Document:

Exhibit 10.4

 

ESCROW
AGREEMENT

 

This
ESCROW AGREEMENT (this “Agreement”) is made and entered into as of August 18, 2017, by and among: (i)
Pacific Special Acquisition Corp., a business company incorporated in the British Virgin Islands with limited liability
(“Purchaser”); (ii) Zhengqi International Holding Limited, a company incorporated in the British
Virgin Islands, in the capacity under the Merger Agreement (as defined below) as the Purchaser Representative (the “Purchaser
Representative”); (iii) Zhengdong Zou, in the capacity under the Merger Agreement as the Seller Representative
(the “Seller Representative”); and (iv) Continental Stock Transfer & Trust Company, as escrow
agent (the “Escrow Agent”). Capitalized terms used herein but not otherwise defined herein shall have
the meaning given to such terms in the Merger Agreement.

 

Whereas,
Purchaser, Borqs International Holding Corp, an exempted company incorporated under the laws of the Cayman Islands with limited
liability (the “Company”), the Seller Representative, the Purchaser Representative, PAAC Merger Subsidiary
Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability and a wholly-owned subsidiary
of Purchaser (“Merger Sub”), and, for certain limited purpose thereof, Zhengqi International Holding
Limited (“Sponsor”), are parties to that certain Merger Agreement, dated as of December 27, 2016 (as
amended, including by the First Amendment to Merger Agreement dated May 10, 2017 and the Second Amendment to Merger Agreement
dated June 29, 2017, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into
the Company, with the Company continuing as the surviving entity (the “Merger”), and as a result of
which, among other matters, all of the issued and outstanding share capital of the Company immediately prior to the consummation
of the Merger (the “Closing”) shall no longer be outstanding, and shall automatically be cancelled and
shall cease to exist, in exchange for a certain number of newly issued ordinary shares of no par value of Purchaser (“Purchaser
Ordinary Shares”) as specified in the Merger Agreement (the “Merger Consideration Shares”),
subject to the withholding of the Escrow Shares (as defined below) being deposited in the Escrow Accounts (as defined below) in
accordance with the terms and conditions of the Merger Agreement and this Agreement;

 

WHEREAS,
pursuant to the Merger Agreement, Purchaser, Purchaser Representative, their respective Affiliates and their respective officers,
directors, managers, employees, successors and permitted assigns (the “Indemnified Parties”) are entitled
to be indemnified in certain respects by the Company and the Company Shareholders;

 

WHEREAS,
in accordance with the Merger Agreement and this Agreement, at the Closing, Purchaser shall issue to the Escrow Agent: (i) 942,467
Purchaser Ordinary Shares (together with any equity securities paid as dividends or distributions with respect to such shares
or into which such shares are exchanged or converted, and any additional shares deposited in the Indemnity Escrow Account in accordance
with Section 5(c) below, the “Indemnity Escrow Shares”) to be held, along with any other Indemnity
Escrow Property (as defined below), by the Escrow Agent in a segregated escrow account (the “Indemnity Escrow Account”)
and disbursed therefrom in accordance with the terms of Article VI of the Merger Agreement and this Agreement; and (ii)
2,352,285 Purchaser Ordinary Shares (together with any equity securities paid as dividends or distributions with respect to such
shares or into which such shares are exchanged or converted, the “Guarantee Escrow Shares”, and collectively
with the Indemnity Escrow Shares, the “Escrow Shares”) to be held by the Escrow Agent in a segregated
escrow account (the “Earnout Escrow Account”, and together with the Indemnity Escrow Account, the “Escrow
Accounts”) and disbursed therefrom in accordance with the terms of Article XII of the Merger Agreement and
this Agreement;

 

    	 	1	 

     

    

 

WHEREAS,
it has been determined in accordance with the terms of the Merger Agreement that there are no Commitment Escrow Shares and no
Net Income Escrow Shares;

 

WHEREAS,
(i) pursuant to the Merger Agreement and the Letters of Transmittal executed by the Company Shareholders the Seller Representative
has been designated as the Company’s and each Company Shareholder’s representative and agent to represent each of
them, and to act on their behalf for purposes of this Agreement, and (ii) pursuant to the Merger Agreement, the Purchaser Representative
has been designated as the Purchaser’s sole representative and agent to act on its behalf for purposes of this Agreement,
which appointment has been acknowledged and confirmed by the Backstop Investors (as defined below) in the Backstop Agreement,
as amended; and

 

WHEREAS,
the Escrow Agent is willing to administer the escrow under the terms and conditions of this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and of the mutual covenants and agreements contained herein, the parties
hereto hereby agree as follows:

 

Section
1.               Appointment. Purchaser
and the Seller Representative hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the
Escrow Agent hereby agrees to perform the duties of their escrow agent under this Agreement. The escrow services to be rendered
by the Escrow Agent under this Agreement will not begin until the Escrow Agent has received the documentation necessary to establish
the Escrow Accounts on its books and has received the Escrow Shares in accordance with this Agreement.

 

Section
2.               Transfer of Share Certificates
Representing Escrow Shares.

 

(a)            In accordance with the Merger Agreement, at the Closing, Purchaser shall deposit with the Escrow Agent (i) share certificate(s)
for the Indemnity Escrow Shares, with each such certificate being in the name of the Escrow Agent, to be held for the benefit
of each Company Shareholder based on each Company Shareholders’ Pro Rata Share of the total Indemnity Escrow Shares as determined
in accordance with the Merger Agreement, all of which shall be deposited by the Escrow Agent in the Indemnity Escrow Account;
and (ii) share certificates for the Guarantee Escrow Shares, with each such certificate being in the name of the Sponsor and/or
any assignee of Sponsor under the Backstop Agreement (collectively, the “Backstop Investors”), all of
which shall be held by the Escrow Agent in the Earnout Escrow Account. Notwithstanding the foregoing, Purchaser may alternatively
have the Escrow Agent, Purchaser and Purchaser’s transfer agent account for any of the Escrow Shares in book entry form.
Upon its receipt of the certificates for the Escrow Shares, the Escrow Agent shall send a written acknowledgement of its receipt
to the Purchaser Representative and the Seller Representative

 

(b)            In addition, as promptly as practicable following the date of this Agreement, Purchaser shall deliver to the Escrow Agent five
(5) duly executed instruments of transfer in customary form, executed in blank by the applicable Backstop Investors, with respect
to the Guarantee Escrow Shares. Upon its receipt of such duly executed instruments of transfer, the Escrow Agent shall send a
written acknowledgement of its receipt to the Purchaser Representative.

 

Section
3.               Maintenance of the Escrow
Shares and other Escrow Property.

 

(a)            So long as any: (i) Indemnity Escrow Shares are being held in the Indemnity Escrow Account, any dividends, distributions or other
income paid on or otherwise accruing to such Indemnity Escrow Shares (the foregoing, together with the Indemnity Escrow Shares,
and as reduced by any disbursements of such Indemnity Escrow Shares or dividends, distributions or other income from the Indemnity
Escrow Account by the Escrow Agent in accordance with the terms of this Agreement and the Merger Agreement, the “Indemnity
Escrow Property”) shall be held by the Escrow Agent in the Indemnity Escrow Account; and (ii) Guarantee Escrow Shares
are being held in the Earnout Escrow Account, the Backstop Investors shall be entitled to (x) exercise voting rights with respect
to such shares, and (y) receive dividends or other distributions (if declared and paid) with respect to the Guarantee Escrow Shares
(other than those paid in equity securities, which shall be included as part of the Guarantee Escrow Shares and held in the Earnout
Escrow Account). If the Escrow Agent receives any dividends or other distributions with respect to the Guarantee Escrow Shares
(other than equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged
or converted) while they are held in the Earnout Escrow Account, it will promptly pay such dividends or distributions to the Backstop
Investor. The Indemnity Escrow Property and the Guarantee Escrow Shares, while held in the applicable Escrow Account, are collectively
referred to as the “Escrow Property”.

 

    	 	2	 

     

    

 

(b)            During the term of this Agreement, the Escrow Agent shall hold the Escrow Property in the applicable Escrow Account and shall
not sell, transfer, dispose of, lend or otherwise subject to a Lien any of the Escrow Property except until and to the extent
that they are disbursed in accordance with Section 4 or Section 5. Except as the Purchaser Representative (on behalf
of Purchaser) and the Seller Representative may otherwise agree in joint written instructions executed and delivered to the Escrow
Agent by the Seller Representative and the Purchaser Representative (on behalf of Purchaser), no part of the Escrow Property may
be withdrawn except as expressly provided in this Agreement.

