the Lender

 

The Lender may assign all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

20. Notices

 

20.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement.

 

20.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

21. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

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22. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

23. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by both Parties.

 

24. Governing Law and Jurisdiction

 

24.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

24.2. Hong Kong Jurisdiction

 

The Parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each Party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

24.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

 

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SCHEDULE 1

 

Asset Information

 

(a) Offices / locations where movable assets are held

 

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

 

(b) Intellectual Property Rights

 

As listed on Schedules A, B, C and D attached to the

Borqs Cayman – Intellectual Property Security Agreement

 

(c) Shares

 

[●]

 

(d) Bank Accounts

 

Bank Name   Account Number   Branch Address
         
         

 

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SCHEDULE 2

 

Form of Notice

 

To: [ insert account bank ]

 

Date:

 

Dear Sirs,

 

NOTICE OF CHARGE

 

We hereby give you notice that we have assigned and charged to Partners For Growth V, L.P. (the “ Lender ”) all our rights, title and interest in our bank account[s] held with you with account number[s] ____________________________________________ (including any renewal or redesignation thereof) (the “Accounts[s] ”) and all monies standing to the credit of the Account from time to time under a deed of debenture dated , 2019 (the “ Debenture ”).

 

We hereby irrevocably and unconditionally instruct you that, with effect from the service of a notice by or on behalf of the Lender on you notifying you that an event of default has occurred under the Debenture: (i) any then existing payment instructions affecting the Account[s] shall immediately and automatically be terminated and payments and communications in respect of the Account[s] should be made to the Lender and (ii) all rights, title and interest in the Account[s] shall vest in the Lender.

 

This letter is governed by the laws of Hong Kong.

 

Please acknowledge receipt of this notice by signing the acknowledgement enclosed and returning it to us with a copy to the Lender:

 

PARTNERS FOR GROWTH V, L.P.

1751 Tiburon Blvd.,

Tiburon, CA 94920 USA

 

Yours faithfully,

 

   
For and on behalf of [●]  

 

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Form of Acknowledgement

 

To: PARTNERS FOR GROWTH V, L.P.

 

We acknowledge receipt of the Notice of Charge dated [●] 2019 and confirm that we will comply with the terms set out in the Notice of Charge. We further confirm that, following receipt of the notice of an event of default as set out in the Notice of Charge we will not act in relation to the Account[s] except as instructed by the Lender or any persons authorised by the Lender and we shall send all statements and other notices in relation to the Account[s] to the Lender.

 

   
For and on behalf of [ insert account bank ]  

 

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IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender.

 

EXECUTED and DELIVERED )
as a DEED by BORQS INTERNATIONAL HOLDING CORP )

 

Acting by: /s/ Pat Sek Yuen Chan

 

Name: Pat Sek Yuen Chan

Title: Director

 

EXECUTED and DELIVERED )
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its General Partner

 

Witnessed by:

 

Name:

Title:

 

/s/ Amy Spencer  

Witness name: Amy Spencer

Witness occupation: Executive Director

 

 

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Exhibit 10.14

 

Date: March 8, 2019

 

 

 

 

Borqs Technologies, Inc.

as Chargor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

DEBENTURE

 

(constituting a fixed and floating charge over all the assets of

Borqs Technologies, Inc. )

 

Borqs Technologies, Inc. (BVI) Debenture

 

 

 

 

THIS DEED (this “ Deed ”) is made as a deed this 8th day of March 2019,

 

BETWEEN:

 

(1) Borqs Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410 and whose registered office is at the offices of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands (the “ Chargor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920 USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Deed have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Deed unless the context otherwise requires, the following expressions shall have the following meanings:

 

Bank Accounts ” means all present and future bank accounts held in the name of the Chargor from time to time, including but not limited to the bank accounts listed in Schedule 1 hereto;

 

Charged Assets ” means all assets listed in Clause 2.2, excluding any Excluded Property;

 

CPO ” means the Conveyancing and Property Ordinance (Cap. 219 of the Laws of Hong Kong);

 

Encumbrance ” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Exchange Rate ” means the rate for converting one currency into another currency which the Lender determines to be prevailing in the relevant foreign exchange market at the relevant time, such determination to be conclusive and binding (except in the case of manifest error);

 

Guarantee ” means the Hong Kong law deed of guaranty and indemnity dated on or about the date hereof between the Chargor and the Lender;

 

HK$ ” means Hong Kong Dollars, the lawful currency for the time being of Hong Kong;

 

Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

Loan Agreement ” means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, BORQS Hong Kong Limited and BORQS Technologies (HK) Limited as borrowers and the Chargor and BORQS International Holding Corp as guarantors;

 

Borqs Technologies, Inc. (BVI) Debenture

 

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Party ” means a party to this Deed;

 

Receiver ” means each of the receivers and/or receivers and managers appointed under this Deed, any of the other Loan Documents or under the powers conferred on the Lender by any law or regulation whether appointed simultaneously or to act jointly and/or severally or to act in place of any one or more receivers and/or receivers and managers previously appointed under this Deed or otherwise, and includes all delegates, attorneys or agents of any such Receiver;

 

Secured Obligations ” means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement, the Guarantee, this Deed and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;

 

Security ” means the Encumbrances created by or pursuant to this Deed;

 

Security Period ” means the period beginning on the date of this Deed and ending on the date on which all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full and the Lender has no further commitment under or pursuant to the Loan Documents; and

 

Shares ” means the assets listed in Clause 2.2(a)(ii), including but not limited to the shares listed in Schedule 1 hereto, but excluding any Excluded Property.

 

1.2. Construction

 

Any reference in this Deed to:

 

(a) the Lender or the Chargor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Deed;

 

(c) this Deed , the Loan Agreement , the Guarantee or any other agreement or document is a reference to this Deed, the Loan Agreement, the Guarantee or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Secured Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Deed) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

Borqs Technologies, Inc. (BVI) Debenture

 

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Apart from a permitted assignee of the Lender pursuant to Clause 20.3, a person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Deed.

 

2. Grant of Security

 

2.1. Covenant to Pay

 

The Chargor covenants to pay and discharge in full the Secured Obligations on demand made by the Lender at any time and to provide cash cover on demand in respect of any contingent or future obligations.

 

2.2. Charge

 

As continuing security for the payment and discharge of the Secured Obligations, the Chargor agrees to charge and hereby charges to the Lender:

 

(a) by way of first fixed charge:

 

(i) all present and future book and other debts, receivables, monies, revenues, royalties, claims and things in action due or owing to or purchased or otherwise acquired by the Chargor (including all credit balances and deposits of the Chargor with the Lender or any other bank or financial institution and any monies credited to any suspense account by the Lender, together with the debts represented by them, and any surplus arising on a realisation of any Encumbrance whether in favour of the Lender or any other person), the proceeds of the same, all legal, beneficial or equitable interests and rights in trust (including any beneficial interest, claim or entitlement in or to the assets of any occupational retirement scheme belonging to or held by the Chargor, the benefit of all discretionary payments and the proceeds of any claim or receivable of the Chargor not itself capable of being charged and the full benefit of all guarantees, indemnities, Encumbrances, rights of set-off, security reservations of proprietary rights, rights of tracing and all other rights and remedies in respect of the same or otherwise);

 

(ii) all present and future shares, namely all right, title and interest held by the Chargor in and to all stocks, shares, debentures, bonds or other securities or investments and all other interests of the Chargor in any person and all rights, benefits and advantages arising in respect of or incidental to the same;

 

(iii) all present and future uncalled capital, goodwill and all patents, patent applications, inventions, trademarks and service marks and applications therefor, trade names, registered designs, copyrights, know-how and other intellectual property rights held by the Chargor and all licences and all rights, benefits and advantages arising in respect of or incidental to the same;

 

Borqs Technologies, Inc. (BVI) Debenture

 

3

 

 

(iv) all present and future real property and all rights and interests in or affecting land (or the proceeds of sale of land or the documents of title to land) of the Chargor and all buildings, structures, fixtures (including trade fixtures), owned by the Chargor, including the full benefit of all Encumbrances, options, agreements, rights and interests of the Chargor over or affecting land of the Chargor and all fixed plant, other plant, machinery, fittings and equipment and all other chattels now or at any time after the date of this Deed belonging to the Chargor and its interest in any plant, machinery, equipment or chattels in its possession, including the benefit of all contracts and warranties relating to the same (excluding any of the same for the time being forming part of its stock in trade or work in progress);

 

(v) all present and future rights under any sale or purchase agreements and distributorship or any similar agreements entered into by it, any letters of credit issued in its favour and all bills of exchange and other negotiable instruments held by it;

 

(vi) all present and future benefits of all licences, quota, consents and authorities (statutory or otherwise) held in connection with its business or the use of any asset charged by any other sub-paragraph in this Clause 2.2 and the right to recover and receive all proceeds and/or compensation which may be payable to it in respect of them; and

 

(vii) all present and future benefits in respect of all contracts and policies of insurance of whatever nature which are from time to time taken out by or on behalf of the Chargor or (to the extent of such interest) in which the Chargor has an interest and all claims and returns of premiums in respect of them; and

 

(b) by way of first floating charge, the undertaking and all present and future property, assets and rights of the Chargor, whatsoever and wheresoever not otherwise effectively charged by way of first fixed charge by Clause 2.2(a),

 

in each case, excluding any Excluded Property, and provided that if any asset cannot be secured without consent of a third party, this Agreement will constitute security over all proceeds and other amount receivable from such asset.

 

2.3. Crystallisation

 

The Lender may, by notice in writing to the Chargor, convert the floating charge referred to in Clause 2.2(b) into a specific fixed charge as regards all or part of the Charged Assets described therein, if an Event of Default has occurred and is continuing, or the Lender considers those assets to be in danger of being seized or sold under any distress, execution or sequestration or to be otherwise in jeopardy.

 

The floating charge referred to in Clause 2.2(b) shall (in addition to the circumstances in which the same shall occur under general law) automatically be converted into a specific fixed charge:

 

(a) if the Chargor takes steps to create any subsequent Encumbrance (other than Permitted Liens) on any of the Charged Assets without the prior approval of the Lender;

 

Borqs Technologies, Inc. (BVI) Debenture

 

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(b) on the convening of any meeting of the members of the Chargor to consider a resolution to wind up the Chargor (or not to wind up the Chargor);

 

(c) immediately prior to the presentation of a petition (other than a frivolous or vexatious petition) to wind up the Chargor; or

 

(d) if any person levies or attempts to levy distress, execution or sequestration against any of the Charged Assets.

 

2.4. Documents Supporting Security

 

In furtherance of the Security created under this Deed, the Chargor shall at its own cost, deliver or procure that there shall be delivered to the Lender the following (in each case, in form and substance satisfactory to the Lender):

 

(a) any documents necessary or conducive to enable the Lender to register such Charged Assets in its name or in the name of its nominee(s); and

 

(b) all documents necessary and satisfactory to the Lender in order to effect a valid transfer of any Charged Assets following an Event of Default.

 

2.5. Registration

 

The Chargor shall at its own cost:

 

(a) immediately after the execution of this Deed, enter particulars of the Security in its register of charges (“ Register of Charges ”) maintained at its registered office in the British Virgin Islands pursuant to section 162 of the BVI Business Companies Act, 2004;

 

(b) promptly and in any event within three (3) Business Days from and including the date of execution of this Deed, deliver or procure that there shall be delivered to the Lender:

 

(i) a certified copy of the updated Register of Charges recording the particulars of the Security; and

 

(ii) a copy of the written notice of charge to each bank where Bank Accounts are held substantially in the form as set out in Schedule 2 hereto; and

 

(c) use its best efforts to obtain written acknowledgement of the notice(s) sent in accordance with Clause 2.5(b)(ii) by each relevant bank as soon as practical after the date of execution of this Deed.

 

3. Continuing Security

 

(a) The Security is continuing and shall extend to the ultimate balance of all the Secured Obligations regardless of any intermediate payment or discharge in whole or in part. This Deed shall remain in full force and effect as a continuing security for the duration of the Security Period.

 

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(b) This Deed is in addition to, without prejudice to, and shall not merge with, any other right, remedy, guarantee or Encumbrance which the Lender may at any time hold for any Secured Obligation.

 

(c) This Deed may be enforced against the Chargor without the Lender first having to take recourse to any other right, remedy, guarantee or Encumbrance held by or available to it.

 

4. Covenants

 

4.1. General Covenants

 

The Chargor covenants that it will observe and perform each of the following covenants and undertakings in relation to its business, property and assets or (as the case may be) the Charged Assets, except as expressly permitted under the Loan Documents:

 

(a) conduct and carry on its business in a proper and efficient manner and not make any substantial alteration in the nature or mode of conduct of its business;

 

(b) keep or cause to be kept proper books of accounts relating to its business and from time to time within a reasonable time after being requested by the Lender, furnish the Lender with such information about the assets, business and financial condition of the Chargor as the Lender may require;

 

(c) use commercially reasonable endeavours to duly and punctually pay and discharge all debts, obligations and liabilities, and all rents, rates, taxes, outgoings and impositions payable in respect of any premises now or from time to time after the date of this Deed owned, tenanted, occupied or used by the Chargor and, when required, produce to the Lender receipts or other evidence satisfactory to the Lender that such payments have been made, or (as the case may be) such obligations and liabilities have been discharged;

 

(d) (i) use commercially reasonable endeavours to take all steps to maintain, preserve and protect its revenues and assets (tangible and intangible) and maintain and (where applicable) take out insurances in respect of its business, undertaking, property and assets and against such risks and contingencies as is prudent (given the industry practice in relation to the business, undertaking, property or asset concerned) with the interest of the Lender noted on the policies and with the policies containing such provisions for the benefit of the Lender as the Lender may require; (ii) on demand produce to the Lender the policies of such insurances and proof of payment of all premiums and other monies necessary for effecting and keeping such insurances; and (iii) immediately upon receipt pay to the Lender and pending such payment hold on trust for the Lender all monies received by the Chargor by virtue of any insurances maintained or effected by it (whether or not effected pursuant to the above) for application in making good the loss or damage in respect of which such monies are received or, at the option of the Lender, for payment to such account(s) as the Lender may specify;

 

(e) if so required by the Lender, give notice (in such form as the Lender may require) to any person requiring payment into such account(s) as the Lender may specify of all monies due or to become due to the Chargor from that person;

 

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(f) deposit with the Lender all certificates and documents of title, duly executed transfers and any other documents relating to the Charged Assets as the Lender may from time to time require;

 

(g) use its commercially reasonable endeavours to observe and perform all covenants and stipulations (under any agreement, law, regulation or otherwise) from time to time affecting any of the Charged Assets, take such action as may from time to time be necessary or desirable to preserve and maintain the Charged Assets or any registration thereof, and not do or omit to be done any act, matter or thing whereby any provision of any applicable law, decree, order or regulation from time to time affecting any of the Charged Assets is infringed;

 

(h) if requested to do so by the Lender, make entries in any public register or give such notices as the Lender may consider appropriate to record the existence of this Deed, any security created by it or the restrictions contained in it;

 

(i) not declare any dividends or pay any similar distribution to shareholders or redeem or purchase its own shares unless explicitly permitted under the Loan Agreement or with the prior written consent of the Lender;

 

(j) inform the Lender immediately on contracting to purchase any estate or interest in real property and provide to the Lender such information in relation to the same as the Lender may from time to time require;

 

(k) keep all its buildings and erections and all the plant, machinery, equipment, accessories, fixtures, fittings, vehicles and other effects and every part of them in good and substantial repair and in good working order and condition, and not to pull down or remove any of the same without the prior written consent of the Lender;

 

(l) not make any application under the Buildings Ordinance (Cap. 123 of the Laws of Hong Kong) to carry out any development of any of the immovable property for the time being owned by the Chargor;

 

(m) not call up or receive in advance of calls any of the uncalled capital for the time being of the Chargor;

 

(n) not continue its existence in a jurisdiction outside of the British Virgin Islands or attempt or resolve to do so; and

 

(o) generally not to do or cause or permit to be done anything which may in any way jeopardise or otherwise prejudice the value of the Charged Assets as a whole or the Security and not (without the prior written consent of the Lender) incur any expenditure or liabilities of an exceptional or unusual nature.