 

Section
4.               Transfer of the Indemnity
Escrow Property. The Escrow Agent shall hold the Indemnity Escrow Property and shall transfer the Indemnity Escrow Property
to either the Purchaser or the Seller Representative (for further distribution to the Company Shareholders), as applicable, in
accordance with the following procedures:

 

(a)            Purchaser (with the Purchaser Representative acting on its behalf) may assert a claim for indemnification on behalf of an Indemnified
Party pursuant to the Merger Agreement (an “Indemnification Claim”) by providing written notice (a “Claim
Notice”) of such claim to the Seller Representative and the Escrow Agent, which Claim Notice shall include (i) a
reasonable description of the facts and circumstances which relate to the subject matter of such Indemnification Claim to the
extent then known and (ii) the amount of Losses suffered by the Indemnified Party in connection with the claim to the extent known
or reasonably estimable (provided, that the Purchaser Representative (on behalf of Purchaser) may thereafter in good faith adjust
the amount of Losses with respect to the claim by providing a revised Claim Notice to the Seller Representative and the Escrow
Agent (such updated Claim Notice, a “Revised Claim Notice”, and such amount, as it may be adjusted,
the “Claim Amount”); provided, that the copy of any Claim Notice provided to the Escrow Agent
shall be redacted for any confidential or proprietary information of the Indemnifying Party or the Indemnified Party described
in clause (i).

 

(b)            With respect to any (i) direct indemnification claim that is not a Third Party Claim, the Seller Representative will have a period
of thirty (30) days after receipt of the Claim Notice (or of any Revised Claim Notice) to respond thereto, or (ii) Third Party
Claim that has become a Resolved Third Party Claim, the Seller Representative will have a period of thirty (30) days after such
Third Party Claims has become a Resolved Third Party Claim and notice of such Resolved Third Party Claim has been given to the
Purchaser Representative and the Seller Representative in accordance with Section 6.5 of the Merger Agreement to respond to the
Claim Notice (or any Revised Claim Notice, as it may have been updated) sent for such Third Party Claim. If the Seller Representative
does not provide to the Purchaser Representative and the Escrow Agent a written notice objecting to such Indemnification Claim
(an “Objection Notice”) (with any Objection Notice provided to the Purchaser Representative, but not
the Escrow Agent, including an attachment with a description, in reasonable detail, of the facts upon which such objection is
based) by 5:00 p.m. New York City time on the end of such applicable thirtieth (30th) day (such applicable thirty (30)
day period, the “Objection Period”), the Seller Representative on will be deemed to have accepted responsibility
for the Losses set forth in such Claim Notice or Revised Claim Notice subject to the limitations on indemnification set forth
in Article VI of the Merger Agreement and will have no further right to contest the validity of such Claim Notice or Revised Claim
Notice, and the Escrow Agent shall promptly (in any event within five (5) Business Days) after the expiration of the Objection
Period (or, if during the Objection Period, the Seller Representative provides affirmative written instructions to the Escrow
Agent to release such Indemnity Escrow Property from the Indemnity Escrow Account, promptly (in any event within five (5) Business
Days) after the Escrow Agent’s receipt of such instructions from the Seller Representative) disburse from the Indemnity
Escrow Account to the Purchaser Representative, Indemnity Escrow Property in an amount equal to the Claim Amount. If the Seller
Representative provides an Objection Notice during the Objection Period that disputes only a portion of the Claim Amount, the
Escrow Agent shall promptly (in any event within five (5) Business Days) the expiration of the Objection Period (or, if during
the Objection Period, the Seller Representative provides affirmative written instructions to the Escrow Agent to release such
Indemnity Escrow Property from the Indemnity Escrow Account, promptly (in any event within five (5) Business Days) after the Escrow
Agent’s receipt of such instructions from the Seller Representative), distribute from the Indemnity Escrow Account to Purchaser,
Indemnity Escrow Property in an amount equal to the undisputed portion of the Claim Amount.

 

    	 	3	 

     

    

 

(c)            If the Seller Representative timely disputes an Indemnification Claim by providing an Objection Notice to the Purchaser Representative
and the Escrow Agent during the Objection Period, the Purchaser Representative and the Seller Representative shall resolve the
dispute in accordance with the terms of the Merger Agreement. If an Indemnification Claim is disputed by the Seller Representative,
the Escrow Agent shall not distribute to the Seller Representative (or directly to any Company Shareholder) any portion of the
Indemnity Escrow Property with respect to the disputed portion of the Claim Amount, until receipt of (i) joint written instructions
executed and delivered by the Seller Representative and Purchaser Representative(on behalf of Purchaser) stating that the dispute
has been resolved and that the Purchaser Representative has the right to the Claim Amount (or some portion thereof) (“Joint
Instructions”) or (ii) a copy of a final, non-appealable arbitration award issued pursuant to Section 10.4 of the
Merger Agreement or a final, non-appealable Order from a court of competent jurisdiction establishing the Indemnified Party’s
right to the Claim Amount (or some portion thereof) pursuant to the Merger Agreement (a “Binding Award”).
Upon receipt of such Joint Instructions or Binding Award, the Escrow Agent shall, without further action on the part of the Seller
Representative or the Purchaser Representative, promptly (in any event within five (5) Business Days) disburse to Purchaser the
amount of the Indemnity Escrow Property set forth in the Joint Instructions or the Binding Award, less any undisputed amounts
already disbursed (as applicable).

 

(d)            Payments from the Indemnity Escrow Account with respect to any Indemnification Claims shall first be paid with any Indemnity Escrow
Shares then held in the Indemnity Escrow Account, and then with any remaining property in the Indemnity Escrow Account. For any
Indemnity Escrow Shares to be disbursed with respect to Indemnification Claims pursuant to this Section 4, the Indemnity Escrow
Shares shall be valued at the Purchaser Share Price as of the date that an Indemnification Claim is finally determined in accordance
with the Merger Agreement and this Agreement (the “Resolution Date”). For the avoidance of doubt, the
Resolution Date shall be (i) if no Objection Notice is delivered by the Seller Representative during the Objection Period, the
first (1st) Business Day immediately following the Objection Period; (ii) if prior to the date described in clause
(i) above, the date that the Escrow Agent receives written instructions from the Seller Representative to release the Indemnity
Escrow Property for the amount set forth in the Claim Notice or Revised Claim Notice; (iii) if the Seller Representative provides
an Objection Notice that disputes only a portion of the Claim Amount, with respect to the undisputed portion of such Claim Amount,
the date that the Escrow Agent receives such Objection Notice; and (iv) with respect to any disputed Claim Amount, either the
date that the Escrow Agent receives Joint Instructions or a Binding Award.

 

(e)            With respect to any indemnification claims made in accordance with Article VI of the Merger Agreement and this Agreement
on or prior to the eighteen (18) month anniversary of the Closing (the “Expiration Date”) (including
those at are revised or adjusted in accordance with Article VI of the Merger Agreement after the Expiration Date) that
remain unresolved at the time of the Expiration Date (“Pending Claims”), all or a portion of the Indemnity
Escrow Property reasonably necessary to satisfy such Pending Claims (as determined based on the amount of the indemnification
claim included in the Claim Notice or Revised Claim Notice provided by the Purchaser Representative and the Purchaser Share Price
as of the Expiration Date) shall remain in the Indemnity Escrow Account until such time as such Pending Claim shall have been
finally resolved pursuant to the provisions of Article VI of the Merger Agreement and this Agreement. After the Expiration
Date, any Indemnity Escrow Property remaining in the Indemnity Escrow Account that is not subject to Pending Claims, if any, and
not subject to resolved but unpaid claims in favor of an Indemnified Party, shall be transferred by the Escrow Agent to the Seller
Representative (for distribution to the Company Shareholders that have previously delivered the Transmittal Documents to the Surviving
Company or Purchaser in accordance with Section 1.9 of the Merger Agreement, with each such Company Shareholder receiving
its Pro Rata Share of such Indemnity Escrow Property). Promptly after the final resolution of all Pending Claims and payment of
all indemnification obligations in connection therewith, the Escrow Agent shall transfer any Indemnity Escrow Property remaining
in the Indemnity Escrow Account to the Seller Representative (for distribution by the Seller Representative to the Company Shareholders
that have previously delivered the Transmittal Documents to the Surviving Company or Purchaser in accordance with Section 1.9
of the Merger Agreement, with each such Company Shareholder receiving its Pro Rata Share of such Indemnity Escrow Property).