 

4.2. Negative pledge and Disposals

 

The Chargor shall not do or agree to do any of the following without the prior written consent of the Lender, except as expressly permitted under the Loan Documents:

 

(a) create or permit to subsist any Encumbrance on any Charged Asset other than Permitted Liens;

 

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(b) sell, transfer, lease, lend or otherwise dispose of (whether by a single transaction or a number of transactions and whether related or not) the whole or any part of its interest in any Charged Asset (other than the Charged Assets subject to the floating charge under Clause 2.2(b)); or

 

(c) take or permit the taking of any action which may result in the rights attaching to any Charged Asset being altered.

 

4.3. Subsequent Encumbrances

 

If the Lender receives notice (actual or otherwise) of any subsequent Encumbrance, assignment or other disposition affecting the Charged Assets or any interest in the Charged Assets or the proceeds of sale thereof, the Lender shall be deemed to have opened a new account when such notice was received and as from that time all payments in respect of or on account of the Secured Obligations shall be deemed to have been credited to the new account and shall not, as between the Chargor and the Lender, operate to reduce the amount of the Secured Obligations outstanding when such notice was received.

 

4.4. Lien

 

The Lender shall have and shall be authorised to exercise a lien over all property of the Chargor (excluding any Excluded Property) coming into the possession or control of the Lender, for custody or any other reason and whether or not in the ordinary course of banking business, with power for the Lender to sell such property to satisfy the Secured Obligations if an Event of Default has occurred and is continuing.

 

4.5. Voting Rights and Dividends

 

(a) Until an Event of Default occurs, the Chargor shall be entitled to:

 

(i) receive and retain all dividends, distributions and other monies paid on or derived from the Shares; and

 

(ii) exercise all voting and other rights and powers attaching to the Shares, provided that it must not do so in a manner which has the effect of changing the terms of the Shares (or any class of them) or of any related rights or is prejudicial to the interests of the Lender.

 

(b) At any time following the occurrence of an Event of Default, the Lender may effectuate the transfer for all or any Shares on behalf of the Chargor in favour of itself or such other person as it may select and all dividends, interest payments, distributions of an income nature or other monies which may be paid on or in respect of the Shares, if received by the Chargor or its nominee(s), shall be paid over to (and pending such payment shall be held on trust for) the Lender and may be applied, at the discretion of the Lender, in or towards discharging the Secured Obligations.

 

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5. Further Assurances

 

5.1. Further action

 

The Chargor shall, at its own expense, promptly on request do all acts and execute all documents as the Lender or a Receiver may reasonably specify (and in such form as the Lender or a Receiver may reasonably require) for:

 

(a) creating, perfecting or protecting the Security intended to be created by this Deed or any other Loan Document;

 

(b) facilitating the realisation of any Charged Asset;

 

(c) facilitating the exercise of any rights, powers and remedies exercisable by the Lender, or any Receiver or any delegate in respect of any Charged Asset or provided by or pursuant to the Loan Documents or by law; or

 

(d) creating and perfecting Security in favour of the Lender over any Charged Asset located in any jurisdiction outside Hong Kong equivalent or similar to the Security intended to be created by or pursuant to this Deed or any other Loan Document.

 

This includes:

 

i. the re-execution of this Deed or such Loan Document;

 

ii. the execution of any legal mortgage, charge, transfer, conveyance, assignment, assignation or assurance of any property, whether to the Lender or to its nominee; and

 

iii. the giving of any notice, order or direction and the making of any filing or registration,

 

which, in any such case, the Lender may think expedient.

 

5.2. Loan Documents

 

The Chargor shall take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Lender by or pursuant to the Loan Documents.

 

6. Power to remedy

 

6.1. Power to remedy

 

If at any time the Chargor does not comply with any of its obligations under this Deed, the Lender (without prejudice to any other rights arising as a consequence of such non-compliance) shall be entitled (but not bound) to rectify that default. The Chargor irrevocably authorises the Lender and its employees and agents by way of security to do all things which are necessary or desirable to rectify that default.

 

6.2. Mortgagee in possession

 

The exercise of the powers of the Lender under this Clause 6 shall not render it liable as a mortgagee in possession.

 

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6.3. Monies expended

 

The Chargor shall pay to the Lender on demand any monies which are expended by the Lender in exercising its powers under this Clause 6 together with interest at the Default Rate from the date on which those monies were expended by the Lender (both before and after judgment).

 

7. Representations and Warranties

 

7.1. Representations and Warranties

 

The Chargor represents and warrants to the Lender in addition to any warranties implicit under any applicable law that:

 

(a) it is duly incorporated and validly existing under its place of incorporation as a limited liability company with power to carry on its business as it is now being conducted and to own its assets and is in good standing;

 

(b) it has the power and authority to enter into and perform this Deed and no limitation on its powers will be exceeded by doing so;

 

(c) this Deed constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar Legal Requirements relating to creditors’ rights generally);

 

(d) neither the execution of this Deed nor the creation of any of the charges contained in this Deed contravenes, or is inconsistent or in conflict with, any provision of its constitutional documents or any applicable enactment, law, decree, order, regulation, authorisation, franchise, consent, permit, security, instrument, agreement or document binding upon or affecting the Chargor or any of its undertaking, property, assets or rights;

 

(e) this Deed creates those Encumbrances it purports to create and is not liable to be avoided or otherwise set aside on the liquidation of the Chargor in whole or in part;

 

(f) the Chargor is now and will during the subsistence of this Deed be the sole legal and beneficial owner of the Charged Assets and has good title to (and has full right and authority to charge and assign under this Deed) the Charged Assets and the Charged Assets are free from any Encumbrance or other rights or interests in favour of third parties (other than the Security and Permitted Liens);

 

(g) as at the date of this Deed, the contents of Schedule 1 hereto, and the other information and reports furnished by the Chargor to the Lender in connection with the negotiation and preparation of this Deed and/or in connection with the advance or continuance of any facilities are true and accurate in all material respects, and not misleading and do not omit material facts and all reasonable enquiries have been made to verify the facts and statements contained in them; and

 

(h) no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a material adverse effect on the business or financial condition of the Chargor and its Subsidiaries (or any of them) or the ability of the Chargor to perform or discharge any of the Secured Obligations.

 

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7.2. Times when Representations and Warranties are made

 

The representations and warranties set out in this Clause 7 are:

 

(a) made on the date of this Deed; and

 

(b) except for Clause 7.1(g), deemed to be repeated by the Chargor every day with reference to the facts and circumstances then existing until this Deed is discharged.

 

7.3. Acknowledgement of Reliance

 

The Chargor acknowledges that the Lender has entered into this Deed in reliance upon the representations and warranties set out in Clause 7.1.

 

8. Enforcement of Security

 

8.1. When Security becomes enforceable

 

The Security (and any powers implied by statute) shall become immediately enforceable upon the occurrence of an Event of Default and shall remain so for so long as such Event of Default is continuing.

 

8.2. Statutory powers

 

The power of sale and other powers conferred to the Lender pursuant to the CPO (as amended or extended by this Deed) shall be immediately exercisable upon and at any time after the occurrence of any Event of Default and for so long as such Event of Default is continuing.

 

8.3. Enforcement

 

After the Security has become enforceable, the Lender may in its absolute discretion enforce all or any part of the Charged Assets in such manner as it sees fit.

 

8.4. Powers on Enforcement

 

At the same time as or at any time after this Deed has become enforceable, the Lender may, without prejudice to any other rights available to the Lender in respect of the Secured Obligations or to any other security held for or in respect of the Secured Obligations:

 

(a) dispose of the Charged Assets or any part thereof in such manner and for such consideration (whether payable or deliverable immediately or by instalments) as the Lender considers appropriate; and/or

 

(b) effect the transfer of any and all of the Charged Assets into its name or the name(s) of its nominee(s) and/or without liability on the part of the Lender in the event of loss, act in all respects as the legal or beneficial owner of the Charged Assets and assume the management and control of any subsidiary companies; and/or

 

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(c) apply all payments, dividends, interest payments, distributions or other monies accruing on the Charged Assets in or towards satisfaction of the Secured Obligations; and/or

 

(d) dispose of all or any of the Lender’s other rights under this Deed for such consideration (whether payable or deliverable immediately or by instalments) and in such manner as the Lender considers appropriate.

 

8.5. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrance shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

8.6. Valid Receipt

 

Upon any such sale or other disposition and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other monies paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

8.7. Protection of Third Party

 

No person (including a purchaser) dealing with the Lender, any Receiver, their respective delegate or sub-delegate or any of their respective agents will be concerned to enquire:

 

(a) whether the Secured Obligations have become payable;

 

(b) whether any power which the Lender or the Receiver is purporting to exercise has become exercisable;

 

(c) whether any money remains due under any Loan Document; or

 

(d) how any money paid to the Lender or to the Receiver is to be applied.

 

8.8. Exercise of Rights not Foreclosure

 

If the Lender exercises the rights conferred on it by Clause 8.4, the same shall not be treated as an absolute appropriation of or foreclosure on the Charged Assets to the exclusion of the Chargor and in extinguishment of its interests therein, unless the Lender otherwise notifies the Chargor (whether before or after the relevant appropriation or foreclosure has been effected), in which latter event any such appropriation or foreclosure shall be treated as a sale of the Charged Assets at a fair market value and the Secured Obligations shall be reduced by an equivalent amount.

 

8.9. Lender may purchase Charged Assets

 

In the event of any disposal pursuant to Clause 8.4, the Lender may itself purchase the whole or any part of the Charged Assets free from any rights of redemption on the part of the Chargor which are hereby waived and released.

 

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8.10. No Claims against the Lender

 

(a) The Chargor shall not have any right or claim against the Lender and the Lender shall not have any liability of any nature whatsoever to the Chargor or any other person in respect of any loss arising out of any disposal of the Secured Obligations or the disposal or exercise of any other rights under this Deed or any part thereof, however such loss may have been caused, and whether or not a better price could or might have been obtained on such disposal, by either deferring or advancing the date of such disposal or otherwise howsoever, except for any loss caused by the gross negligence or wilful misconduct of the Lender.

 

(b) Neither the Lender nor any Receiver shall be liable to account as a mortgagee in possession in respect of all or any part of the Charged Assets or be liable for any loss upon realisation or for any neglect, default or omission in connection with the Charged Assets to which a mortgagee or a mortgagee in possession might otherwise be liable.

 

9. Receivership

 

9.1. Appointment of Receiver

 

On or at any time after the occurrence of an Event of Default or, if the Chargor so requests the Lender in writing, the Lender may, without further notice, legal process or any other action with respect to the Chargor appoint any one or more persons to be a Receiver under this Deed of all or any part of the Charged Assets and may from time to time fix his remuneration (which shall be of such amount as may be agreed from time to time between the Lender and the Receiver) and may remove any Receiver so appointed and/or appoint another in his place or in place of any Receiver whose appointment may for any reason have terminated.

 

9.2. Receiver Agent of the Chargor

 

Each Receiver shall be the agent of the Chargor, and the Chargor shall be solely responsible for his acts or defaults and for his remuneration.

 

9.3. Rights of the Receiver

 

Each Receiver shall have all the rights conferred on any mortgagee and/or receiver under the CPO as well as the following rights:

 

(a) to take possession of, collect and get in the Charged Assets, exercise all voting or other powers or rights available to a registered and/or beneficial (as appropriate) owner of the Charged Assets in such manner as such Receiver may think fit and to take, defend or abandon any proceedings in the name of the Chargor or otherwise as may seem expedient;

 

(b) to carry on or authorise or concur in carrying on the business or any part of the business of the Chargor and to manage, conduct, reconstruct, amalgamate or diversify the business of the Chargor or any part of it (including power to acquire, develop or improve properties or other assets) without being responsible for loss or damage;

 

(c) to raise or borrow money from or incur any other liability to the Lender or others on such terms with or without security as such Receiver may think fit and so that any such security may be or include a charge on the Charged Assets ranking in priority to this security or otherwise;

 

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(d) to sell by public auction or private contract, let, surrender or accept surrenders, grant leases, options, rights of pre-emption, tenancies or licences or otherwise dispose of or deal with the Charged Assets in such manner, for such consideration and generally on such terms and conditions as such Receiver may think fit, with full power to convey or otherwise transfer such Charged Assets in the name of the Chargor or other estate owner. Any such consideration may be cash, debentures or other obligations, shares, stock or other consideration and may be payable immediately or by instalments spread over such period or periods as he shall think fit and so that any consideration received or receivable shall immediately be and become charged with the payment and discharge of the Secured Obligations. Plant, machinery, equipment, accessories and other fixtures and fittings may be severed and sold separately from any premises of the Chargor containing them and such Receiver may apportion any rent and the performance of any obligations affecting the premises sold without the consent of the Chargor;

 

(e) to promote the formation of companies with a view to such companies purchasing the Charged Assets or otherwise;

 

(f) to make any arrangement, settlement or compromise or enter into or complete, cancel, abandon or disregard any contracts which such Receiver shall think expedient in the interests of the Lender;

 

(g) to make and effect all repairs, renewals and improvements and to maintain, renew, take out or increase insurances in relation to the Charged Assets;

 

(h) to appoint and remunerate any person for any of the purposes of this Deed and/or to guard or protect the Charged Assets for such periods as such Receiver may determine and to dismiss the same or any other person appointed by the Chargor;

 

(i) to make calls, conditionally or unconditionally on the members of the Chargor, in respect of uncalled capital, with the same powers of enforcing payment of any calls so made as are, by the constitutional documents of the Chargor, conferred upon its directors and to the exclusion of the directors’ powers in that regard;

 

(j) to do anything which such Receiver shall think necessary or expedient to preserve, protect, maintain or manage the Charged Assets; and

 

(k) to sign any document, execute any deed (with authorisation to use the common seal of the Chargor for such purposes) and generally, on behalf and at the cost of the Chargor (notwithstanding liquidation of the Chargor or any similar event), to do or omit to do anything incidental to the matters referred to in this Clause 8.3 or to the realisation of this security or which the Chargor could do or omit to do in relation to the Charged Assets and to use the name of the Chargor for all the above purposes.