 

Section
5.               Transfer of the Guarantee
Escrow Shares. The Escrow Agent shall hold the Guarantee Escrow Shares and shall transfer the Guarantee Escrow Shares to the
applicable recipient in accordance with the following procedures (and the register of members of Purchaser shall be updated accordingly):

 

(a)            Promptly, but in any event within five (5) Business Days, after the Escrow Agent’s receipt of joint written instructions
(“Earnout Payment Instructions”) from the Purchaser Representative (on behalf of Purchaser) and the
Seller Representative that there has been a final determination in accordance with Section 12.1 of the Merger Agreement with respect
to the number of Guarantee Escrow Shares (the date that the Escrow Agent receives Earnout Payment Instructions the “Earnout
Release Date”), the Escrow Agent shall transfer the applicable Guarantee Escrow Shares from the Earnout Escrow Account
in accordance with such Earnout Payment Instructions.

 

(b)           Any amount of Guarantee Escrow Shares required to be transferred to any Person pursuant to this Section 5 shall be transferred
by the Escrow Agent pursuant to such delivery instructions as set forth in the Earnout Payment Instructions. The Escrow Agent
shall rely exclusively on instructions provided by the Seller Representative and the Purchaser Representative (on behalf of Purchaser)
as to the amount and recipient of any distribution of Escrow Property pursuant to this Section 5, or the relevant order
of any court of competent jurisdiction or other award granted pursuant to other binding legal process (including any binding arbitration).
The Escrow Agent has no duty or responsibility to calculate any distribution or to confirm the accuracy of any distribution amount
so instructed.

 

    	 	4	 

     

    

 

(c)           
In the event that any Guarantee Escrow Shares are released to Purchaser so that Purchaser can issue replacement shares to the
Company Shareholders as the Borqs Guarantee Issued Shares under Section 12(b) of the Merger Agreement, then Purchaser shall transfer
to the Escrow Agent four percent (4%) of such replacement shares as the Guarantee Additional Indemnity Escrow Shares under Section
12(b) of the Merger Agreement for deposit by the Escrow Agent into the Indemnity Escrow Account as Indemnity Escrow Shares, and
the Escrow Agent will deposit such shares into the Indemnity Escrow Account as Indemnity Escrow Shares to be held and disbursed
in accordance with Section 4.

  

Section
6.                 Tax Matters.

 

(a)            Purchaser, the Purchaser Representative and the Seller Representative agree and acknowledge that, for all U.S. and foreign tax
purposes, except as required by applicable Law: (i) Purchaser shall be the owner of the Indemnity Escrow Property while held in
the Indemnity Escrow Account and until released to the Company Shareholders or the Seller Representative for distribution to Company
Shareholders, and all interest, earnings or income, if any, earned with respect to the Indemnity Escrow Property while held by
the Escrow Agent shall be treated as earned by Purchaser; and (ii) the Backstop Investors shall be the owner of the Guarantee
Escrow Shares while held in the Earnout Escrow Account, and until released all distributions from the Earnout Escrow Account to
the Backstop Investors shall be treated by the parties for tax purposes as adjustment to the basis of the Backstop Investors’
investment in Purchaser Ordinary Shares, and in the event that the Guarantee Escrow Shares are released by the Escrow Agent to
Purchaser, such release shall be treated by the parties as a shareholder contribution to capital by the Backstop Investors.

 

(b)            The Escrow Agent shall have the right to deduct and withhold taxes from any payments to be made hereunder if such withholding
is required by law and to request and receive any necessary tax forms, including Form W-9 or the appropriate series of Form W-8,
as applicable, or any similar information, from the applicable recipient of the Escrow Shares.

 

Section
7.               Duties. The Escrow Agent’s
duties are entirely ministerial and not discretionary, and the Escrow Agent will be under no duty or obligation to do or to omit
the doing of any action with respect to the Escrow Property, except to give notice, provide monthly reports, make disbursements,
keep an accurate record of all transactions with respect to the Escrow Property, hold the Escrow Property in accordance with the
terms of this Agreement and to comply with any other duties expressly set forth in this Agreement. The Escrow Agent shall not
have any interest in the Escrow Property but shall serve as escrow holder only and have only possession thereof. Nothing contained
herein shall be construed to create any obligation or liability whatsoever on the part of the Escrow Agent to anyone other than
the parties to this Agreement. There are no third party beneficiaries to this Agreement.

 

Section
8.               Determination of Purchaser
Share Price. In the event that the Escrow Agent has any question as to the applicable Purchaser Share Price, the Seller Representative
and Purchaser Representative shall cooperate to promptly provide the Escrow Agent with their good faith determination of the applicable
Purchaser Share Price pursuant to Joint Instructions or a Binding Award (and in the event of any dispute as to the Purchaser Share
Price, the Escrow Agent shall not disburse the applicable Escrow Property until such dispute has been resolved).

 

    	 	5	 

     

    

 

Section
9.              Monthly Reports. The
Escrow Agent shall provide monthly account statements to Purchaser Representative on behalf of Purchaser and the Seller Representative
with respect to the Escrow Accounts. The Purchaser Representative and the Seller Representative have one hundred twenty (120)
days to object in writing to such reports. If no written notice detailing a party's objections has been received by the Escrow
Agent within this period, an acceptance of such reports shall be deemed to have occurred.

 

Section
10.             Authorized Parties; Reliance. The parties hereby
acknowledge that the Purchaser Representative has the sole and exclusive authorization to act on behalf of Purchaser under this
Agreement. The Purchaser Representative on behalf of Purchaser and the Seller Representative agree to provide, on Exhibit A
(as it may be amended from time to time) to this Agreement, the names and specimen signatures of those persons who are authorized
to issue notices and instructions to the Escrow Agent and execute required documents under this Agreement. The Escrow Agent may
rely and shall be protected in acting or refraining from acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent
is entitled to rely on, and shall be fully protected in relying on, the instructions and notices from any one of the authorized
signers, as identified on the attached Exhibit A (as it may be amended from time to time) to this Agreement, from each
of Purchaser Representative (on behalf of Purchaser) and the Seller Representative, either acting alone, until such time as their
authority is revoked in writing, or until successors have been appointed and identified by notice in the manner described in Section
16 below.

 

Section
11.             Good Faith. The Escrow Agent shall not be liable
for any action taken by it in good faith and reasonably believed by it to be authorized or within the rights or powers conferred
upon it by this Agreement and may consult with counsel of its own choice and shall have full and complete authorization and protection
for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

Section
12.             Right to Resign. The Escrow Agent may resign
and be discharged from its duties or obligations hereunder by giving such notice in writing of such resignation specifying a date
when such resignation shall take effect, which shall be a date not less than sixty (60) days after the date of the notice of such
resignation. Similarly, the Escrow Agent may be removed and replaced following the giving of thirty (30) days’ notice to
the Escrow Agent by all of the other parties hereto. In either event, the Purchaser Representative and the Seller Representative
shall agree upon a successor Escrow Agent. If the Seller Representative and the Purchaser Representative are unable to agree upon
a successor or shall have failed to appoint a successor prior to the expiration of sixty (60) days following the date of resignation
or thirty (30) days following the date of removal, the then-acting Escrow Agent may petition any court of competent jurisdiction
for the appointment of a successor escrow agent or otherwise appropriate relief, and any such resulting appointment shall be binding
upon all of the parties hereto. Any successor Escrow Agent shall execute and deliver to the predecessor Escrow Agent, the Purchaser
Representative and the Seller Representative an instrument accepting such appointment and the transfer of the Escrow Property
and agreeing to the terms of this Agreement.

 

Section
13.             Compensation. The Escrow Agent shall be entitled
to receive the fees as set forth on Exhibit B for the services to be rendered hereunder, and to be paid or reimbursed for
all reasonable documented out-of-pocket expenses, disbursements and advances, including reasonable documented out-of-pocket attorneys’
fees, incurred or paid in connection with carrying out its duties hereunder, such amounts to be paid by Purchaser.

 

Section
14.             Indemnification. Purchaser hereby agrees to
indemnify the Escrow Agent for, and to hold it harmless against any loss, liability or expense incurred without gross negligence,
willful misconduct or bad faith on the part of the Escrow Agent, arising out of or in connection with its entering into this Agreement
and carrying out its duties hereunder.

 

    	 	6	 

     

    

 

Section
15.             Disputes. If a controversy arises between the
parties hereto as to whether or not or to whom the Escrow Agent shall transfer all or any portion of the Escrow Property or as
to any other matter arising out of or relating to this Agreement or the Escrow Property, the Escrow Agent shall not be required
to determine the same, shall not make any transfer of and shall retain the Escrow Property in dispute without liability to anyone
until the rights of the parties to the dispute shall have finally been determined by mutual written agreement of the Purchaser
Representative on behalf of Purchaser and the Seller Representative, or by a final non-appealable judgment or order of any state
or federal court located in New York County, New York (or in any court in which appeal from such courts may be taken) but the
Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings. The Escrow Agent shall be entitled
to assume that no such controversy has arisen unless it has received notice of such controversy or conflicting written notices
from the parties to this Agreement. Any disputes arising out of, related to, or in connection with, this Agreement between Purchaser,
the Purchaser Representative and/or the Seller Representative, including a dispute arising from a party’s failure or refusal
to sign a joint written notice hereunder, shall be determined by arbitration conducted in accordance with the provisions of Section
10.4 of the Merger Agreement (other than (i) disputes subject to the Dispute Resolution Procedure under Section 12.1 of the Merger
Agreement, which will be determined in accordance with such section, or (ii) applications for a temporary restraining order, preliminary
injunction, permanent injunction or other equitable relief or application for enforcement of any arbitration award pursuant to
this Section 15 or Section 10.4 of the Merger Agreement).

 

Section
16.             Notices. Except to the extent expressly set
forth herein, all notices and communications hereunder shall be in writing and shall be deemed to be given if (a) delivered personally,
(b) sent by facsimile or email (with affirmative confirmation of receipt), (c) sent by recognized overnight courier that issues
a receipt or other confirmation of delivery or (d) sent by registered or certified mail, return receipt requested, postage prepaid
to the parties as follows:

 

	 

                                                                                                     If
        to Purchaser or the Purchaser Representative, to:

         

        Zhengqi
        International Holding Limited

        855 Pudong South Road

        The World Plaza, 27th Floor

        Pudong, Shanghai 200120, China

        Attn: Yaqi (Sophie) Feng, COO

        Facsimile No.: 86-21-8012-9882

        Telephone No: 86-21-8012-9878

        Email: fengyq@tpyzq.com

         
	 

                                                                                                     with
        a copy (which will not constitute notice) to:

         

        Ellenoff
        Grossman & Schole LLP

        1345 Avenue of the Americas, 11th Floor

        New York, New York 10105

        Attention: Stuart Neuhauser

        Facsimile No.: (212) 370-7889

        Telephone No.: (212) 370-1300

        Email: sneuhauser@egsllp.com

	 

                                                                                         If
        to the Seller Representative, to:

         

        Zhengdong
        Zou

        28/F, Jing Guang Centre, Hu Jia Lou

        No. 1 East Third Ring Road

        Chaoyang District, Beijing 100020, China

        Facsimile No.: 86-10-6554-4123

        Telephone No: 86-10-6597-0811

        Email: zouzhendong@sinowinglaw.com

         
	 

                                                                                         with
        a copy (which will not constitute notice) to:

         

        Fenwick
        & West LLP

        801 California Street

        Mountain View, CA 94041

        Attn: Eva Wang

        Facsimile No.: (650) 938-5200

        Telephone No.: (650) 335-7878

        Email: ewang@fenwick.com

 

    	 	7	 

     

    

 

	 

                                                                                                                                                                  If
        to the Escrow Agent, to:

                                                                                          

        Continental
        Stock Transfer & Trust Company

        17 Battery Place 8th Floor

        New York, NY 10004

        Attention: Compliance Department

        Facsimile No: (212) 509-5150

        Telephone No: (212) 845-4000

         
	 

 

or
at such other address as any of the above may have furnished to the other parties in a notice duly given as provided herein. Any
such notice or communication given in the manner specified in this Section 16 shall be deemed to have been given (i) on the date
personally delivered or transmitted by facsimile or email (with affirmative confirmation of receipt), (ii) one (1) Business Day
after the date sent by recognized overnight courier that issues a receipt or other confirmation of delivery or (iii) three (3)
Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid.

 

Section
17.            Term. This Agreement shall terminate upon the
final, proper and complete distribution of the Escrow Property in accordance with the terms hereof; provided, that Purchaser’s
obligations under Section 14 hereof shall survive any termination of this Agreement.

 

Section
18.             Entire Agreement. The terms and provisions
of this Agreement (including the Exhibits hereto, which are hereby incorporated by reference herein) constitute the entire agreement
between the Escrow Agent and the other parties hereto with respect to the subject matter hereof. Notwithstanding the foregoing,
as between Purchaser, the Purchaser Representative and the Seller Representative, the terms of the Merger Agreement shall control
and govern over the terms of this Agreement in the event of any conflict or inconsistency between this Agreement and the Merger
Agreement. The actions of the Escrow Agent shall be governed solely by this Agreement.

 

Section
19.             Amendment; Waiver. This Agreement may be amended
or modified only by a written instrument duly signed by the parties hereto, and any provision hereof may be waived only by a written
instrument duly signed by the party against whom enforcement of such waiver is sought.

 

Section
20.             Severability. In the event that any provision
of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision
to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties
further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

Section
21.             Further Assurances. From time to time on and
after the date hereof, Purchaser Representative and the Seller Representative shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do and cause to be done such further acts as the Escrow Agent shall reasonably
request (it being understood that the Escrow Agent shall have no obligation to make any such request) to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting
hereunder.

 

Section
22.             Accounting. In the event of the resignation
or removal of the Escrow Agent, upon the termination of this Agreement or upon demand at any time of either the Purchaser Representative
or the Seller Representative under reasonable circumstances, the Escrow Agent shall render to the Purchaser Representative, the
Seller Representative and the successor escrow agent (if any) an accounting (free of charge) in writing of the property constituting
the Escrow Property.

 

    	 	8	 

     

    

 

Section
23.            Interpretation. The parties acknowledge and
agree that: (a) this Agreement is the result of negotiations between the parties and will not be deemed or construed as having
been drafted by any one party, (b) each party and its counsel have reviewed and negotiated the terms and provisions of this Agreement
(including any Exhibits attached hereto) and have contributed to its revision and (c) the rule of construction to the effect that
any ambiguities are resolved against the drafting party will not be employed in the interpretation of this Agreement. The headings
contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement, unless the context otherwise requires: (i) words of the masculine, feminine or neuter gender will
include the masculine, neuter or feminine gender, and words in the singular number or in the plural number will each include,
as applicable, the singular number or the plural number; (ii) reference to any Person includes such Person’s successors
and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person
in a particular capacity excludes such Person in any other capacity; (iii) reference to any law means such law as amended, modified
codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder;
(iv) any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means
such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent and references
to all attachments thereto and instruments incorporated therein; (v) the term “or” means “and/or”; (vi)
the words “herein, “hereof” and “hereunder” and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision; (vii) the words “include,” “includes”
and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”;
(viii) any reference herein to “dollars” or “$” shall mean United States dollars; and (ix) reference to
any Section or Exhibit means such Section hereof or Exhibit hereto.

 

Section
24.             Successors and Assigns. This Agreement and
the rights and obligations hereunder may not be assigned without the prior written consent of each of the parties hereto; provided,
however, that (a) if the Seller Representative is replaced in accordance with the terms of the Merger Agreement, the replacement
Seller Representative shall automatically become a party to this Agreement as if it were the original Seller Representative hereunder
upon providing (i) written notice to the Escrow Agent and Purchaser of such replacement and accepting its rights and obligations
under this Agreement and (ii) the Escrow Agent with the documentation referenced in Section 29 hereof from such replacement
Seller Representative and any replacement authorized individuals to act on behalf of the Seller Representative for purposes of
Exhibit A and (b) if the Purchaser Representative is replaced in accordance with the terms of the Merger Agreement, the
replacement Purchaser Representative shall automatically become a party to this Agreement as if it were the original Purchaser
Representative hereunder upon providing (i) written notice to the Escrow Agent and the Seller Representative of such replacement
and accepting its rights and obligations under this Agreement and (ii) the Escrow Agent with the documentation referenced in Section
29 hereof from such replacement Purchaser Representative and any replacement authorized individuals to act on behalf of Purchaser
for purposes of Exhibit A. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.

 

Section
25.             Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right hereunder will impair such right or be construed
to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement herein, nor will any
single or partial exercise of any such right preclude any other (or further) exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive to or exclusive of, any rights or remedies otherwise
available to a party hereunder.