 

9.4. More Than One Receiver

 

If more than one person is appointed as a Receiver under this Deed, such persons shall throughout the duration of their office (unless the documents appointing them state otherwise) be entitled to exercise all or any of the powers conferred on a Receiver under this Deed individually.

 

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10. Sale of Charged Assets

 

10.1. Statutory Restrictions

 

No restrictions imposed by any applicable law on any immediate or other power of sale, application of proceeds or on any other right or on the consolidation of mortgages or other Encumbrances shall apply to this Deed, the Lender or any Receiver or to any Encumbrance given to the Lender pursuant to this Deed.

 

10.2. Indemnity

 

Any sale or other disposition by or on behalf of the Lender or any of its nominees or any Receiver under the provisions of this Deed may be made upon such terms for the safety and protection of the purchaser or upon such terms as to indemnity as the Lender or such Receiver may think fit.

 

10.3. Valid Receipt

 

Upon any such sale or other disposition referred to in Clause 10.2 and upon any other dealing or transaction under the provisions of this Deed, the receipt of the Lender or any Receiver for the purchase money of the property or asset sold or for any other moneys paid to or other consideration received by the Lender or any Receiver shall effectually discharge the purchaser or person paying or giving the same therefrom and from being concerned to see to the application or being answerable for the loss, non-application or mis-application thereof.

 

10.4. Enquiries by Purchaser

 

No purchaser or other person shall be bound or concerned to see or enquire whether the right of the Lender or any of its nominees or agents or any Receiver to exercise any of the rights conferred by this Deed has arisen or not, or be concerned with notice to the contrary, or with the propriety of the exercise or purported exercise of such rights.

 

10.5. Limitation of Liability

 

Neither the Lender nor any Receiver shall be liable for any losses which may arise:

 

(a) in the exercise or non-exercise of any of their rights;

 

(b) by reason of any entry into possession of the Charged Assets to account as mortgagee in possession;

 

(c) on realisation of the Charged Assets; or

 

(d) as a result of any default or omission for which a mortgagee in possession may be liable,

 

except for any loss caused by the gross negligence or wilful misconduct of the Lender or Receiver.

 

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11. Power of Attorney

 

11.1. Appointment

 

For the purpose of securing the interest of the Lender in the Charged Assets and the performance of its obligations to the Lender, the Chargor, irrevocably, by way of security, appoints the Lender and separately each Receiver and any of their delegates or sub-delegates severally to be its attorney (with full power to appoint substitutes and to sub-delegate including power to authorise the person so appointed to make further appointments, in both cases, with regard to the Charged Assets) on behalf of and in the name of the Chargor or otherwise, to execute, seal and deliver and otherwise perfect and do all such deeds, agreements, acts and things which:

 

(a) (before the Security becomes enforceable) the Chargor is obliged to do under this Deed, but has not done;

 

(b) (after the Security becomes enforceable) the Chargor is or may become obliged to do under this Deed; and/or

 

(c) (after the Security becomes enforceable) otherwise may be required for or deemed proper on or in connection with the full exercise of all or any of the rights conferred by this Deed on the Lender or on any Receiver and its rights to give full force and effect to the terms and conditions contained in this Deed.

 

This power of attorney is coupled with an interest and is irrevocable and shall remain irrevocable as long as this Deed remains outstanding.

 

11.2. Ratification

 

The Chargor ratifies and confirms and agrees to ratify and confirm any deed, agreement, act or thing which any attorney appointed under this Deed may lawfully execute, seal, deliver or do.

 

12. Expenses and Indemnity

 

12.1. Expenses

 

The Chargor will pay the Lender, on demand, all the Lender’s and Receiver’s expenses (including legal and out-of-pocket expenses) incurred:

 

(a) in connection with the negotiation, preparation and execution of this Deed and any amendment to, or waiver or consent or release of or under, this Deed; and/or

 

(b) in contemplation of, or in connection with, the preservation, enforcement or exercise of any rights under this Deed.

 

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12.2. Indemnity

 

The Chargor will indemnify the Lender and the Receiver, on demand, against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise now or after the date of this Deed incurred by the Lender or the Receiver (except for any losses, actions, claims, expenses, demands and liabilities caused by the gross negligence or wilful misconduct of the Lender or the Receiver):

 

(a) for anything done or omitted in the exercise or purported exercise or non-exercise of the rights contained in this Deed;

 

(b) as a result of any breach by the Chargor of any of its covenants or other obligations to the Lender or any other person;

 

(c) in consequence of any payment in respect of the Secured Obligations (whether made by the Chargor or any other person) being impeached or declared void for any reason whatsoever; and/or

 

(d) as a result of any taxes, duties, rates or outgoings assessed upon or payable in respect of the Charged Assets or in connection with the entry into preservation, enforcement or exercise of any rights under this Deed.

 

12.3. Documentary Duties and Taxes

 

The Chargor will pay all documentary stamp, registration and other duties or similar taxes, including any payable by the Lender, which are imposed on or are payable in connection with this Deed.

 

12.4. Default Interest

 

The amounts payable under this Clause 12 shall carry interest at the Default Rate after as well as before judgment from the date on which they were incurred by the Lender or any Receiver (as the case may be) and such amounts and interest shall form part of the Secured Obligations.

 

13. Application of Proceeds

 

13.1. Order of Application

 

All monies received or recovered by any Receiver and/or by the Lender from the Chargor pursuant to this Deed shall, subject to any claims ranking in priority to the Secured Obligations to the extent of such priority, be applied, in or towards discharging, in the following order of priority:

 

(a) the amount of all fees and remuneration of, and all other costs, charges, expenses and liabilities incurred by the Lender and/or each Receiver in connection with or as a result of the exercise of their respective rights, including the remuneration of each Receiver, or otherwise in relation to this Deed or any other agreement entered into between the Chargor and the Lender in such order as the Lender or any Receiver may from time to time determine;

 

(b) all other Secured Obligations in such order as the Lender may from time to time determine; and

 

(c) the Chargor and/or the claims of those entitled to any surplus.

 

Borqs Technologies, Inc. (BVI) Debenture

 

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13.2. Currency Conversion

 

The Lender and/or each Receiver may convert any monies received, recovered or realised under this Deed (including the proceeds of any previous conversion under this Clause 13.2) from their existing currency of denomination into such other currency of denomination as the Lender and/or any Receiver may think fit and any such conversion shall be effected at the Exchange Rate. If and to the extent that the Chargor fails to pay any amount due on demand, the Lender and/or each Receiver may in its absolute discretion without notice to the Chargor purchase at any time after the demand has been made so much of any currency as the Lender and/or any Receiver considers necessary or desirable to cover the Secured Obligations at the Exchange Rate and the Chargor agrees to indemnify the Lender and each Receiver against the full cost (including all costs, charges and expenses) paid.

 

13.3. Currency Indemnity

 

If the currency of a sum due from the Chargor under this Deed (the “ contractual currency ”) or a sum due from the Chargor under any judgment or order relating to this Deed in the contractual currency is converted from the contractual currency into another currency for the purpose of:

 

(a) making or filing a claim or proof;

 

(b) obtaining a judgment or order; or

 

(c) enforcing a judgment or order,

 

the Chargor will indemnify the Lender against any loss or liability incurred as a result of any difference between (i) the rate of exchange used to convert the sum in question from the contractual currency into the other currency and (ii) the rate or rates of exchange at which the Lender, in the ordinary course of business, can purchase the contractual currency with the other currency on receipt of a sum paid to it in full or part satisfaction of that claim, proof, judgment or order.

 

Any amount due from the Chargor under this Clause 13.3 will be a separate and independent debt and will not be affected by judgment being obtained for any other sum due under or in respect of this Deed. The term “ rate of exchange ” in this Clause 13.3 includes any premium and exchange costs payable in connection with the purchase of the contractual currency with the other currency.

 

14. Protection of Lender

 

14.1. Suspense Account

 

Any moneys paid to or received by the Lender in respect of the Secured Obligations or under this Deed may be applied in or towards satisfaction of the Secured Obligations or placed to the credit of such account as the Lender may determine with a view to preserving its rights to prove for the whole of the Secured Obligations.

 

Borqs Technologies, Inc. (BVI) Debenture

 

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14.2. No Withholding

 

Payments by the Chargor shall be made to the Lender as specified by the Lender without any set-off, counterclaim, withholding or condition of any kind except that, if the Chargor is compelled by law to make such withholding, the sum payable by the Chargor shall be increased so that the amount actually received by the Lender is the amount it would have received if there had been no withholding.

 

14.3. Claw Back

 

If the Lender considers that an amount paid by the Chargor or any other person is capable of being avoided or otherwise set aside (on the liquidation of the Chargor or otherwise) then that amount shall not be considered to have been paid for the purposes of this Deed. Furthermore, the Lender may in its absolute discretion concede or compromise any claim that any payment, security or other disposition is liable to be avoided, reduced or repaid.

 

14.4. Conditional Discharge

 

Any release, discharge or settlement under this Deed shall be conditional upon no payment or discharge in respect of the Secured Obligations by the Chargor or any other person being avoided, reduced or repaid for any reason and the Lender shall be entitled to enforce this Deed if such condition is not fulfilled as if such release, discharge or settlement had not occurred.

 

14.5. Set-Off

 

The Lender may at any time without notice:

 

(a) combine or consolidate all or any of the Chargor’s accounts with the Lender;

 

(b) apply any credit balance to which the Chargor is entitled on any account with the Lender or any other moneys owing to the Chargor in or towards satisfaction of the Secured Obligations; or

 

(c) in the absolute discretion of the Lender, refuse to permit the withdrawal or utilisation of any deposit or moneys for such period as the Lender may consider appropriate (notwithstanding the terms of the deposit or moneys and whether or not any Secured Obligation has become due).

 

For these purposes, the Lender is authorised to purchase, at the Exchange Rate, such other currencies as may be necessary to effect such application with the monies standing to the credit of such account.

 

15. Trusteeship

 

The Chargor declares that:

 

(a) as and when the security created by this Deed shall become enforceable, it will hold all the Charged Assets (subject to the Chargor’s right of redemption) upon trust to convey, assign, transfer or otherwise dispose of or deal with the same in such manner and to such person as the Lender shall direct; and

 

Borqs Technologies, Inc. (BVI) Debenture

 

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(b) it shall be lawful for the Lender to appoint new trustees of the Charged Assets from time to time in place of the Chargor or in place of any trustee appointed under this power.

 

16. Redemption of Prior Encumbrances

 

On or at any time after the Security has become enforceable, the Lender may:

 

(a) redeem any prior Encumbrance against the Charged Assets;

 

(b) procure the transfer of that Encumbrance to itself; and/or

 

(c) settle and pass the accounts of the prior mortgagee, chargee or encumbrancer; any accounts so settled and passed shall be conclusive and binding on the Chargor;

 

and all principal moneys, interest, costs, charges and expenses of and incidental to any such redemption and/or transfer shall be paid by the Chargor to the Lender on demand.

 

17. Delegation

 

The Lender and any Receiver may:

 

(a) delegate by power of attorney or in any other manner to any person any right exercisable by them under this Deed on such terms (including power to sub-delegate) as the Lender or any Receiver (as the case may be) sees fit; and/or

 

(b) employ agents, managers, employees, advisers and others on such terms as the Lender or any Receiver (as the case may be) sees fit for the purposes of this Deed.

 

Neither the Lender nor any Receiver will in any way be liable or responsible to the Chargor for any loss or liability arising from any act, default, omission or misconduct on the part of any such delegate or sub-delegate.

 

18. No Waiver

 

No failure or delay by the Lender or any Receiver to exercise any right under this Deed or otherwise will operate as a waiver of that right or any other right, nor will any single or partial exercise of any such right preclude any other or further exercise of that right or the exercise of any other right.

 

19. Remedies Cumulative

 

The rights of the parties or any Receiver under this Deed are cumulative and do not exclude or restrict any other rights.

 

20. Assignment

 

20.1. Successors and Permitted Assigns

 

This Deed shall be binding upon and enure to the benefit of each party to this Deed and its successors in title and permitted assigns.

 

Borqs Technologies, Inc. (BVI) Debenture

 

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20.2. Assignment by the Chargor

 

The Chargor shall not be entitled to assign or transfer any of its rights, benefits or obligations under this Deed without the prior written consent of the Lender.

 

20.3. Assignment by the Lender

 

The Lender may assign all or any of its rights under this Deed to any person in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement.

 

21. Notices

 

21.1. In Writing and Methods of Delivery

 

Any notice, demand or other communication under this Deed shall be sent in accordance with Section 8.5 (Notices) of the Loan Agreement.

 

21.1. Deemed Giving of Notice and Receipt

 

Any such notice, demand or other communication shall be deemed effective in such manner and at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

22. Severance

 

If any provision of this Deed is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

23. Counterparts

 

This Deed may be executed in any number of counterparts and by different parties on separate counterparts, each of which is an original but, together, they constitute one and the same agreement.

 

24. Amendments

 

No amendment to this Deed will be effective unless in writing and executed by all the Parties.

 

25. Governing Law and Jurisdiction

 

25.1. Governing Law

 

This Deed is governed by and will be construed in accordance with Hong Kong Law.

 

25.2. Hong Kong Jurisdiction

 

The parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each party waives any objection to proceedings in Hong Kong on the grounds of venue or inconvenient forum.

 

25.3. Waiver of Sovereign Immunity

 

To the extent that the Chargor may, in any jurisdiction, be entitled to claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Chargor irrevocably agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

 

25. Process Agent

 

The service of any process connected with proceedings in the Hong Kong courts and relating to this Deed will be deemed to have been validly served on the Chargor if it is received by the Borrower at its registered address or the address specified in Section 8.5 (Notices) of the Loan Agreement and service will be deemed to have been acknowledged by the Chargor if it is acknowledged by the Borrower.