 

    	 	9	 

     

    

 

Section
26.             Governing Law; Venue. The terms and provisions
of this Agreement shall be construed and enforced in accordance with the laws of the State of New York without reference to its
conflict of law provisions. Subject to Section 15, each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any state or federal court located in New York County, New York (or in any court in which appeal from such courts
may be taken) in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees
that process may be served upon them in any manner authorized by the laws of the State of New York for such Persons and waives
and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

 

Section
27.             Waiver of Jury Trial. EACH PARTY HEREBY WAIVES
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION, CLAIM, CAUSE OF ACTION OR OTHER LEGAL PROCEEDING BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES HERETO
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE PARTIES HERETO EACH
AGREE THAT ANY SUCH LITIGATION, CLAIM, CAUSE OF ACTION OR OTHER LEGAL PROCEEDING SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES HERETO FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT.

 

Section
28.            Counterparts. This Agreement may be executed
simultaneously in two or more counterparts (including by facsimile or other electronic transmission), each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

 

Section
29.             U.S. Patriot Act. Purchaser and the Seller
Representative agree to provide the Escrow Agent with the information reasonably requested by the Escrow Agent to verify and record
Purchaser’s and the Seller Representative’s respective identities pursuant to the Escrow Agent’s procedures
for compliance with the U.S. Patriot Act and any other applicable laws.

 

Section
30.             Representations of the Parties. Each of the
parties hereto hereby represents and warrants that as of the date hereof: (a) it has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and all such actions have been duly and validly authorized by all necessary
proceedings; and (b) this Agreement has been duly authorized, executed and delivered by it, and constitutes a legal, valid and
binding agreement of it.

 

{REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS}

 

    	 	10	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first
written above.

 

	 	Purchaser:

 

Pacific
Special Acquisition Corp.

  

	 	By:	/s/     Zhouhong
    Peng                         
	 		Name: Zhouhong
    Peng
	 	 	Title: CEO
	 	 	 
	 	The
                                         Seller Representative:

 

/s/
Zhengdong Zou 

 

Zhengdong
Zou, in the capacity under the Merger Agreement as the Seller Representative

  

	 	The
                                         Escrow Agent:

 

CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, as escrow agent

	 	 
	 	By:	/s/
    Kevin Jennings 
	 	 	Name: Kevin Jennings
	 	 	Title: Vice-President

   

[Signature Page to Escrow Agreement]

 

     

     

    

 

	 	The
                                         Purchaser Representative:

 

ZHENGQI
INTERNATIONAL HOLDING LIMITED, solely in
its capacity as the Purchaser Representative

 

	 	By:	/s/
    Zhouhong Peng 
	 	 	Name: Zhouhong Peng
	 	 	Title: Director

 

[Signature Page to Escrow Agreement]

 

     

     

    

 

EXHIBIT
A

AUTHORIZED SIGNERS

 

Purchaser:

 

Individuals
authorized by the Purchaser Representative:

 

	Name	 	Telephone
    Number	 	Specimen
    Signature
	 	 	 	 	 	 
	1.	Yaqi (Sophie) Feng, COO	 	86-21-8012-9878	 	/s/
    Yaqi (Sophie) Feng
	 	 	 	 	 	 
	2.	Zhouhong
    Peng, CEO	 	86-21-6137-6584	 	/s/
    Zhouhong     Peng
	 	 	 	 	 	 
	3.		 		 	

 

Seller
Representative:

 

	Name	 	Telephone
    Number	 	Specimen
    Signature
	 	 	 	 	 	 
	1.	Zhengdong Zou	 	86-10-6597-0811	 	/s/
    Zhengdong Zou
	 	 	 	 	 	 
	2.		 		 	
	 	 	 	 	 	 
	3.		 		 	

 

     

     

    

 

EXHIBIT
B

FEE INFORMATION

 

[To
be provided]Exhibit
10.5

 

INSTRUCTIONS
FOR LETTER OF TRANSMITTAL

FOR
SHAREHOLDERS AND WARRANT HOLDERS (“HOLDERS”)

OF
BORQS INTERNATIONAL HOLDING CORP (THE “COMPANY”)

 

	1.	Delivery
                                         of Letter of Transmittal, Exhibits and Certificates. The Letter of Transmittal,
                                         together with the exhibits attached thereto, properly completed and duly executed, together
                                         with the certificate(s) for the securities described, should be delivered to the Company
                                         at the address below in the envelope enclosed for your convenience. If the space provided
                                         on the Letter of Transmittal is inadequate, the applicable information should be listed
                                         on a separate schedule to be attached thereto.

 

THE
METHOD OF DELIVERY OF ALL REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, BUT IF SENT BY MAIL, IT IS RECOMMENDED
THAT THEY BE SENT BY REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. DELIVERY OF THE DOCUMENTS WILL BE EFFECTIVE, AND RISK OF LOSS
AND TITLE WITH RESPECT THERETO SHALL PASS, ONLY WHEN THE MATERIALS ARE ACTUALLY RECEIVED BY THE COMPANY AT THE ADDRESS BELOW.

 

	2.	Signatures.

 

		a.	If
                                         the Letter of Transmittal is signed by the registered owner(s) of the share certificate(s)
                                         listed and surrendered thereby, no endorsements of certificates or separate stock powers
                                         are required. If the Letter of Transmittal is signed by the original recipient of the
                                         warrants to be surrendered, no evidence of transfer is required. If the certificate(s)
                                         or warrants surrendered is (are) owned of record by two or more joint owners, all such
                                         owners must sign the Letter of Transmittal.

 

		b.	If,
                                         with respect to any surrendered certificate(s), the Letter of Transmittal is signed by
                                         a person other than the registered owner of the certificate(s) listed or its duly authorized
                                         representative (as confirmed by proper evidence satisfactory to the Company and to Pacific
                                         Special Acquisition Corp. (the “Purchaser”)), such certificate(s)
                                         must be endorsed or accompanied by appropriate stock powers, in either case signed exactly
                                         as the name or names of the registered owner or owners appear on the certificate(s).
                                         Signatures on such Letters of Transmittal and such certificates or stock powers must
                                         be guaranteed by a financial institution that is a member of a Securities Transfer Association
                                         approved medallion program such as STAMP, SEMP or MSP (an “Eligible Institution”).

 

		c.	If,
                                         with respect to any warrant(s), the Letter of Transmittal is signed by a person other
                                         than the person to whom such warrants were issued or its duly authorized representative
                                         (as confirmed by proper evidence satisfactory to the Company and the Purchaser), such
                                         warrants must be accompanied by appropriate evidence of transfer, signed exactly as the
                                         name or names of the person indicated in such warrants. Signatures on such Letters of
                                         Transmittal and evidence of transfer must be guaranteed by an Eligible Institution.

 

		d.	If
                                         the Letter of Transmittal or any certificate, warrant, stock power or other exhibit to
                                         the Letter of Transmittal is signed by trustees, executors, administrators, guardians,
                                         attorney-in-fact, officers of corporations or other entities or others, acting in a fiduciary
                                         or representative capacity, such persons should so indicate when signing and proper evidence,
                                         satisfactory to the Company and the Purchaser, of their authority to do so must be submitted.

 

	3.	Special
                                         Payment and Delivery Instructions. Indicate on the Letter of Transmittal all
                                         names and addresses to which consideration for the securities is to be issued and the
                                         amounts thereto, if different from the name and address of the person(s) signing the
                                         Letter of Transmittal. Signatures on such Letters of Transmittal must be guaranteed by
                                         an Eligible Institution.

 

    	 	1	 

     

    

 

	4.	Form
                                         W-8/W-9. If you are a U.S. person, please enter your social security or employer
                                         identification number, and complete, sign and date the attached Form W-9. If you are
                                         a non-U.S. person, you must provide a properly completed and executed Internal Revenue
                                         Service Form W-8BEN or other Form W-8, which you can obtain from the Company by contacting
                                         the designated person below.

 

	5.	Additional
                                         Copies. Additional copies of the Letter of Transmittal may be obtained from the
                                         Company at the address listed below.

 

	6.	Lost,
                                         Stolen or Destroyed Certificates and Warrant. If any share certificates or warrants
                                         have been lost, stolen or destroyed, please so indicate on the front of the Letter of
                                         Transmittal, and additional paperwork will be sent to you to replace the lost, stolen
                                         or destroyed certificates or warrants, as applicable.

 

All
questions as to the validity, form and eligibility of any surrender of certificates or warrants will be determined by the Company
and the Purchaser, and such determination shall be final and binding on each Holder. The Company and the Purchaser reserve the
right to together waive any irregularities or defects in the surrender of any certificates or warrants. A surrender will not be
deemed to have been made until all irregularities have been cured or waived. Neither the Company nor the Purchaser is under any
obligation to waive or to provide any notification of any irregularities or defects in the surrender of any certificates or warrants,
nor shall the Company or the Purchaser be liable for any failure to give such notification.

 

All
documentation and requests should be sent to the Company at the following address:

 

Borqs
International Holding Corp.

Tower
A, Building B23

Universal
Business Park

No.
10 Jiuxiangqiao Road

Chaoyang
District, Beijing 100015, China

Attention:
Daphne Mao

Facsimile
No.: 86-10-5975-6363

Telephone
No: 86-10-5975-6336

Email:
daphne.mao@borqs.com

 

    	 	2	 

     

    

 

Method
of delivery of the certificate(s) is at the option and risk of the Holder. See Instruction 1.

 

All
Holders, please mail or deliver each of the following:

 

	☐	An original of this Letter of Transmittal, duly
    executed by Holder

 

	☐	An original of the Lock-Up Agreement, duly executed
    by Holder, the form of which is attached as Exhibit A

 

	☐	An original of the Registration Rights Agreement,
    duly executed by Holder, the form of which is attached as Exhibit B

 

	☐	A completed and executed IRS Form W-9 or Form
    W-8BEN (or Other Form W-8), as applicable, the form of which is attached as Exhibit C.

 

If
you are a holder of Company shares, please also mail the following:

 

	☐	The certificate(s) representing your Company shares

 

	☐	If required, as described in the instructions, an original
stock power, duly executed by Holder, the form of which is attached as Exhibit D

 

If
you are a holder of Company warrants, please also mail the following:

 

	☐	All agreements for your Company warrants

 

Please
return all documents to the Company using the address set forth in the instructions.

 

    	 	3	 

     

    

 

LETTER
OF TRANSMITTAL

 

To
Exchange Securities of Borqs International Holding Corp Pursuant to the Merger of Borqs International

Holding Corp and PAAC Merger
Subsidiary Limited.

 

This
letter of transmittal (this “Letter of Transmittal”) is being furnished in connection with the merger
of PAAC Merger Subsidiary Limited, a Cayman Islands company (“Merger Sub”) and a wholly-owned subsidiary
of Pacific Special Acquisition Corp., a British Virgin Islands company (the “Purchaser”), with and into
Borqs International Holding Corp, a Cayman Islands company (the “Company”), pursuant to the Merger Agreement,
dated as of December 27, 2016 (as amended, including by that First Amendment to Merger Agreement, dated May 10, 2017, and that
Second Amendment to Merger Agreement, dated June 29, 2017, the “Merger Agreement”), by and among (i)
the Purchaser, (ii) Merger Sub, (iii) Zhengqi International Holding Limited, a British Virgin Islands company, in the capacity
thereunder as the Purchaser Representative (the “Purchaser Representative”), (iv) Zhengdong Zou, in
the capacity thereunder as the Seller Representative (the “Seller Representative”), (v) the Company
and (vi) solely for limited purposes thereof, Zhengqi International Holding Limited, a British Virgin Islands company. Pursuant
to the Merger Agreement, and subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company
with the Company surviving the Merger as a wholly-owned subsidiary of the Purchaser (the “Merger”).
At the effective time of the Merger (the “Effective Time”), each issued and outstanding (a) share in
the capital of the Company (other than shares in respect of which dissenters or appraisal rights have been properly exercised
and perfected under Cayman law and shares held in treasury) (each, a “Company Share”) will be cancelled
and cease to exist in exchange for the right to receive ordinary shares of the Purchaser (the “Merger Consideration
Shares”), (b) warrant to acquire shares in the capital of the Company (each, a “Company Warrant”)
shall be cancelled, retired and terminated in exchange for the right to receive from the Purchaser a new warrant for ordinary
shares of the Purchaser with its price and number of shares equitably adjusted based on the conversion of the Company Shares into
the Merger Consideration shares (the “Replacement Purchaser Warrants”), and (c) option to acquire shares
in the capital of the Company (each, a “Company Option”) (whether vested or unvested) shall be assumed
by Purchaser and automatically converted into an option to acquire ordinary shares of the Purchaser, with its price and number
of shares equitably adjusted based on the conversion of the Company Shares into the Merger Consideration Shares. Any capitalized
term used but not defined in this Letter of Transmittal will have the meaning ascribed to such term in the Merger Agreement.

 

The
undersigned holder (“Holder”) of Company Shares and/or Company Warrants understands that this Letter
of Transmittal is being provided to both the Company and the Purchaser in connection with, and as a condition to the consummation
of the Merger, and that the Company and the Purchaser are consummating the Merger and the other transactions contemplated by the
Merger Agreement in reliance upon the representations, warranties, covenants and agreements of Holder set forth in this Letter
of Transmittal.

 

IN
ADDITION, HOLDER HAS READ, UNDERSTANDS AND AGREES TO ALL OF THE TERMS AND CONDITIONS SET FORTH IN THE MERGER AGREEMENT, THE ANCILLARY
DOCUMENTS TO WHICH THE HOLDER IS BOUND, THE MATERIALS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND THE ACCOMPANYING INSTRUCTIONS
BEFORE COMPLETING ANY OF THE INFORMATION BELOW.

 

Please
read carefully this entire Letter of Transmittal and the accompanying instructions before completing any of the boxes below.

 

1.       Representations
and Warranties of Holder. Holder hereby represents, warrants and covenants to the Company and the Purchaser as follows as
of the date of this Letter of Transmittal and as of the Effective Time:

 

(a)       Ownership
of Securities. All of the Company Shares and Company Warrants owned by Holder, including without limitation the number, type,
class and series thereof, are set forth and accurately described in Schedule 1 below (the “Holder Company Securities”).
Holder has beneficial ownership over, is the lawful owner of, and has good and valid title to, the Holder Company Securities,
free and clear of any and all pledges, mortgages, encumbrances, charges, proxies, voting agreements, liens, adverse claims, options,
security interests and demands of any nature or kind whatsoever (other than those imposed by applicable securities laws or the
Company’s organizational documents, as in effect on the date hereof, or any applicable Voting Agreement entered into by
Holder with the Company and the Purchaser in connection with the Merger Agreement). There are no claims for finder’s fees
or brokerage commission or other like payments in connection with the Merger Agreement or the transactions contemplated thereby
payable by Holder pursuant to arrangements made by such Holder. Except for the Holder Company Securities set forth on Schedule
1 and any Company Options, Holder is not a beneficial owner or record holder of any: (i) equity securities of the Company,
(ii) securities of the Company having the right to vote on any matters on which the holders of equity securities of the Company
may vote, or (iii) options, warrants or other rights to acquire from the Company any equity securities or securities convertible
into or exchangeable for equity securities of the Company.

 

    	 	4	 

     

    

 

(b)       Binding
Agreement. Holder (i) if a natural person, is of legal age to execute this Letter of Transmittal and each of the Exhibits
hereto, including the Lock-Up Agreement and the Registration Rights Agreement, and any other document required by this Letter
of Transmittal (collectively with the Letter of Transmittal, the “Transmittal Documents”), and is legally
competent to do so and (ii) if not a natural person, is (A) a corporation or other entity duly organized and validly existing
under the laws of the jurisdiction of its organization and (B) has all necessary power and authority to execute and deliver the
Transmittal Documents, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. If Holder is not a natural person, the execution and delivery of the Transmittal Documents, the performance of its
obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby by Holder has been
duly authorized by all necessary corporate or similar action on the part of Holder. This Letter of Transmittal and each other
Transmittal Document, assuming due authorization, execution and delivery hereof by the other parties hereto and thereto, constitutes
a legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its terms (except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditor’s rights, and to general equitable principles).

 

(c)       No
Conflicts. No filing with, or notification to, any governmental authority, and no consent, approval, authorization or permit
of any other person or entity is necessary for the execution of this Letter of Transmittal or any other Transmittal Document by
Holder, the performance of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated
hereby or thereby. None of the execution and delivery of this Letter of Transmittal or any other Transmittal Document by Holder,
the performance of its obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or
thereby will (i) conflict with or result in any breach of the organizational documents of Holder, if applicable, (ii) result in,
or give rise to, a violation or breach of or a default under any of the terms of any contract or obligation to which Holder is
a party or by which Holder or any of the Company Shares or Company Warrants or its other assets may be bound, or (iii) violate
any applicable law or order, except for any of the foregoing in clauses (i) through (iii) as would not reasonably be expected
to impair in any material respect Holder’s ability to perform its obligations under this Letter of Transmittal or the other
Transmittal Documents. Holder has not entered into any agreement or knowingly taken any action (nor will enter into any agreement
or knowingly take any action) that would make any representation or warranty of Holder contained in this Letter of Transmittal
untrue or incorrect in any material respect or have the effect of preventing Holder from performing any of its material obligations
under this Letter of Transmittal or any Transmittal Document.