 

Borqs Technologies, Inc. (BVI) Debenture

 

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SCHEDULE 1

Asset Information

 

(a) Offices / locations where movable assets are held

 

Company   Complete Street and Mailing Address, including County and Zip Code
Borqs Beijing Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Borqs Beijing Ltd. Shenzhen branch   Room C-602, Building Languangkeji, Xinxi Road, North Gaoxin District, Nanshan District, Shenzhen, China
Borqs Wireless Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Beijing Borqs Software Technology Co., Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Beijing Big Cloud Century Technology Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Beijing Big Cloud Information Technology Co., Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Jiangsu Chen Hui Information Technology Co., Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Beijing Big Cloud Network Tech Co., Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Yuantel (Beijing) Telecommunications Technology Co., Ltd.   Tower A, Building B23, Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing 100015, China
Borqs Hong Kong Limited   Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong
BORQS International Holding Corp   PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands
Borqs Software Solutions Private Limited   Prestige Al-Kareem, NO.3 Edward Road, Civil Station, Corporation Division NO.72, Bangalore, Karnataka, INDIA 560052
BORQS Korea   #403 JPlus Tower, 28, Bongeunsaro114 street, Gangnam-Gu, Seoul, 135-881, Korea
Borqs KK Japan   Tokyo sibuyaku ebisu minami  1-chome NO.1 HumaxEbisu8F, Japan
Bozz Solution Inc.   3830 Vally Centre Dr.  #705 PMB 285, San Diego, CA92130-3307, USA
Br. Code Desenvolvimento De Software S.A.   1021 R Senador Accioly Filho, 81.310-000, Cidade Industrial, Curitibindustrial, Curitiba, Brazil

 

Borqs Technologies, Inc. (BVI) Debenture

 

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(b) Intellectual Property Rights

 

As listed on Schedules A, B, C and D attached to the

Reaffirmation of Intellectual Property Security Agreement & Joinder

 

(c) Shares

 

100% of the shares of Borqs International Holding Corp

 

(d) Bank Accounts

 

Bank Name   Account Number   Branch Address
         
         

 

Borqs Technologies, Inc. (BVI) Debenture

 

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SCHEDULE 2

 

Form of Notice

 

 

To: [ insert account bank ]

 

Date:

 

Dear Sirs,

 

NOTICE OF CHARGE

 

We hereby give you notice that we have charged to Partners For Growth V, L.P. (the “ Lender ”) all our rights, title and interest in our bank account[s] held with you with account number[s] [●] (including any renewal or redesignation thereof) (the “Accounts[s] ”) and all monies standing to the credit of the Account from time to time under a deed of debenture dated April __, 2019 (the “ Debenture ”).

 

We hereby irrevocably and unconditionally instruct you that, with effect from the service of a notice by or on behalf of the Lender on you notifying you that an event of default has occurred under the Debenture: (i) any then existing payment instructions affecting the Account[s] shall immediately and automatically be terminated and payments and communications in respect of the Account[s] should be made to the Lender and (ii) all rights, title and interest in the Account[s] shall vest in the Lender.

 

This letter is governed by the laws of Hong Kong.

 

Please acknowledge receipt of this notice by signing the acknowledgement enclosed and returning it to us with a copy to the Lender:

 

PARTNERS FOR GROWTH V, L.P.

1751 Tiburon Blvd., Suite D

Tiburon, CA 94920 USA

 

Yours faithfully,

 

   
For and on behalf of [●]  

 

Borqs Technologies, Inc. (BVI) Debenture

 

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Form of Acknowledgement

 

To: [Chargor]

Copy to: PARTNERS FOR GROWTH V, L.P.

 

We acknowledge receipt of the Notice of Charge dated [●] and confirm that we will comply with the terms set out in the Notice of Charge. We further confirm that, following receipt of the notice of an event of default as set out in the Notice of Charge we will not act in relation to the Account[s] except as instructed by the Lender or any persons authorised by the Lender and we shall send all statements and other notices in relation to the Account[s] to the Lender.

 

   
For and on behalf of [ insert account bank ]  

  

Borqs Technologies, Inc. (BVI) Debenture

 

 

 

 

IN WITNESS of which this Deed has been duly executed by the Chargor as a deed and duly executed by the Lender.

 

EXECUTED and DELIVERED )
as a DEED by Borqs Technologies, Inc. )
   
Acting by: /s/ Pat Sek Yuen Chan  
   
Name: Pat Sek Yuen Chan  
Title: Director  
   
in the presence of :  
   
/s/ Anthony Chan                            
Witness name: Anthony Chan  
Witness occupation: CFO  
   
EXECUTED and DELIVERED )
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its General Partner

 

Witnessed by:

 

Name:

Title:

 

/s/ Amy Spencer                                

Witness name: Amy Spencer

Witness occupation: Executive Director

 

Borqs Technologies, Inc. (BVI) Debenture

 

 

 

 

 

Exhibit 10.15

 

Date: March 8, 2019

 

BORQS Hong Kong Limited

as Guarantor

Partners for Growth V, L.P.

as Lender

 

DEED OF GUARANTEE AND INDEMNITY

 

 

 

 

 

THIS GUARANTEE (this “ Guarantee ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS Hong Kong Limited , a private company limited by shares duly incorporated and validly existing under the laws of Hong Kong with registration number 1151010 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon (the “ Guarantor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Guarantee have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Guarantee, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Encumbrance   means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;
     
Guaranteed Obligations   means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature; and
     
Loan Agreement   means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Guarantor and BORQS Technologies (HK) Limited as borrowers and BORQS Technologies, Inc. and BORQS International Holding Corp as guarantors.

 

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1.2. Construction

 

Any reference in this Guarantee to:

 

(a) the Lender or the Guarantor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Guarantee;

 

(c) this Guarantee , the Loan Agreement or any other agreement or document is a reference to this Guarantee, the Loan Agreement or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Guaranteed Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Guarantee) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 15.1, a person who is not a party to this Guarantee has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Guarantee.

 

2. Guarantee

 

In consideration of the Lender agreeing to enter into the Loan Agreement and making available loans or other banking facilities, or giving time, credit or accommodation to the Obligors, the Guarantor hereby irrevocably, unconditionally and absolutely:

 

(a) guarantees to the Lender punctual payment and performance of the Guaranteed Obligations; and

 

(b) undertakes that the Guarantor will on demand make good any default by any Obligor in the payment or discharge of the Guaranteed Obligations as if the Guarantor instead of the Obligor were expressed to be the primary obligor in respect of the Guaranteed Obligations.

 

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3. Indemnity

 

For the same consideration, the Guarantor agrees as a primary obligor to indemnify the Lender immediately on demand against any loss, cost or liability suffered by the Lender if any Guaranteed Obligations or any actual or purported agreement, arrangement or instruction relating to any Guaranteed Obligations is or becomes invalid, unenforceable or illegal, irrespective of whether the reason for such invalidity, unenforceability or illegality was or ought to have been known to the Lender. The amount of such loss shall be the amount which the Lender would otherwise have been entitled to recover from the Obligors.

 

4. Representations and Warranties

 

The Guarantor makes the representations and warranties set out in this Clause 4 (Representations and Warranties) to the Lender.

 

4.1. Status

 

The Guarantor is a company, duly incorporated, and validly existing under the laws of its jurisdiction of incorporation and has the power to carry on its business as it is now being conducted and to own property and other assets and is in good standing.

 

4.2. Powers, Authority and Non-Conflict

 

The execution, delivery and performance of this Guarantee is within the corporate powers of the Guarantor, has been duly authorised by all necessary corporate and other action and does not and will not conflict with (a) any law or regulation applicable to it; (b) any constitutional documents of the Guarantor; or (c) any agreement or instrument binding on the Guarantor.

 

4.3. Legal Validity

 

The obligations and liabilities expressed to be assumed by the Guarantor under this Guarantee are legal, valid, binding and enforceable obligations of the Guarantor (subject to applicable equitable principles and insolvency laws) and it is not necessary in order to ensure the legality, validity and enforceability of this Guarantee that it be filed, recorded or enrolled with any court or authority anywhere or that any stamp duty, registration or similar tax be paid on or in relation to it.

 

4.4. Authorisations

 

All authorisations, consents, approvals, resolutions, licences, exemptions, filings or registrations required under any applicable law or regulation (a) to enable it lawfully to carry on its business and to enter into, exercise its rights and comply with its obligations in this Guarantee, and (b) to make this Guarantee admissible in evidence in its jurisdiction of incorporation have been obtained or effected and are in full force and effect.

 

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4.5. Choice of Law

 

The choice of the law of Hong Kong as the governing law of this Guarantee will be recognised and enforced in its jurisdiction of incorporation.

 

4.6. No litigation

 

No litigation, arbitration or administrative proceeding is current, pending or (to the knowledge of the Guarantor) threatened against the Guarantor:

 

(a) to restrain the entry into by the Guarantor of, the exercise by the Guarantor of its rights and/or performance or enforcement of or compliance with its obligations under this Guarantee; or

 

(b) which has or could have a material adverse effect on or on the financial condition of the Guarantor or the ability of the Guarantor to make any payment when due or to perform any of its other obligations in accordance with this Guarantee.

 

4.7. Security and Ranking

 

Save for any Permitted Liens, no Encumbrance exists over any of the undertaking or the present or future revenues or assets of the Guarantor and the obligations of the Guarantor under this Guarantee are or will be its direct, general and unconditional obligations and rank or will rank at least pari passu in all respects with all its other present and future unsecured and unsubordinated indebtedness and obligations (including contingent obligations), with the exception of indebtedness and obligations mandatorily preferred by law and not by contract.

 

4.8. Time when representations and warranties are made

 

The Guarantor represents, warrants and agrees that each of the representations and warranties contained in this Clause 4 will be and remain correct so long as it has any liability (contingent or actual) under this Guarantee.

 

5. Continuing Guarantee

 

This Guarantee is a continuing guarantee for all the Guaranteed Obligations and will extend to the ultimate balance of the Guaranteed Obligations, regardless of any intermediate discharge or payment of or on account of the Guaranteed Obligations or any intermediate settlement of accounts between the Lender and any Obligor or any other person. No demand made by the Lender under this Guarantee shall restrict the right of the Lender to make further or other demands.

 

6. Interest

 

The Guarantor shall on demand pay to the Lender interest at the Default Rate on any amount for the time being due from the Guarantor to the Lender under this Guarantee (both before and after judgement) from the date of a demand for payment under this Guarantee until actual payment in full.

 

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7. Opening of New Accounts

 

If for any reason this Guarantee ceases to be a continuing security, the Lender may open a new account for each Obligor. If the Lender does not open a new account, it shall nevertheless be treated as if it had done so at the time this Guarantee ceased to be a continuing security. As from that time all payments made to the Lender will be credited or treated as having been credited to the new account and will not operate to reduce the obligations of the Guarantor under this Guarantee.

 

8. Waiver of Defences

 

The liability of the Guarantor under this Guarantee shall not be reduced, discharged or otherwise adversely affected by any of the events or circumstances set out in this Clause 8 (Waiver of Defences).

 

8.1. Variations

 

Any determination, renewal, variation (however fundamental), replacement, discharge, release or increase of, or composition or arrangement by the Lender relating to, any credit or facilities to the Obligors or of or relating to the Guaranteed Obligations.

 

8.2. Time or Indulgence

 

The grant by the Lender to any Obligor or any other person of any time, waiver, consent or indulgence.

 

8.3. Dealings with Security

 

Any taking, dealing, exchange, renewal, variation, release, compromise, discharge, composition, arrangement or modification in relation to any guarantee, security or right which the Lender may now or after the date of this Guarantee have in respect of the Guaranteed Obligations.

 

8.4. Negotiable Instruments

 

The renewal by the Lender of any bill, promissory note or other negotiable instrument or security.

 

8.5. Other Guarantees or Security

 

The Lender obtaining or refusing, neglecting or otherwise failing to obtain, perfect, enforce or claim any other guarantee, security or right (whether contemporaneously with this Guarantee or otherwise) or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security.

 

8.6. Incapacity

 

Any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Obligor or any other person.

 

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8.7. Unenforceability

 

Any unenforceability, illegality, invalidity or non-provability of any obligation of the Obligor or any person under any document, agreement or security.

 

8.8. Insolvency

 

Any liquidation, composition, insolvency, administration, bankruptcy, death or other incapacity, or any alteration in the corporate existence or structure, of any of the Obligors, the Guarantor or any other person.

 

8.9. Other Circumstances

 

Any other act, omission, matter or thing which, but for this provision, would or might reduce, discharge or otherwise adversely affect the obligations of the Guarantor under this Guarantee.

 

9. Reinstatement

 

If any payment by any Obligor or any other person or any discharge given by the Lender (whether in respect of the Guaranteed Obligations or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

(a) the liability of the Guarantor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

(b) the Lender shall be entitled to recover the value or amount of that security or payment from the Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

 

10. Deferral of Guarantor’s Rights

 

10.1. Restriction on Rights or Claims

 

Until all of the Guaranteed Obligations have been irrevocably paid or discharged in full, the Guarantor will not, unless the Lender otherwise directs:

 

(a) make or enforce any claim (including, but not limited to, a claim by way of set-off or counterclaim) or right against any Obligor or prove as a creditor of any Obligor in competition with the Lender, whether in respect of any payment under this Guarantee made by the Guarantor or otherwise; or

 

(b) be entitled to claim or have the benefit of, any set-off, counterclaim or proof against, or dividend paid on a winding-up or administration of or composition with creditors by any Obligor or any Obligor’s estate; or

 

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(c) be entitled to claim or otherwise obtain the benefit (by way of subrogation or otherwise) of any security or guarantee or indemnity at any time held by the Lender for or in respect of any of the Guaranteed Obligations; or

 

(d) claim or enforce any right of contribution against any co-surety.

 

10.2. Proof at the Lender’s Request

 

If requested by the Lender the Guarantor shall:

 

(a) exercise any right of proof or claim in the winding-up, administration, voluntary arrangement, bankruptcy or estate of any Obligor on behalf of the Lender and hold any dividend or other money received in respect of such proof or claim upon trust for the Lender to the extent of the Guaranteed Obligations; and

 

(b) hold upon trust for the Lender any money which it may receive or recover from any co-surety by virtue of any rights of contribution.

 

10.3. Monies held on Trust

 

If while the Guarantor remains under any liability to the Lender under this Guarantee, any monies or other property or assets shall be received or recovered by the Guarantor in breach of any provisions of this Clause 10 (Deferral of Guarantor’s Rights), such monies or other property or assets shall, to the extent of such liability, be held upon trust to pay or transfer the same to the Lender.

 

11. Suspense Account

 

The Lender may at any time place and keep to the credit of a separate interest bearing suspense account any monies received under this Guarantee for so long and in such manner as the Lender may determine without any obligation to apply such monies or any part of them in or towards the discharge of the Guaranteed Obligations. In the event of any proceedings in or analogous to bankruptcy, liquidation, composition or arrangement of or concerning any Obligor, the Lender may notwithstanding any payment made under this Guarantee prove for a claim and agree to accept any dividend or composition in respect of the whole or any part of the Guaranteed Obligations as if this Guarantee had not been given.

 

12. Other Means of Payment

 

Lender may make a demand under this Guarantee:

 

(a) before making any demand on any Obligor or any Obligor’s estate or any other person or enforcing any other guarantee or security for the Guaranteed Obligations; and

 

(b) for the payment of the ultimate balance after resorting to other means of payment, or for the balance due at any time notwithstanding that the Lender has not resorted to other means of payment (in which case the Guarantor shall not be entitled to any benefit from such other means of payment so long as the Guaranteed Obligations remain outstanding).

 

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13. Expenses

 

13.1. Costs

 

The Guarantor shall pay to the Lender on demand all reasonable costs and expenses (including, but not limited to, legal fees) from time to time paid or incurred by the Lender in connection with taking, perfecting, preserving, defending or enforcing this Guarantee or in exercising any right or power under or in connection with this Guarantee, and shall indemnify the Lender against all such costs and expenses.

 

13.2. Stamp Duty

 

The Guarantor shall pay on demand all stamp, documentary, registration and other similar duties and taxes of any kind and from any source, if any, to which this Guarantee may be subject or give rise and shall indemnify the Lender against any and all liability with respect to or resulting from any delay or failure by the Guarantor in making such payment.