 

(d)       Investment
Representations. Holder: (i) is an “accredited investor” as such term is defined in Rule 501(a) of Regulation
D under the Securities Act of 1933, as amended (the “Securities Act”); (ii) is acquiring its portion
of the Merger Consideration Shares and/or Replacement Purchaser Warrants, and/or the Purchaser Ordinary Shares underlying each
such Replacement Purchaser Warrant (collectively, the “Purchaser Securities”) for itself for investment
purposes only, and not with a view towards any resale or distribution of such Purchaser Securities; (iii) has been advised and
understands that the Purchaser Securities (A) are being issued in reliance upon one or more exemptions from the registration requirements
of the Securities Act and any applicable state securities laws, (B) have not been and shall not be registered under the Securities
Act or any applicable state securities laws and, therefore, must be held indefinitely and cannot be resold unless such Purchaser
Securities are registered under the Securities Act and all applicable state securities laws, unless exemptions from registration
are available and (C) will be subject to additional restrictions on transfer pursuant to the Lock-Up Agreement; (iv) is aware
that an investment in the Purchaser is a speculative investment and is subject to the risk of complete loss; and (v) acknowledges
that the Purchaser is under no obligation hereunder to register the Purchaser Securities under the Securities Act (except as may
be set forth in the Registration Rights Agreement). Holder does not have any contract with any person or entity to sell, transfer,
or grant participations to such person or entity, or to any third person or entity, with respect to the Purchaser Securities.
By reason of Holder’s business or financial experience, or by reason of the business or financial experience of Holder’s
“purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), Holder is capable of
evaluating the risks and merits of an investment in Purchaser and of protecting its interests in connection with this investment.
Holder has carefully read and understands all materials provided by or on behalf of Purchaser or its affiliates or the managers,
directors, officers, employees, agents or advisors of Purchaser or its affiliates (collectively, “Purchaser’s
Representatives”) to Holder or its affiliates or the managers, directors, officers, employees, agents or advisors
of Holder or its affiliates (collectively, “Holder’s Representatives”) pertaining to an investment
in the Purchaser and has consulted, as Holder has deemed advisable, with its own attorneys, accountants or investment advisors
with respect to the investment contemplated hereby and its suitability for Holder. Holder acknowledges that the Purchaser Securities
are subject to dilution for events not under the control of Holder. Holder has completed its independent inquiry and has relied
fully upon the advice of its own legal counsel, accountant, financial and other Holder’s Representatives in determining
the legal, tax, financial and other consequences of the Merger Agreement and the Transmittal Documents and the transactions contemplated
hereby and thereby and the suitability of the foregoing for Holder and its particular circumstances, and has not relied upon any
representations or advice by Purchaser or Purchaser’s Representatives. Holder acknowledges and agrees that no representations
or warranties have been made by Purchaser or any Purchaser’s Representatives to Holder, and that Holder has not been guaranteed
or represented to by any person or entity, (i) any specific amount or the event of the distribution of any cash, property or other
interest in Purchaser or (ii) the profitability or value of the Purchaser Securities in any manner whatsoever. Holder: (A) has
been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do
so); (B) has had the full right and opportunity to consult with Holder’s attorneys and other advisors and has availed itself
of this right and opportunity; (C) has carefully read and fully understands the Merger Agreement and this Letter of Transmittal
and the other Transmittal Documents in their entirety and has had them fully explained to it by such counsel; (D) is fully aware
of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Letter of Transmittal
and the other Transmittal Documents and has executed this Letter of Transmittal and the other Transmittal Documents free from
coercion, duress or undue influence.

 

    	 	5	 

     

    

 

2.       Escrow,
Earnout, and Indemnification. Holder acknowledges, covenants and agrees that: (a) Pursuant to the Merger Agreement, between
2,352,285 and 3,846,154 Merger Consideration Shares otherwise due to the Company Shareholders (the “Earnout Shares”)
shall be placed in escrow and subject to release (or, in the case of certain Earnout Shares, cancellation and reissuance of an
equivalent number of shares equal and identical in all material respects) to the Company Shareholders only in the event that certain
specified net income earnout conditions for the period of July 1, 2017 to June 30, 2018 are met and in any case pursuant to the
provisions (including the dispute resolution provisions) in the Merger Agreement governing such Earnout Shares; (b) Pursuant to
Section 1.14 of the Merger Agreement, four percent (4%) of the Merger Consideration Shares less the Earnout Shares (as set forth
in the Merger Agreement, the “Indemnity Escrow Shares”, and, such Indemnity Escrow Shares, together
with the Earnout Shares, the “Escrow Shares”), together with any dividends, distributions or other income
thereon (the Indemnity Escrow Shares together with any such dividends, distributions or other income, as set forth in the Merger
Agreement, the “Indemnity Escrow Property”), will be held in escrow for a period of eighteen (18) months
after the Closing Date (the “Indemnity Escrow Period”) (subject to amounts retained in escrow thereafter
for then pending claims) and shall serve as security for, and a source of payment of, the indemnification rights of the Purchaser,
the Purchaser Representative, their respective affiliates and their respective officers, directors, managers, employees, successors
and permitted assigns (collectively, the “Indemnified Parties”) pursuant to Article VI of the Merger
Agreement; and (c) four percent (4%) of any Earnout Shares earned by the Company Shareholders shall be delivered to the Escrow
Agent for deposit in the Indemnity Escrow Account and held as Indemnity Escrow Shares (including for the purposes of satisfying
indemnification obligations, if applicable). Consequently, Holder’s Pro Rata Share (as defined in the Merger Agreement)
of the Escrow Shares and any other Indemnity Escrow Property will be held in escrow in accordance with the Merger Agreement and
the Escrow Agreement(s) to be entered into in connection with the Merger Agreement; and Holder, if a holder of Company Shares,
will be required to provide several indemnification to the Indemnified Parties for claims made during the Indemnity Escrow Period
to the extent of the Indemnity Escrow Property then remaining in the escrow account

 

3.       Disposition
of Company Shares and Company Warrants. Pursuant to the Merger Agreement, Holder hereby: (a) surrenders, cancels and terminates
Holder’s Company Shares, if any, in exchange for Holder’s Pro Rata Share of the Merger Consideration Shares (net of
any Escrow Shares), subject to the Merger Agreement and the Escrow Agreement(s); and (b) agrees that Holder’s Company Warrants,
if any, will be surrendered, cancelled and terminated in accordance with the Merger Agreement and replaced with Replacement Purchaser
Warrants. Holder hereby authorizes and instructs the Purchaser to (i) make entries in its register of members to record and give
effect to the issue and allotment of the portion of Merger Consideration Shares (less the Escrow Shares) due to Holder as a result
of the Merger, if any, in the name of and deliver to the address indicated below (unless otherwise instructed in Schedule 2 hereto),
and (ii) replace Holder’s Company Warrants, if any, with Replacement Purchaser Warrants pursuant to the Merger Agreement.

 

    	 	6	 

     

    

 

4.       Appointment
of Seller Representative to Act on Holder’s Behalf. By the execution and delivery of this Letter of Transmittal, Holder
on behalf of itself and its successors and assigns, hereby agrees to the provisions of Section 10.15 of the Merger Agreement and
irrevocably constitutes and appoints Zhengdong Zou in the capacity as the Seller Representative as set forth in the Merger Agreement,
as the true and lawful agent and attorney-in-fact of Holder with full powers of substitution to act in the name, place and stead
of thereof with respect to the performance on behalf of Holder to the extent set forth in Section 10.15 of the Merger Agreement;
provided, that the Seller Representative shall have no authority to incur expenses or liabilities for or on behalf of the Holder
exceeding the value of the Holder’s Pro Rata Share of (i) the Indemnity Escrow Property plus (ii) the Earnout Shares.