 

13.3. Value Added Tax

 

Where this Guarantee requires the Guarantor to re-imburse the Lender for any costs or expenses the Guarantor shall at the same time pay and indemnify the Lender against any value added tax (or any tax of a similar nature) incurred by the Lender in respect of the costs and expenses to the extent that the Lender determines that it is not entitled to credit or repayment of the value added tax (or other tax of a similar nature).

 

14. Miscellaneous

 

14.1. Additional Security

 

This Guarantee is in addition to and is not in any way prejudiced by any bill, note, guarantee, mortgage, charge or other security now or subsequently held by the Lender for any of the Guaranteed Obligations.

 

14.2. No Deduction or Withholding

 

All payments made by the Guarantor to the Lender under this Guarantee shall (save insofar as required by law to the contrary) be paid in full without set-off or counterclaim and free and clear of and without any deduction or withholding or payment for or on account of any present or future tax, levy, duty, impost or other charge or withholding of a similar nature. If the Guarantor shall be required by law to effect any such deduction or withholding or payment the Guarantor shall immediately pay to the Lender such additional amount as will result in the immediate receipt by the Lender of the full amount which would otherwise have been received had no such deduction or withholding or payment been made.

 

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14.3. Set-off

 

The Lender may set-off any matured obligation owed by the Guarantor to the Lender against any obligation (whether or not matured) owed by the Lender to the Guarantor regardless of the place of payment, or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange for the purpose of the set-off in an amount estimated by it in good faith to be the amount of that obligation.

 

14.4. Waivers; Rights Cumulative

 

No delay or omission of the Lender in exercising any right, power or privilege (each a “ right ”) under this Guarantee or otherwise available to it at law shall impair such right, or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude its further exercise or the exercise of any other right. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law and may be waived only in writing and specifically.

 

14.5. Severability

 

Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guarantee or affecting the validity or enforceability of such provision in any other jurisdiction.

 

14.6. Certificates and Determinations

 

A certificate or determination by the Lender of the amount of the Guaranteed Obligations outstanding at any time or of any other amount payable by the Guarantor under this Guarantee is, in the absence of manifest error, conclusive evidence for all purposes of this Guarantee as against the Guarantor.

 

14.7. Currency Indemnity

 

The Guarantor’s liability under this Guarantee is to pay to the Lender the full amount of the Guaranteed Obligations in the currency in which they are for the time being denominated. If, for any reason, any payment due from the Guarantor under or in connection with this Guarantee is made or is satisfied in a currency (the “ Other Currency ”) other than the currency in which the relevant payment is due (the “ Contractual Currency ”), then to the extent that the payment (when converted into the Contractual Currency at the rate of exchange on the date of payment or, in the case of the liquidation or insolvency of the Guarantor, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation or insolvency) actually received by the Lender falls short of the amount expressed to be due under the terms of this Guarantee, the Guarantor shall, as a separate and independent obligation, indemnify the Lender and hold the Lender harmless against the amount of such shortfall.

 

For the purpose of this Clause “rate of exchange” means the rate at which the Lender is able on the relevant date to purchase the Contractual Currency with the Other Currency and shall take into account any premium and other costs of exchange.

 

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15. Benefit of this Guarantee

 

15.1. Assignment by the Lender

 

The Lender may assign or transfer all or any part of its rights under this Guarantee in connection with the assignment of its rights and obligations in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement. The Guarantor shall enter into any documents reasonably specified by the Lender to be necessary to give effect to such assignment or transfer.

 

15.2. No Assignment by the Guarantor

 

The Guarantor may not assign or transfer all or any part of its rights and/or obligations under this Guarantee.

 

15.3. Disclosure of Information

 

The Lender may not disclose such information about the Guarantor unless such disclosure is made in compliance with Section 8.1 (Confidentiality) of the Loan Agreement.

 

16. Notices and Demands

 

16.1. Address

 

The Guarantor’s address and fax number for any notice, demand or other communication under or in connection with this Guarantee are set forth in Section 8.5 (Notices) of the Loan Agreement. Any such notice, demand or other communication shall also be effective if sent to the Guarantor’s registered office or the address of the Guarantor last known to the Lender.

 

16.2. Method and Receipt

 

Any notice, demand or other communication to be given or made pursuant to this Guarantee to the Guarantor may be given or made in such manner and be deemed delivered at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

16.3. English language

 

Any notice given under or in connection with this Guarantee must be in English.

 

17. Governing Law

 

17.1. This Guarantee shall be governed by and construed in accordance with the laws of Hong Kong. The parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

 

17.2. The submission of the parties hereto to the jurisdiction of the Hong Kong Courts shall not restrict the right of the Lender to take proceedings in connection with this Guarantee in any other courts having, claiming or accepting jurisdiction in respect of matters pertaining to this Guarantee, including but not limited to the California Courts, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not.

 

17.3. The Guarantor hereby irrevocably consents to the granting of any relief and/or the issue of any process in connection with any legal action or proceedings in connection with this Guarantee, including the making, enforcement or execution of any judgment or order against any of the property, assets or revenues of the Guarantor whatsoever.

 

EXECUTED and delivered on the date stated at the beginning of this document.

 

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EXECUTED and DELIVERED )
as a DEED by BORQS HONG KONG LIMITED )
   
Acting by: /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Director  
   
in the presence of :  
   
/s/ Anthony Chan                             
Witness name: Anthony Chan  
Witness occupation: CFO  
   
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer                                

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

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Exhibit 10.16

 

Date: March 8, 2019

 

BORQS Technologies (HK) Limited

as Guarantor

Partners for Growth V, L.P.

as Lender

 

DEED OF GUARANTEE AND INDEMNITY

 

 

 

 

THIS GUARANTEE (this “ Guarantee ”) is made as a deed this March 8, 2019

 

BETWEEN:

 

(1) BORQS Technologies (HK) Limited , a private company limited by shares duly incorporated and validly existing under the laws of Hong Kong with registration number 2688549 and registered address at Office B, 21/F., Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon (the “ Guarantor ”); an

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920, USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Guarantee have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Guarantee, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Encumbrance   means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;
     
Guaranteed Obligations   means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature; and
     
Loan Agreement   means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, the Guarantor and BORQS Hong Kong Limited as borrowers and BORQS Technologies, Inc. and BORQS International Holding Corp as guarantors.

 

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1.2. Construction

 

Any reference in this Guarantee to:

 

(a) the Lender or the Guarantor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Guarantee;

 

(c) this Guarantee , the Loan Agreement or any other agreement or document is a reference to this Guarantee, the Loan Agreement or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Guaranteed Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Guarantee) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.3. Third Party Rights

 

Apart from a permitted assignee of the Lender pursuant to Clause 15.1, a person who is not a party to this Guarantee has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Guarantee.

 

2. Guarantee

 

In consideration of the Lender agreeing to enter into the Loan Agreement and making available loans or other banking facilities, or giving time, credit or accommodation to the Obligors, the Guarantor hereby irrevocably, unconditionally and absolutely:

 

(a) guarantees to the Lender punctual payment and performance of the Guaranteed Obligations; and

 

(b) undertakes that the Guarantor will on demand make good any default by any Obligor in the payment or discharge of the Guaranteed Obligations as if the Guarantor instead of the Obligor were expressed to be the primary obligor in respect of the Guaranteed Obligations.

 

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3. Indemnity

 

For the same consideration, the Guarantor agrees as a primary obligor to indemnify the Lender immediately on demand against any loss, cost or liability suffered by the Lender if any Guaranteed Obligations or any actual or purported agreement, arrangement or instruction relating to any Guaranteed Obligations is or becomes invalid, unenforceable or illegal, irrespective of whether the reason for such invalidity, unenforceability or illegality was or ought to have been known to the Lender. The amount of such loss shall be the amount which the Lender would otherwise have been entitled to recover from the Obligors.

 

4. Representations and Warranties

 

The Guarantor makes the representations and warranties set out in this Clause 4 (Representations and Warranties) to the Lender.

 

4.1. Status

 

The Guarantor is a company, duly incorporated, and validly existing under the laws of its jurisdiction of incorporation and has the power to carry on its business as it is now being conducted and to own property and other assets and is in good standing.

 

4.2. Powers, Authority and Non-Conflict

 

The execution, delivery and performance of this Guarantee is within the corporate powers of the Guarantor, has been duly authorised by all necessary corporate and other action and does not and will not conflict with (a) any law or regulation applicable to it; (b) any constitutional documents of the Guarantor; or (c) any agreement or instrument binding on the Guarantor.

 

4.3. Legal Validity

 

The obligations and liabilities expressed to be assumed by the Guarantor under this Guarantee are legal, valid, binding and enforceable obligations of the Guarantor (subject to applicable equitable principles and insolvency laws) and it is not necessary in order to ensure the legality, validity and enforceability of this Guarantee that it be filed, recorded or enrolled with any court or authority anywhere or that any stamp duty, registration or similar tax be paid on or in relation to it.

 

4.4. Authorisations

 

All authorisations, consents, approvals, resolutions, licences, exemptions, filings or registrations required under any applicable law or regulation (a) to enable it lawfully to carry on its business and to enter into, exercise its rights and comply with its obligations in this Guarantee, and (b) to make this Guarantee admissible in evidence in its jurisdiction of incorporation have been obtained or effected and are in full force and effect.

 

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4.5. Choice of Law

 

The choice of the law of Hong Kong as the governing law of this Guarantee will be recognised and enforced in its jurisdiction of incorporation.

 

4.6. No litigation

 

No litigation, arbitration or administrative proceeding is current, pending or (to the knowledge of the Guarantor) threatened against the Guarantor:

 

(a) to restrain the entry into by the Guarantor of, the exercise by the Guarantor of its rights and/or performance or enforcement of or compliance with its obligations under this Guarantee; or

 

(b) which has or could have a material adverse effect on or on the financial condition of the Guarantor or the ability of the Guarantor to make any payment when due or to perform any of its other obligations in accordance with this Guarantee.

 

4.7. Security and Ranking

 

Save for any Permitted Liens, no Encumbrance exists over any of the undertaking or the present or future revenues or assets of the Guarantor and the obligations of the Guarantor under this Guarantee are or will be its direct, general and unconditional obligations and rank or will rank at least pari passu in all respects with all its other present and future unsecured and unsubordinated indebtedness and obligations (including contingent obligations), with the exception of indebtedness and obligations mandatorily preferred by law and not by contract.

 

4.8. Time when representations and warranties are made

 

The Guarantor represents, warrants and agrees that each of the representations and warranties contained in this Clause 4 will be and remain correct so long as it has any liability (contingent or actual) under this Guarantee.

 

5. Continuing Guarantee

 

This Guarantee is a continuing guarantee for all the Guaranteed Obligations and will extend to the ultimate balance of the Guaranteed Obligations, regardless of any intermediate discharge or payment of or on account of the Guaranteed Obligations or any intermediate settlement of accounts between the Lender and any Obligor or any other person. No demand made by the Lender under this Guarantee shall restrict the right of the Lender to make further or other demands.

 

6. Interest

 

The Guarantor shall on demand pay to the Lender interest at the Default Rate on any amount for the time being due from the Guarantor to the Lender under this Guarantee (both before and after judgement) from the date of a demand for payment under this Guarantee until actual payment in full.

 

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7. Opening of New Accounts

 

If for any reason this Guarantee ceases to be a continuing security, the Lender may open a new account for each Obligor. If the Lender does not open a new account, it shall nevertheless be treated as if it had done so at the time this Guarantee ceased to be a continuing security. As from that time all payments made to the Lender will be credited or treated as having been credited to the new account and will not operate to reduce the obligations of the Guarantor under this Guarantee.

 

8. Waiver of Defences

 

The liability of the Guarantor under this Guarantee shall not be reduced, discharged or otherwise adversely affected by any of the events or circumstances set out in this Clause 8 (Waiver of Defences).

 

8.1. Variations

 

Any determination, renewal, variation (however fundamental), replacement, discharge, release or increase of, or composition or arrangement by the Lender relating to, any credit or facilities to the Obligors or of or relating to the Guaranteed Obligations.

 

8.2. Time or Indulgence

 

The grant by the Lender to any Obligor or any other person of any time, waiver, consent or indulgence.

 

8.3. Dealings with Security

 

Any taking, dealing, exchange, renewal, variation, release, compromise, discharge, composition, arrangement or modification in relation to any guarantee, security or right which the Lender may now or after the date of this Guarantee have in respect of the Guaranteed Obligations.

 

8.4. Negotiable Instruments

 

The renewal by the Lender of any bill, promissory note or other negotiable instrument or security.

 

8.5. Other Guarantees or Security

 

The Lender obtaining or refusing, neglecting or otherwise failing to obtain, perfect, enforce or claim any other guarantee, security or right (whether contemporaneously with this Guarantee or otherwise) or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security.

 

8.6. Incapacity

 

Any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Obligor or any other person.

 

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8.7. Unenforceability

 

Any unenforceability, illegality, invalidity or non-provability of any obligation of the Obligor or any person under any document, agreement or security.

 

8.8. Insolvency

 

Any liquidation, composition, insolvency, administration, bankruptcy, death or other incapacity, or any alteration in the corporate existence or structure, of any of the Obligors, the Guarantor or any other person.

 

8.9. Other Circumstances

 

Any other act, omission, matter or thing which, but for this provision, would or might reduce, discharge or otherwise adversely affect the obligations of the Guarantor under this Guarantee.

 

9. Reinstatement

 

If any payment by any Obligor or any other person or any discharge given by the Lender (whether in respect of the Guaranteed Obligations or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

(a) the liability of the Guarantor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

(b) the Lender shall be entitled to recover the value or amount of that security or payment from the Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

 

10. Deferral of Guarantor’s Rights

 

10.1. Restriction on Rights or Claims

 

Until all of the Guaranteed Obligations have been irrevocably paid or discharged in full, the Guarantor will not, unless the Lender otherwise directs:

 

(a) make or enforce any claim (including, but not limited to, a claim by way of set-off or counterclaim) or right against any Obligor or prove as a creditor of any Obligor in competition with the Lender, whether in respect of any payment under this Guarantee made by the Guarantor or otherwise; or

 

(b) be entitled to claim or have the benefit of, any set-off, counterclaim or proof against, or dividend paid on a winding-up or administration of or composition with creditors by any Obligor or any Obligor’s estate; or

 

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(c) be entitled to claim or otherwise obtain the benefit (by way of subrogation or otherwise) of any security or guarantee or indemnity at any time held by the Lender for or in respect of any of the Guaranteed Obligations; or

 

(d) claim or enforce any right of contribution against any co-surety.

 

10.2. Proof at the Lender’s Request

 

If requested by the Lender the Guarantor shall:

 

(a) exercise any right of proof or claim in the winding-up, administration, voluntary arrangement, bankruptcy or estate of any Obligor on behalf of the Lender and hold any dividend or other money received in respect of such proof or claim upon trust for the Lender to the extent of the Guaranteed Obligations; and

 

(b) hold upon trust for the Lender any money which it may receive or recover from any co-surety by virtue of any rights of contribution.

 

10.3. Monies held on Trust

 

If while the Guarantor remains under any liability to the Lender under this Guarantee, any monies or other property or assets shall be received or recovered by the Guarantor in breach of any provisions of this Clause 10 (Deferral of Guarantor’s Rights), such monies or other property or assets shall, to the extent of such liability, be held upon trust to pay or transfer the same to the Lender.

 

11. Suspense Account

 

The Lender may at any time place and keep to the credit of a separate interest bearing suspense account any monies received under this Guarantee for so long and in such manner as the Lender may determine without any obligation to apply such monies or any part of them in or towards the discharge of the Guaranteed Obligations. In the event of any proceedings in or analogous to bankruptcy, liquidation, composition or arrangement of or concerning any Obligor, the Lender may notwithstanding any payment made under this Guarantee prove for a claim and agree to accept any dividend or composition in respect of the whole or any part of the Guaranteed Obligations as if this Guarantee had not been given.

 

12. Other Means of Payment

 

Lender may make a demand under this Guarantee:

 

(a) before making any demand on any Obligor or any Obligor’s estate or any other person or enforcing any other guarantee or security for the Guaranteed Obligations; and

 

(b) for the payment of the ultimate balance after resorting to other means of payment, or for the balance due at any time notwithstanding that the Lender has not resorted to other means of payment (in which case the Guarantor shall not be entitled to any benefit from such other means of payment so long as the Guaranteed Obligations remain outstanding).

 

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13. Expenses

 

13.1. Costs

 

The Guarantor shall pay to the Lender on demand all reasonable costs and expenses (including, but not limited to, legal fees) from time to time paid or incurred by the Lender in connection with taking, perfecting, preserving, defending or enforcing this Guarantee or in exercising any right or power under or in connection with this Guarantee, and shall indemnify the Lender against all such costs and expenses.

 

13.2. Stamp Duty

 

The Guarantor shall pay on demand all stamp, documentary, registration and other similar duties and taxes of any kind and from any source, if any, to which this Guarantee may be subject or give rise and shall indemnify the Lender against any and all liability with respect to or resulting from any delay or failure by the Guarantor in making such payment.

 

13.3. Value Added Tax

 

Where this Guarantee requires the Guarantor to re-imburse the Lender for any costs or expenses the Guarantor shall at the same time pay and indemnify the Lender against any value added tax (or any tax of a similar nature) incurred by the Lender in respect of the costs and expenses to the extent that the Lender determines that it is not entitled to credit or repayment of the value added tax (or other tax of a similar nature).

 

14. Miscellaneous

 

14.1. Additional Security

 

This Guarantee is in addition to and is not in any way prejudiced by any bill, note, guarantee, mortgage, charge or other security now or subsequently held by the Lender for any of the Guaranteed Obligations.

 

14.2. No Deduction or Withholding

 

All payments made by the Guarantor to the Lender under this Guarantee shall (save insofar as required by law to the contrary) be paid in full without set-off or counterclaim and free and clear of and without any deduction or withholding or payment for or on account of any present or future tax, levy, duty, impost or other charge or withholding of a similar nature. If the Guarantor shall be required by law to effect any such deduction or withholding or payment the Guarantor shall immediately pay to the Lender such additional amount as will result in the immediate receipt by the Lender of the full amount which would otherwise have been received had no such deduction or withholding or payment been made.

 

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14.3. Set-off

 

The Lender may set-off any matured obligation owed by the Guarantor to the Lender against any obligation (whether or not matured) owed by the Lender to the Guarantor regardless of the place of payment, or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange for the purpose of the set-off in an amount estimated by it in good faith to be the amount of that obligation.

 

14.4. Waivers; Rights Cumulative

 

No delay or omission of the Lender in exercising any right, power or privilege (each a “ right ”) under this Guarantee or otherwise available to it at law shall impair such right, or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude its further exercise or the exercise of any other right. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law and may be waived only in writing and specifically.

 

14.5. Severability

 

Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guarantee or affecting the validity or enforceability of such provision in any other jurisdiction.

 

14.6. Certificates and Determinations

 

A certificate or determination by the Lender of the amount of the Guaranteed Obligations outstanding at any time or of any other amount payable by the Guarantor under this Guarantee is, in the absence of manifest error, conclusive evidence for all purposes of this Guarantee as against the Guarantor.

 

14.7. Currency Indemnity

 

The Guarantor’s liability under this Guarantee is to pay to the Lender the full amount of the Guaranteed Obligations in the currency in which they are for the time being denominated. If, for any reason, any payment due from the Guarantor under or in connection with this Guarantee is made or is satisfied in a currency (the “ Other Currency ”) other than the currency in which the relevant payment is due (the “ Contractual Currency ”), then to the extent that the payment (when converted into the Contractual Currency at the rate of exchange on the date of payment or, in the case of the liquidation or insolvency of the Guarantor, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation or insolvency) actually received by the Lender falls short of the amount expressed to be due under the terms of this Guarantee, the Guarantor shall, as a separate and independent obligation, indemnify the Lender and hold the Lender harmless against the amount of such shortfall.

 

For the purpose of this Clause “rate of exchange” means the rate at which the Lender is able on the relevant date to purchase the Contractual Currency with the Other Currency and shall take into account any premium and other costs of exchange.

 

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15. Benefit of this Guarantee

 

15.1. Assignment by the Lender

 

The Lender may assign or transfer all or any part of its rights under this Guarantee in connection with the assignment of its rights and obligations in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement. The Guarantor shall enter into any documents reasonably specified by the Lender to be necessary to give effect to such assignment or transfer.

 

15.2. No Assignment by the Guarantor

 

The Guarantor may not assign or transfer all or any part of its rights and/or obligations under this Guarantee.

 

15.3. Disclosure of Information

 

The Lender may not disclose such information about the Guarantor unless such disclosure is made in compliance with Section 8.1 (Confidentiality) of the Loan Agreement.

 

16. Notices and Demands

 

16.1. Address

 

The Guarantor’s address and fax number for any notice, demand or other communication under or in connection with this Guarantee are set forth in Section 8.5 (Notices) of the Loan Agreement. Any such notice, demand or other communication shall also be effective if sent to the Guarantor’s registered office or the address of the Guarantor last known to the Lender.

 

16.2. Method and Receipt

 

Any notice, demand or other communication to be given or made pursuant to this Guarantee to the Guarantor may be given or made in such manner and be deemed delivered at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

16.3. English language

 

Any notice given under or in connection with this Guarantee must be in English.

 

17. Governing Law

 

17.1. This Guarantee shall be governed by and construed in accordance with the laws of Hong Kong. The parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

 

17.2. The submission of the parties hereto to the jurisdiction of the Hong Kong Courts shall not restrict the right of the Lender to take proceedings in connection with this Guarantee in any other courts having, claiming or accepting jurisdiction in respect of matters pertaining to this Guarantee, including but not limited to the California Courts, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not.

 

17.3. The Guarantor hereby irrevocably consents to the granting of any relief and/or the issue of any process in connection with any legal action or proceedings in connection with this Guarantee, including the making, enforcement or execution of any judgment or order against any of the property, assets or revenues of the Guarantor whatsoever.

 

EXECUTED and delivered on the date stated at the beginning of this document.

 

11

 

 

EXECUTED and DELIVERED )
as a DEED by BORQS HONG KONG LIMITED )
   
Acting by: /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Director  
   
in the presence of :  
   
/s/ Anthony Chan                             
Witness name: Anthony Chan  
Witness occupation: CFO  
   
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer                                

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

 

12

 

Exhibit 10.17

 

Date: March 8, 2019

 

Borqs Technologies, Inc.

as Guarantor

 

 

 

 

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEED OF GUARANTEE AND INDEMNITY

 

Deed of Guarantee and Indemnity (BVI)

  

 

 

 

THIS GUARANTEE (this “ Guarantee ”) is made as a deed this 8th day of March 2019,

 

BETWEEN:

 

(1) Borqs Technologies, Inc. , a BVI business company incorporated under the laws of the British Virgin Islands with registered number 1880410 and whose registered office is at the offices of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands (the “ Guarantor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Suite D, Tiburon, CA 94920 USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Guarantee have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Guarantee, unless the context otherwise requires, the following expressions shall have the following meanings:

 

Encumbrance means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;

 

Guaranteed Obligations means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement and the other Loan Documents whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature.

 

Loan Agreement means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, and BORQS Hong Kong Limited and BORQS Technologies (HK) Limited as borrowers and the Guarantor and BORQS International Holding Corp as guarantors;

 

Deed of Guarantee and Indemnity (BVI)

 

1

 

 

1.2. Construction

 

1.2.1. Any reference in this Guarantee to:

 

(a) the Lender or the Guarantor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

(b) a Clause is a reference to a clause of this Guarantee;

 

(c) this Guarantee , the Loan Agreement or any other agreement or document is a reference to this Guarantee, the Loan Agreement or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Guaranteed Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Guarantee) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.2.2. Apart from a permitted assignee of the Lender pursuant to Clause 15.1, a person who is not a party to this Guarantee has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Guarantee.

 

2. Guarantee

 

In consideration of the Lender agreeing to enter into the Loan Agreement and making available loans or other banking facilities, or giving time, credit or accommodation to the Obligors, the Guarantor hereby irrevocably, unconditionally and absolutely:

 

(a) guarantees to the Lender punctual payment and performance of the Guaranteed Obligations; and

 

(b) undertakes that the Guarantor will on demand make good any default by any Obligor in the payment or discharge of the Guaranteed Obligations as if the Guarantor instead of the Obligor were expressed to be the primary obligor in respect of the Guaranteed Obligations.

 

Deed of Guarantee and Indemnity (BVI)

 

2

 

 

3. Indemnity

 

For the same consideration, the Guarantor agrees as a primary obligor to indemnify the Lender immediately on demand against any loss, cost or liability suffered by the Lender if any Guaranteed Obligations or any actual or purported agreement, arrangement or instruction relating to any Guaranteed Obligations is or becomes invalid, unenforceable or illegal, irrespective of whether the reason for such invalidity, unenforceability or illegality was or ought to have been known to the Lender. The amount of such loss shall be the amount which the Lender would otherwise have been entitled to recover from the Obligors.

 

4. Representations and Warranties

 

The Guarantor makes the representations and warranties set out in this Clause 4 (Representations and Warranties) to the Lender.

 

4.1. Status

 

The Guarantor is a company, duly incorporated, and validly existing under the laws of its jurisdiction of incorporation and has the power to carry on its business as it is now being conducted and to own property and other assets and is in good standing.

 

4.2. Powers, Authority and Non-Conflict

 

The execution, delivery and performance of this Guarantee is within the corporate powers of the Guarantor, has been duly authorised by all necessary corporate and other action and does not and will not conflict with (a) any law or regulation applicable to it; (b) any constitutional documents of the Guarantor; or (c) any agreement or instrument binding on the Guarantor.

 

4.3. Legal Validity

 

The obligations and liabilities expressed to be assumed by the Guarantor under this Guarantee are legal, valid, binding and enforceable obligations of the Guarantor (subject to applicable equitable principles and insolvency laws) and it is not necessary in order to ensure the legality, validity and enforceability of this Guarantee that it be filed, recorded or enrolled with any court or authority anywhere or that any stamp duty, registration or similar tax be paid on or in relation to it.

 

4.4. Authorisations

 

All authorisations, consents, approvals, resolutions, licences, exemptions, filings or registrations required under any applicable law or regulation (a) to enable it lawfully to carry on its business and to enter into, exercise its rights and comply with its obligations in this Guarantee, and (b) to make this Guarantee admissible in evidence in its jurisdiction of incorporation have been obtained or effected and are in full force and effect.

 

4.5. Choice of Law

 

The choice of the law of Hong Kong as the governing law of this Guarantee will be recognised and enforced in its jurisdiction of incorporation.

 

Deed of Guarantee and Indemnity (BVI)

 

3

 

 

4.6. No litigation

 

No litigation, arbitration or administrative proceeding is current, pending or (to the knowledge of the Guarantor) threatened against the Guarantor:

 

(a) to restrain the entry into by the Guarantor of, the exercise by the Guarantor of its rights and/or performance or enforcement of or compliance with its obligations under this Guarantee; or

 

(b) which has or could have a material adverse effect on or on the financial condition of the Guarantor or the ability of the Guarantor to make any payment when due or to perform any of its other obligations in accordance with this Guarantee.

 

4.7. Security and Ranking

 

Save for any Permitted Liens, no Encumbrance exists over any of the undertaking or the present or future revenues or assets of the Guarantor and the obligations of the Guarantor under this Guarantee are or will be its direct, general and unconditional obligations and rank or will rank at least pari passu in all respects with all its other present and future unsecured and unsubordinated indebtedness and obligations (including contingent obligations), with the exception of indebtedness and obligations mandatorily preferred by law and not by contract.

 

4.8. Time when representations and warranties are made

 

The Guarantor represents, warrants and agrees that each of the representations and warranties contained in this Clause 4 will be and remain correct so long as it has any liability (contingent or actual) under this Guarantee.

 

5. Continuing Guarantee

 

This Guarantee is a continuing guarantee for all the Guaranteed Obligations and will extend to the ultimate balance of the Guaranteed Obligations, regardless of any intermediate discharge or payment of or on account of the Guaranteed Obligations or any intermediate settlement of accounts between the Lender and any Obligor or any other person. No demand made by the Lender under this Guarantee shall restrict the right of the Lender to make further or other demands.

 

6. Interest

 

The Guarantor shall on demand pay to the Lender interest at the Default Rate on any amount for the time being due from the Guarantor to the Lender under this Guarantee (both before and after judgement) from the date of a demand for payment under this Guarantee until actual payment in full.

 

7. Opening of New Accounts

 

If for any reason this Guarantee ceases to be a continuing security, the Lender may open a new account for each Obligor. If the Lender does not open a new account, it shall nevertheless be treated as if it had done so at the time this Guarantee ceased to be a continuing security. As from that time all payments made to the Lender will be credited or treated as having been credited to the new account and will not operate to reduce the obligations of the Guarantor under this Guarantee.

 

Deed of Guarantee and Indemnity (BVI)

 

4

 

 

8. Waiver of Defences

 

The liability of the Guarantor under this Guarantee shall not be reduced, discharged or otherwise adversely affected by any of the events or circumstances set out in this Clause 8 (Waiver of Defences).

 

8.1. Variations

 

Any determination, renewal, variation (however fundamental), replacement, discharge, release or increase of, or composition or arrangement by the Lender relating to, any credit or facilities to the Obligors or of or relating to the Guaranteed Obligations.

 

8.2. Time or Indulgence

 

The grant by the Lender to any Obligor or any other person of any time, waiver, consent or indulgence.

 

8.3. Dealings with Security

 

Any taking, dealing, exchange, renewal, variation, release, compromise, discharge, composition, arrangement or modification in relation to any guarantee, security or right which the Lender may now or after the date of this Guarantee have in respect of the Guaranteed Obligations.

 

8.4. Negotiable Instruments

 

The renewal by the Lender of any bill, promissory note or other negotiable instrument or security.

 

8.5. Other Guarantees or Security

 

The Lender obtaining or refusing, neglecting or otherwise failing to obtain, perfect, enforce or claim any other guarantee, security or right (whether contemporaneously with this Guarantee or otherwise) or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security.