 

5.       Release
of Claims. In consideration of the receipt of its Pro Rata Share of the Merger Consideration Shares and/or the Replacement
Warrant, Holder, intending to be legally bound, effective as of the Effective Time hereby releases and discharges the Company
and its affiliates and their respective directors, officers, employees, agents, representatives, successors and assigns (collectively,
“Releasees”) fully, finally and forever, from all and any manner of claims, actions, rights, causes
of actions, suits, obligations, liabilities debts, due sums of money, agreements, promises, damages, judgments, executions, accounts,
expenses, costs, attorneys’ fees and demands whatsoever, whether in law, contract or equity, whether known or unknown, matured
or unmatured, foreseen or unforeseen, arising out of events existing or occurring contemporaneously with or prior to the Effective
Time, in each case, in Holder’s capacity as a shareholder, warrant holder or option holder of the Company (or its precedessors)
or otherwise relating to Holder’s acquisition, ownership, control or sale of Company Shares, Company Warrants or Company
Options; provided, that nothing contained herein shall operate to release (i) any liabilities of a Releasee based upon, arising
out of or relating to, without duplication, this Letter of Transmittal or any of the other Transmittal Documents, the Merger Agreement,
or any of the Ancillary Documents or (ii) the Company for Fraud Claims made by the Purchaser against the Company under the Merger
Agreement for which Holder has any responsibility beyond the Escrow Property. Holder hereby irrevocably covenants to refrain from,
directly or indirectly asserting, commencing or instituting any cause of action, suit or claim of any kind against any Releasee
based upon any matter intended or purported to be released hereby. This release may not be altered except in a writing signed
by the person or entity against whose interest such change shall operate. This release shall be governed by and construed under
the laws of the State of New York, without regard to principals of conflicts of law.

 

6.       Confidentiality.
Holder hereby agrees for a period of two (2) years from and after the date hereof to, and to cause Holder’s Representatives
to: (i) treat and hold in strict confidence any Company Confidential Information (as defined in the Merger Agreement), and not
use for any purpose (except in connection with the consummation of the transactions contemplated by this Letter of Transmittal,
the Merger Agreement or the Ancillary Documents, performing its obligations hereunder or thereunder or enforcing its rights hereunder
or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third
party any of the Company Confidential Information without the Company’s and the Purchaser’s prior written consent;
and (ii) in the event that Holder or any of Holder’s Representatives becomes legally compelled to disclose any Company Confidential
Information, (A) provide the Company and the Purchaser with prompt written notice of such requirement so that the Company and
the Purchaser may seek a protective order or other remedy or waive compliance with this Section 6 and (B) in the event
that such protective order or other remedy is not obtained, or the Company and the Purchaser waive compliance with this this Section
6, furnish only that portion of such Company Confidential Information which is legally required to be provided as advised
in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment
will be accorded such Company Confidential Information. Notwithstanding the foregoing, in this event that Holder is already subject
to confidentiality obligations to the Company which are in effect as of the Closing Date which provide that such confidentiality
obligations are the sole confidentiality provisions with respect to the Company applicable to Holder, then those confidentiality
obligations will apply to Holder in lieu of the provisions of this Section 6.

 

{remainder
of page intentionally left blank; signature page follows}

 

    	 	7	 

     

    

 

IMPORTANT
— HOLDERS SIGN HERE

 

(Must
be signed by registered Holder(s) exactly as name(s) appear(s) on share certificate(s), warrants and/or on a security position
listing or by person(s) authorized to become registered holder(s) as evidenced by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting
in a fiduciary or representative capacity, please set forth full title and see Instruction 2.)

 

Method
of delivery of the certificate(s) is at the option and risk of the Holder. See Instruction 1.

 

	Signature(s):	 

 

	Print
    Name:	 

 

	Title
    (if signing on behalf of an entity Holder):	 

 

	Mailing
    Address:	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

 

	Area
    Code and Telephone Number:	 

 

	Email
    Address:	 

 

	Dated:	 	,
    2017	 

 

GUARANTEE
OF SIGNATURE(S)

(See
Instruction 2)

Complete
ONLY if required by Instruction 2.

 

FOR
USE BY ELIGIBLE INSTITUTION ONLY.

PLACE
MEDALLION GUARANTEE IN SPACE BELOW.

 

	Firm:	 	 
	 	 	 
	By:	 	 
	 	 	 
	Title:	 	 
	 	 	 
	Date:	 	 
	 	 	 
	Address	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

    	 	8	 

     

    

 

	Schedule
        1

        Holder
        Company Securities

         

	Names(s)
        and Address(es) of Registered Owner(s)

        (Please
        fill in, if blank, exactly as name(s) appear(s) on the records of the Company)
	Company
        Shares

        (Attach
        additional list if necessary)

	 

         
	Company
        Certificate

        Number(s)

         

        _________________

         

        _________________

         

        _________________

         
	Number
        and Class of Company Shares

         

        _______________________________

         

        _______________________________

         

        _______________________________

         

	Names(s)
        and Address(es) of Warrant Holder(s)

        (Please
        fill in, if blank, exactly as name(s) appear(s) on warrant documentation)
	Company
        Warrants 

        (Attach
        additional list if necessary)

         

	 	Company
        Warrant

        Number(s)

         

         

        _________________

         

        _________________

         

        _________________

         
	Number
        and Class of Shares Purchasable under Company Warrants

         

        _______________________________

         

        _______________________________

         

        _______________________________

         

 

	☐ 	If any certificate(s) representing Company Shares that
you own or Company Warrants representing your right to purchase Company Shares have been lost or destroyed, check this box and
see Instruction 6. Please fill out the remainder of this Letter of Transmittal and:

 

		1.	Indicate
                                         here the number and class of Company Shares represented by the lost or destroyed certificates:
	 	 	 
	 	 	 
	 	 	(number
                                         and class of Company Shares);

 

		2.	Indicate
                                         here the number and class of Company Shares purchasable pursuant to the lost or destroyed
                                         Company Warrants
	 	 	 
	 	 	 
	 	 	(number
                                         and class of Company Shares underlying Company Warrants)

 

    	 	9	 

     

    

 

Schedule
2

 

Special
Issuance and Delivery Instructions

 

	SPECIAL
        ISSUANCE INSTRUCTIONS

        (See
        Instructions 2 and 3)

         

        To
        be completed ONLY if the Pro Rata Share of Merger Consideration Shares or Replacement Purchaser Warrants are to be issued
        in the name of someone other than the undersigned Holder.

         

        Holder
        Company Securities to which the Special Issuance Instruction applies (must match at least one of the Holder Company Securities
        listed on Schedule 1):

         

        ______________________________________________

         

        ______________________________________________

         

        ______________________________________________

         

         

        Issue
        to:

         

        Name:
        ________________________________________

        (Please
        Print)

         

        Address:
        ______________________________________

         

        ______________________________________________ 

        (Include
        Zip Code)

         

        ______________________________________________ 

        (Tax
        Identification or Social Security No.)

         

        If
        the above space is inadequate, please note that fact above and continue on a separate attachment
	 	SPECIAL
        DELIVERY INSTRUCTIONS

        (See
        Instructions 2 and 3)

         

        To
        be completed ONLY if the physical copies of the new certificates for the Pro Rata Share of Merger Consideration Shares
        or the Replacement Purchaser Warrants are to be delivered to someone other than the undersigned or to the undersigned
        at an address other than that shown above.

         

        Holder
        Company Securities to which the Special Delivery Instruction applies (must match at least one of the Holder Company Securities
        listed on Schedule 1):

         

        ______________________________________________

         

        ______________________________________________

         

        ______________________________________________

         

         

         

        Deliver
        to:

         

         

        Name:
        ________________________________________

        (Please
        Print)

         

        Address:
        _____________________________________

         

        ____________________________________________ 

        (Include
        Zip Code)

         

        If
        the above space is inadequate, please note that fact above and continue on a separate attachment

         

 

    	 	10	 

     

    

 

Exhibit
A

Form
of Lock-Up Agreement

 

 

TO
BE COMPLETED BY ALL HOLDERS

 

 

[Complete
attached Form Lock-Up Agreement]

 

 

    	 	11	 

     

    

 

Exhibit
B

Form
of Registration Rights Agreement

 

 

TO
BE COMPLETED BY ALL HOLDERS

 

 

[Complete
attached Form Registration Rights Agreement]

 

    	 	12	 

     

    

 

Exhibit
C-1

IRS
Form W-9

 

 

TO
BE COMPLETED BY ALL U.S. HOLDERS

 

(See
Instruction 4)

 

 

[Complete
attached Form W-9]

 

    	 	13	 

     

    

 

Exhibit
C-2

Form
W-8BEN

 

 

TO
BE COMPLETED BY ALL NON-U.S. HOLDERS

 

(See
Instruction 4)

 

 

[Complete
attached Form W-8BEN]

 

    	 	14	 

     

    

 

Exhibit
D

Form
of Stock Power

 

 

TO
BE COMPLETED BY HOLDERS OF COMPANY SHARES

WHERE
THE LETTER OF TRANSMITTAL IS NOT SIGNED BY THE

REGISTERED
OWNER OF THE STOCK CERTIFICATE(S)

 

(See
Instruction 2)

 

[Complete
attached Form Stock Power]

 

 

15

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