 

8.6. Incapacity

 

Any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Obligor or any other person.

 

8.7. Unenforceability

 

Any unenforceability, illegality, invalidity or non-provability of any obligation of the Obligor or any person under any document, agreement or security.

 

Deed of Guarantee and Indemnity (BVI)

 

5

 

 

8.8. Insolvency

 

Any liquidation, composition, insolvency, administration, bankruptcy, death or other incapacity, or any alteration in the corporate existence or structure, of any of the Obligors, the Guarantor or any other person.

 

8.9. Other Circumstances

 

Any other act, omission, matter or thing which, but for this provision, would or might reduce, discharge or otherwise adversely affect the obligations of the Guarantor under this Guarantee.

 

9. Reinstatement

 

If any payment by any Obligor or any other person or any discharge given by the Lender (whether in respect of the Guaranteed Obligations or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

(a) the liability of the Guarantor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

(b) the Lender shall be entitled to recover the value or amount of that security or payment from the Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

 

10. Deferral of Guarantor’s Rights

 

10.1. Restriction on Rights or Claims

 

Until all of the Guaranteed Obligations have been irrevocably paid or discharged in full, the Guarantor will not, unless the Lender otherwise directs:

 

(a) make or enforce any claim (including, but not limited to, a claim by way of set-off or counterclaim) or right against any Obligor or prove as a creditor of any Obligor in competition with the Lender, whether in respect of any payment under this Guarantee made by the Guarantor or otherwise; or

 

(b) be entitled to claim or have the benefit of, any set-off, counterclaim or proof against, or dividend paid on a winding-up or administration of or composition with creditors by any Obligor or any Obligor’s estate; or

 

(c) be entitled to claim or otherwise obtain the benefit (by way of subrogation or otherwise) of any security or guarantee or indemnity at any time held by the Lender for or in respect of any of the Guaranteed Obligations; or

 

(d) claim or enforce any right of contribution against any co-surety.

 

10.2. Proof at the Lender’s Request

 

If requested by the Lender the Guarantor shall:

 

Deed of Guarantee and Indemnity (BVI)

 

6

 

 

(a) exercise any right of proof or claim in the winding-up, administration, voluntary arrangement, bankruptcy or estate of any Obligor on behalf of the Lender and hold any dividend or other money received in respect of such proof or claim upon trust for the Lender to the extent of the Guaranteed Obligations; and

 

(b) hold upon trust for the Lender any money which it may receive or recover from any co-surety by virtue of any rights of contribution.

 

10.3. Monies held on Trust

 

If while the Guarantor remains under any liability to the Lender under this Guarantee, any monies or other property or assets shall be received or recovered by the Guarantor in breach of any provisions of this Clause 10 (Deferral of Guarantor’s Rights), such monies or other property or assets shall, to the extent of such liability, be held upon trust to pay or transfer the same to the Lender.

 

11. Suspense Account

 

The Lender may at any time place and keep to the credit of a separate interest bearing suspense account any monies received under this Guarantee for so long and in such manner as the Lender may determine without any obligation to apply such monies or any part of them in or towards the discharge of the Guaranteed Obligations. In the event of any proceedings in or analogous to bankruptcy, liquidation, composition or arrangement of or concerning any Obligor, the Lender may notwithstanding any payment made under this Guarantee prove for a claim and agree to accept any dividend or composition in respect of the whole or any part of the Guaranteed Obligations as if this Guarantee had not been given.

 

12. Other Means of Payment

 

Lender may make a demand under this Guarantee:

 

(a) before making any demand on any Obligor or any Obligor’s estate or any other person or enforcing any other guarantee or security for the Guaranteed Obligations; and

 

(b) for the payment of the ultimate balance after resorting to other means of payment, or for the balance due at any time notwithstanding that the Lender has not resorted to other means of payment (in which case the Guarantor shall not be entitled to any benefit from such other means of payment so long as the Guaranteed Obligations remain outstanding).

 

13. Expenses

 

13.1. Costs

 

The Guarantor shall pay to the Lender on demand all reasonable costs and expenses (including, but not limited to, legal fees) from time to time paid or incurred by the Lender in connection with taking, perfecting, preserving, defending or enforcing this Guarantee or in exercising any right or power under or in connection with this Guarantee, and shall indemnify the Lender against all such costs and expenses.

 

Deed of Guarantee and Indemnity (BVI)

 

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13.2. Stamp Duty

 

The Guarantor shall pay on demand all stamp, documentary, registration and other similar duties and taxes of any kind and from any source, if any, to which this Guarantee may be subject or give rise and shall indemnify the Lender against any and all liability with respect to or resulting from any delay or failure by the Guarantor in making such payment.

 

13.3. Value Added Tax

 

Where this Guarantee requires the Guarantor to re-imburse the Lender for any costs or expenses the Guarantor shall at the same time pay and indemnify the Lender against any value added tax (or any tax of a similar nature) incurred by the Lender in respect of the costs and expenses to the extent that the Lender determines that it is not entitled to credit or repayment of the value added tax (or other tax of a similar nature).

 

14. Miscellaneous

 

14.1. Additional Security

 

This Guarantee is in addition to and is not in any way prejudiced by any bill, note, guarantee, mortgage, charge or other security now or subsequently held by the Lender for any of the Guaranteed Obligations.

 

14.2. No Deduction or Withholding

 

All payments made by the Guarantor to the Lender under this Guarantee shall (save insofar as required by law to the contrary) be paid in full without set-off or counterclaim and free and clear of and without any deduction or withholding or payment for or on account of any present or future tax, levy, duty, impost or other charge or withholding of a similar nature. If the Guarantor shall be required by law to effect any such deduction or withholding or payment the Guarantor shall immediately pay to the Lender such additional amount as will result in the immediate receipt by the Lender of the full amount which would otherwise have been received had no such deduction or withholding or payment been made.

 

14.3. Set-off

 

The Lender may set-off any matured obligation owed by the Guarantor to the Lender against any obligation (whether or not matured) owed by the Lender to the Guarantor regardless of the place of payment, or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange for the purpose of the set-off in an amount estimated by it in good faith to be the amount of that obligation.

 

14.4. Waivers; Rights Cumulative

 

No delay or omission of the Lender in exercising any right, power or privilege (each a “ right ”) under this Guarantee or otherwise available to it at law shall impair such right, or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude its further exercise or the exercise of any other right. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law and may be waived only in writing and specifically.

 

Deed of Guarantee and Indemnity (BVI)

 

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14.5. Severability

 

Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guarantee or affecting the validity or enforceability of such provision in any other jurisdiction.

 

14.6. Certificates and Determinations

 

A certificate or determination by the Lender of the amount of the Guaranteed Obligations outstanding at any time or of any other amount payable by the Guarantor under this Guarantee is, in the absence of manifest error, conclusive evidence for all purposes of this Guarantee as against the Guarantor.

 

14.7. Currency Indemnity

 

14.7.1. The Guarantor’s liability under this Guarantee is to pay to the Lender the full amount of the Guaranteed Obligations in the currency in which they are for the time being denominated. If, for any reason, any payment due from the Guarantor under or in connection with this Guarantee is made or is satisfied in a currency (the “ Other Currency ”) other than the currency in which the relevant payment is due (the “ Contractual Currency ”), then to the extent that the payment (when converted into the Contractual Currency at the rate of exchange on the date of payment or, in the case of the liquidation or insolvency of the Guarantor, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation or insolvency) actually received by the Lender falls short of the amount expressed to be due under the terms of this Guarantee, the Guarantor shall, as a separate and independent obligation, indemnify the Lender and hold the Lender harmless against the amount of such shortfall.

 

14.7.2. For the purpose of this Clause “rate of exchange” means the rate at which the Lender is able on the relevant date to purchase the Contractual Currency with the Other Currency and shall take into account any premium and other costs of exchange.

 

15. Benefit of this Guarantee

 

15.1. Assignment by the Lender

 

The Lender may assign or transfer all or any part of its rights under this Guarantee in connection with the assignment of its rights and obligations in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement. The Guarantor shall enter into any documents reasonably specified by the Lender to be necessary to give effect to such assignment or transfer.

 

15.2. No Assignment by the Guarantor

 

The Guarantor may not assign or transfer all or any part of its rights and/or obligations under this Guarantee.

 

Deed of Guarantee and Indemnity (BVI)

 

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15.3. Disclosure of Information

 

The Lender may not disclose such information about the Guarantor unless such disclosure is made in compliance with Section 8.1 (Confidentiality) of the Loan Agreement.

 

16. Notices and Demands

 

16.1. Address

 

The Guarantor’s address and fax number for any notice, demand or other communication under or in connection with this Guarantee are set forth in Section 8.5 (Notices) of the Loan Agreement. Any such notice, demand or other communication shall also be effective if sent to the Guarantor’s registered office or the address of the Guarantor last known to the Lender.

 

16.2. Method and Receipt

 

Any notice, demand or other communication to be given or made pursuant to this Guarantee to the Guarantor may be given or made in such manner and be deemed delivered at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

16.3. English language

 

Any notice given under or in connection with this Guarantee must be in English.

 

17. Governing Law

 

17.1. This Guarantee shall be governed by and construed in accordance with the laws of Hong Kong. The parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

 

17.2. The submission of the parties hereto to the jurisdiction of the Hong Kong Courts shall not restrict the right of the Lender to take proceedings in connection with this Guarantee in any other courts having, claiming or accepting jurisdiction in respect of matters pertaining to this Guarantee, including but not limited to the California Courts, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not.

 

17.3. The Guarantor hereby irrevocably consents to the granting of any relief and/or the issue of any process in connection with any legal action or proceedings in connection with this Guarantee, including the making, enforcement or execution of any judgment or order against any of the property, assets or revenues of the Guarantor whatsoever.

 

18. Process Agent

 

The service of any process connected with proceedings in the Hong Kong courts and relating to this Guarantee will be deemed to have been validly served on the Guarantor if it is received by any Obligor at its registered address or the address specified in Section 8.5 (Notices) of the Loan Agreement and service will be deemed to have been acknowledged by the Chargor if it is acknowledged by such Obligorl.

 

EXECUTED as a Deed and delivered on the date stated at the beginning of this document.

 

Deed of Guarantee and Indemnity (BVI)

 

10

 

  

EXECUTED and DELIVERED )
as a DEED by BORQS HONG KONG LIMITED )
   
Acting by: /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Director  
   
in the presence of :  
   
/s/ Anthony Chan                             
Witness name: Anthony Chan  
Witness occupation: CFO  
   
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer                                

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

11

 

Exhibit 10.18

 

Date: March 8, 2019

 

BORQS International Holding Corp

as Guarantor

 

Partners for Growth V, L.P.

as Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEED OF GUARANTEE AND INDEMNITY

 

 

 

 

THIS GUARANTEE (this “ Guarantee ”) is made as a deed this 8th day of March 2019.

 

BETWEEN:

 

(1) BORQS INTERNATIONAL HOLDING CORP , a company duly incorporated and validly existing under and by virtue of the Laws of the Cayman Islands, registered under company number 192127 and with registered office address at P.O. Box 309, Ugland House, Grand Cayman KY1-1104 (the “ Guarantor ”); and

 

(2) PARTNERS FOR GROWTH V, L.P. , a Delaware limited partnership, with its principal place of business at 1751 Tiburon Blvd., Tiburon, CA 94920 USA (the “ Lender ”).

 

IT IS AGREED as follows:

 

1. Definitions and Interpretation

 

1.1. Definitions

 

Unless otherwise defined herein, capitalised terms used in this Guarantee have the meaning given to such terms in the Loan Agreement (as defined below). In addition, in this Guarantee, unless the context otherwise requires, the following expressions shall have the following meanings:

 

  Encumbrance means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law) or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase, sale-and-leaseback arrangement whatsoever over or in any property, assets or rights or interest of whatsoever nature or any agreement for any of the same;
     
  Guaranteed Obligations means all present and future obligations and liabilities of the Obligors to the Lender under the Loan Agreement and the other Loan Documents, whether actual or contingent and whether owed or incurred alone or jointly and/or severally with another and as principal or as surety or in any other capacity or of any nature;
     
  Loan Agreement means the California law Amended and Restated Loan and Security Agreement originally dated 30 April 2018 as amended on 17 December 2018 and as amended and restated on or about the date hereof between the Lender as lender, and BORQS Hong Kong Limited and BORQS Technologies (HK) Limited as borrowers and the Guarantor and BORQS Technologies Inc. as guarantors.

 

1.2. Construction

 

1.2.1. Any reference in this Guarantee to:

 

(a) the Lender or the Guarantor or any other person includes its respective successors in title, permitted assigns and/or permitted transferees;

 

1

 

 

(b) a Clause is a reference to a clause of this Guarantee;

 

(c) this Guarantee , the Loan Agreement or any other agreement or document is a reference to this Guarantee, the Loan Agreement or such other agreement or document as the same may have been, or may from time to time be, amended, varied, supplemented or novated;

 

(d) the Guaranteed Obligations includes a reference to any part of them;

 

(e) the singular shall include the plural and vice versa;

 

(f) a person includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having a separate legal personality) and any other entity or two or more of the foregoing; and

 

(g) any statute or statutory provision or ordinance shall include any statute or statutory provision or ordinance which amends, extends, consolidates or replaces the same (whether before or after the date of this Guarantee) or which has been amended, extended, consolidated or replaced by the same and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provision or ordinance.

 

1.2.2. Apart from a permitted assignee of the Lender pursuant to Clause 15.1, a person who is not a party to this Guarantee has no rights under the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the laws of Hong Kong) to enforce or enjoy the benefit of any term of this Guarantee.

 

2. Guarantee

 

In consideration of the Lender agreeing to enter into the Loan Agreement and making available loans or other banking facilities, or giving time, credit or accommodation to the Obligors, the Guarantor hereby irrevocably, unconditionally and absolutely:

 

(a) guarantees to the Lender punctual payment and performance of the Guaranteed Obligations; and

 

(b) undertakes that the Guarantor will on demand make good any default by any Obligor in the payment or discharge of the Guaranteed Obligations as if the Guarantor instead of the Obligor were expressed to be the primary obligor in respect of the Guaranteed Obligations.

 

3. Indemnity

 

For the same consideration, the Guarantor agrees as a primary obligor to indemnify the Lender immediately on demand against any loss, cost or liability suffered by the Lender if any Guaranteed Obligations or any actual or purported agreement, arrangement or instruction relating to any Guaranteed Obligations is or becomes invalid, unenforceable or illegal, irrespective of whether the reason for such invalidity, unenforceability or illegality was or ought to have been known to the Lender. The amount of such loss shall be the amount which the Lender would otherwise have been entitled to recover from the Obligors.

 

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4. Representations and Warranties

 

The Guarantor makes the representations and warranties set out in this Clause 4 (Representations and Warranties) to the Lender.

 

4.1. Status

 

The Guarantor is a company, duly incorporated, and validly existing under the laws of its jurisdiction of incorporation and has the power to carry on its business as it is now being conducted and to own property and other assets and is in good standing.

 

4.2. Powers, Authority and Non-Conflict

 

The execution, delivery and performance of this Guarantee is within the corporate powers of the Guarantor, has been duly authorised by all necessary corporate and other action and does not and will not conflict with (a) any law or regulation applicable to it; (b) any constitutional documents of the Guarantor; or (c) any agreement or instrument binding on the Guarantor.

 

4.3. Legal Validity

 

The obligations and liabilities expressed to be assumed by the Guarantor under this Guarantee are legal, valid, binding and enforceable obligations of the Guarantor (subject to applicable equitable principles and insolvency laws) and it is not necessary in order to ensure the legality, validity and enforceability of this Guarantee that it be filed, recorded or enrolled with any court or authority anywhere or that any stamp duty, registration or similar tax be paid on or in relation to it.

 

4.4. Authorisations

 

All authorisations, consents, approvals, resolutions, licences, exemptions, filings or registrations required under any applicable law or regulation (a) to enable it lawfully to carry on its business and to enter into, exercise its rights and comply with its obligations in this Guarantee, and (b) to make this Guarantee admissible in evidence in its jurisdiction of incorporation have been obtained or effected and are in full force and effect.

 

4.5. Choice of Law

 

The choice of the law of Hong Kong as the governing law of this Guarantee will be recognised and enforced in its jurisdiction of incorporation.

 

4.6. No litigation

 

No litigation, arbitration or administrative proceeding is current, pending or (to the knowledge of the Guarantor) threatened against the Guarantor:

 

(a) to restrain the entry into by the Guarantor of, the exercise by the Guarantor of its rights and/or performance or enforcement of or compliance with its obligations under this Guarantee; or

 

(b) which has or could have a material adverse effect on or on the financial condition of the Guarantor or the ability of the Guarantor to make any payment when due or to perform any of its other obligations in accordance with this Guarantee.

 

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4.7. Security and Ranking

 

Save for any Permitted Liens, no Encumbrance exists over any of the undertaking or the present or future revenues or assets of the Guarantor and the obligations of the Guarantor under this Guarantee are or will be its direct, general and unconditional obligations and rank or will rank at least pari passu in all respects with all its other present and future unsecured and unsubordinated indebtedness and obligations (including contingent obligations), with the exception of indebtedness and obligations mandatorily preferred by law and not by contract.

 

4.8. Time when representations and warranties are made

 

The Guarantor represents, warrants and agrees that each of the representations and warranties contained in this Clause 4 will be and remain correct so long as it has any liability (contingent or actual) under this Guarantee.

 

5. Continuing Guarantee

 

This Guarantee is a continuing guarantee for all the Guaranteed Obligations and will extend to the ultimate balance of the Guaranteed Obligations, regardless of any intermediate discharge or payment of or on account of the Guaranteed Obligations or any intermediate settlement of accounts between the Lender and any Obligor or any other person. No demand made by the Lender under this Guarantee shall restrict the right of the Lender to make further or other demands.

 

6. Interest

 

The Guarantor shall on demand pay to the Lender interest at the Default Rate on any amount for the time being due from the Guarantor to the Lender under this Guarantee (both before and after judgement) from the date of a demand for payment under this Guarantee until actual payment in full.

 

7. Opening of New Accounts

 

If for any reason this Guarantee ceases to be a continuing security, the Lender may open a new account for each Obligor. If the Lender does not open a new account, it shall nevertheless be treated as if it had done so at the time this Guarantee ceased to be a continuing security. As from that time all payments made to the Lender will be credited or treated as having been credited to the new account and will not operate to reduce the obligations of the Guarantor under this Guarantee.

 

8. Waiver of Defences

 

The liability of the Guarantor under this Guarantee shall not be reduced, discharged or otherwise adversely affected by any of the events or circumstances set out in this Clause 8 (Waiver of Defences).

 

8.1. Variations

 

Any determination, renewal, variation (however fundamental), replacement, discharge, release or increase of, or composition or arrangement by the Lender relating to, any credit or facilities to the Obligors or of or relating to the Guaranteed Obligations.

 

8.2. Time or Indulgence

 

The grant by the Lender to any Obligor or any other person of any time, waiver, consent or indulgence.

 

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8.3. Dealings with Security

 

Any taking, dealing, exchange, renewal, variation, release, compromise, discharge, composition, arrangement or modification in relation to any guarantee, security or right which the Lender may now or after the date of this Guarantee have in respect of the Guaranteed Obligations.

 

8.4. Negotiable Instruments

 

The renewal by the Lender of any bill, promissory note or other negotiable instrument or security.

 

8.5. Other Guarantees or Security

 

The Lender obtaining or refusing, neglecting or otherwise failing to obtain, perfect, enforce or claim any other guarantee, security or right (whether contemporaneously with this Guarantee or otherwise) or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security.

 

8.6. Incapacity

 

Any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Obligor or any other person.

 

8.7. Unenforceability

 

Any unenforceability, illegality, invalidity or non-provability of any obligation of the Obligor or any person under any document, agreement or security.

 

8.8. Insolvency

 

Any liquidation, composition, insolvency, administration, bankruptcy, death or other incapacity, or any alteration in the corporate existence or structure, of any of the Obligors, the Guarantor or any other person.

 

8.9. Other Circumstances

 

Any other act, omission, matter or thing which, but for this provision, would or might reduce, discharge or otherwise adversely affect the obligations of the Guarantor under this Guarantee.

 

9. Reinstatement

 

If any payment by any Obligor or any other person or any discharge given by the Lender (whether in respect of the Guaranteed Obligations or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

(a) the liability of the Guarantor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

(b) the Lender shall be entitled to recover the value or amount of that security or payment from the Guarantor, as if the payment, discharge, avoidance or reduction had not occurred.

 

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10. Deferral of Guarantor’s Rights

 

10.1. Restriction on Rights or Claims

 

Until all of the Guaranteed Obligations have been irrevocably paid or discharged in full, the Guarantor will not, unless the Lender otherwise directs:

 

(a) make or enforce any claim (including, but not limited to, a claim by way of set-off or counterclaim) or right against any Obligor or prove as a creditor of any Obligor in competition with the Lender, whether in respect of any payment under this Guarantee made by the Guarantor or otherwise; or

 

(b) be entitled to claim or have the benefit of, any set-off, counterclaim or proof against, or dividend paid on a winding-up or administration of or composition with creditors by any Obligor or any Obligor’s estate; or

 

(c) be entitled to claim or otherwise obtain the benefit (by way of subrogation or otherwise) of any security or guarantee or indemnity at any time held by the Lender for or in respect of any of the Guaranteed Obligations; or

 

(d) claim or enforce any right of contribution against any co-surety.

 

10.2. Proof at the Lender’s Request

 

If requested by the Lender the Guarantor shall:

 

(a) exercise any right of proof or claim in the winding-up, administration, voluntary arrangement, bankruptcy or estate of any Obligor on behalf of the Lender and hold any dividend or other money received in respect of such proof or claim upon trust for the Lender to the extent of the Guaranteed Obligations; and

 

(b) hold upon trust for the Lender any money which it may receive or recover from any co-surety by virtue of any rights of contribution.

 

10.3. Monies held on Trust

 

If while the Guarantor remains under any liability to the Lender under this Guarantee, any monies or other property or assets shall be received or recovered by the Guarantor in breach of any provisions of this Clause 10 (Deferral of Guarantor’s Rights), such monies or other property or assets shall, to the extent of such liability, be held upon trust to pay or transfer the same to the Lender.

 

11. Suspense Account

 

The Lender may at any time place and keep to the credit of a separate interest bearing suspense account any monies received under this Guarantee for so long and in such manner as the Lender may determine without any obligation to apply such monies or any part of them in or towards the discharge of the Guaranteed Obligations. In the event of any proceedings in or analogous to bankruptcy, liquidation, composition or arrangement of or concerning any Obligor, the Lender may notwithstanding any payment made under this Guarantee prove for a claim and agree to accept any dividend or composition in respect of the whole or any part of the Guaranteed Obligations as if this Guarantee had not been given.

 

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12. Other Means of Payment

 

Lender may make a demand under this Guarantee:

 

(a) before making any demand on any Obligor or any Obligor’s estate or any other person or enforcing any other guarantee or security for the Guaranteed Obligations; and

 

(b) for the payment of the ultimate balance after resorting to other means of payment, or for the balance due at any time notwithstanding that the Lender has not resorted to other means of payment (in which case the Guarantor shall not be entitled to any benefit from such other means of payment so long as the Guaranteed Obligations remain outstanding).

 

13. Expenses

 

13.1. Costs

 

The Guarantor shall pay to the Lender on demand all reasonable costs and expenses (including, but not limited to, legal fees) from time to time paid or incurred by the Lender in connection with taking, perfecting, preserving, defending or enforcing this Guarantee or in exercising any right or power under or in connection with this Guarantee, and shall indemnify the Lender against all such costs and expenses.

 

13.2. Stamp Duty

 

The Guarantor shall pay on demand all stamp, documentary, registration and other similar duties and taxes of any kind and from any source, if any, to which this Guarantee may be subject or give rise and shall indemnify the Lender against any and all liability with respect to or resulting from any delay or failure by the Guarantor in making such payment.

 

13.3. Value Added Tax

 

Where this Guarantee requires the Guarantor to re-imburse the Lender for any costs or expenses the Guarantor shall at the same time pay and indemnify the Lender against any value added tax (or any tax of a similar nature) incurred by the Lender in respect of the costs and expenses to the extent that the Lender determines that it is not entitled to credit or repayment of the value added tax (or other tax of a similar nature).

 

14. Miscellaneous

 

14.1. Additional Security

 

This Guarantee is in addition to and is not in any way prejudiced by any bill, note, guarantee, mortgage, charge or other security now or subsequently held by the Lender for any of the Guaranteed Obligations.

 

14.2. No Deduction or Withholding

 

All payments made by the Guarantor to the Lender under this Guarantee shall (save insofar as required by law to the contrary) be paid in full without set-off or counterclaim and free and clear of and without any deduction or withholding or payment for or on account of any present or future tax, levy, duty, impost or other charge or withholding of a similar nature. If the Guarantor shall be required by law to effect any such deduction or withholding or payment the Guarantor shall immediately pay to the Lender such additional amount as will result in the immediate receipt by the Lender of the full amount which would otherwise have been received had no such deduction or withholding or payment been made.

 

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14.3. Set-off

 

The Lender may set-off any matured obligation owed by the Guarantor to the Lender against any obligation (whether or not matured) owed by the Lender to the Guarantor regardless of the place of payment, or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange for the purpose of the set-off in an amount estimated by it in good faith to be the amount of that obligation.

 

14.4. Waivers; Rights Cumulative

 

No delay or omission of the Lender in exercising any right, power or privilege (each a “ right ”) under this Guarantee or otherwise available to it at law shall impair such right, or be construed as a waiver of such right nor shall any single or partial exercise of any such right preclude its further exercise or the exercise of any other right. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law and may be waived only in writing and specifically.

 

14.5. Severability

 

Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guarantee or affecting the validity or enforceability of such provision in any other jurisdiction.

 

14.6. Certificates and Determinations

 

A certificate or determination by the Lender of the amount of the Guaranteed Obligations outstanding at any time or of any other amount payable by the Guarantor under this Guarantee is, in the absence of manifest error, conclusive evidence for all purposes of this Guarantee as against the Guarantor.

 

14.7. Currency Indemnity

 

14.7.1. The Guarantor’s liability under this Guarantee is to pay to the Lender the full amount of the Guaranteed Obligations in the currency in which they are for the time being denominated. If, for any reason, any payment due from the Guarantor under or in connection with this Guarantee is made or is satisfied in a currency (the “ Other Currency ”) other than the currency in which the relevant payment is due (the “ Contractual Currency ”), then to the extent that the payment (when converted into the Contractual Currency at the rate of exchange on the date of payment or, in the case of the liquidation or insolvency of the Guarantor, at the rate of exchange on the latest date permitted by applicable law for the determination of liabilities in such liquidation or insolvency) actually received by the Lender falls short of the amount expressed to be due under the terms of this Guarantee, the Guarantor shall, as a separate and independent obligation, indemnify the Lender and hold the Lender harmless against the amount of such shortfall.

 

14.7.2. For the purpose of this Clause “rate of exchange” means the rate at which the Lender is able on the relevant date to purchase the Contractual Currency with the Other Currency and shall take into account any premium and other costs of exchange.

 

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15. Benefit of this Guarantee

 

15.1. Assignment by the Lender

 

The Lender may assign or transfer all or any part of its rights under this Guarantee in connection with the assignment of its rights and obligations in accordance with the terms of Section 8.14 (Benefit of Agreement) of the Loan Agreement. The Guarantor shall enter into any documents reasonably specified by the Lender to be necessary to give effect to such assignment or transfer.

 

15.2. No Assignment by the Guarantor

 

The Guarantor may not assign or transfer all or any part of its rights and/or obligations under this Guarantee.

 

15.3. Disclosure of Information

 

The Lender may not disclose such information about the Guarantor unless such disclosure is made in compliance with Section 8.1 (Confidentiality) of the Loan Agreement.

 

16. Notices and Demands

 

16.1. Address

 

The Guarantor’s address and fax number for any notice, demand or other communication under or in connection with this Guarantee are set forth in Section 8.5 (Notices) of the Loan Agreement. Any such notice, demand or other communication shall also be effective if sent to the Guarantor’s registered office or the address of the Guarantor last known to the Lender.

 

16.2. Method and Receipt

 

Any notice, demand or other communication to be given or made pursuant to this Guarantee to the Guarantor may be given or made in such manner and be deemed delivered at such time specified under Section 8.5 (Notices) of the Loan Agreement.

 

16.3. English language

 

Any notice given under or in connection with this Guarantee must be in English.

 

17. Governing Law

 

17.1. This Guarantee shall be governed by and construed in accordance with the laws of Hong Kong. The parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong Courts.

 

17.2. The submission of the parties hereto to the jurisdiction of the Hong Kong Courts shall not restrict the right of the Lender to take proceedings in connection with this Guarantee in any other courts having, claiming or accepting jurisdiction in respect of matters pertaining to this Guarantee, including but not limited to the California Courts, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not.

 

17.3. The Guarantor hereby irrevocably consents to the granting of any relief and/or the issue of any process in connection with any legal action or proceedings in connection with this Guarantee, including the making, enforcement or execution of any judgment or order against any of the property, assets or revenues of the Guarantor whatsoever.

 

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EXECUTED and DELIVERED )
as a DEED by BORQS HONG KONG LIMITED )
   
Acting by: /s/ Chan Sek Yuen Pat  
   
Name: Chan Sek Yuen Pat 陳錫源  
Title: Director  
   
in the presence of :  
   
/s/ Anthony Chan                             
Witness name: Anthony Chan  
Witness occupation: CFO  
   
EXECUTED and DELIVERED  
as a DEED by PARTNERS FOR GROWTH V, L.P. )

 

Acting by: /s/ Geoffrey Allan

 

Name: Geoffrey Allan

Title: Manager, Partners for Growth V, LLC, its managing member

 

in the presence of :

 

/s/ Amy Spencer                                

Witness name: Amy Spencer

Witness Address

Witness occupation: Executive Director

 

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