THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT RELATING TO THE SECURITIES WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT, (ii) A NON-US PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES
ACT, (iii) RULE 144 PROMULGATED UNDER THE SECURITIES ACT OR (iv) AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY
APPLICABLE STATE LAWS IS AVAILABLE.

 

XcelMobility, Inc.

 

CONVERTIBLE PROMISSORY NOTE

 

May 6, 2016 $1,000,000.00

 

XcelMobility, Inc., a Nevada corporation (the “Company”), for value received,
promises to pay to the order of Biz Wit Holdings Ltd., a company organized under
the laws of the British Virgin Islands (the “Holder”), the sum of USD
$1,000,000.00, or the aggregate unpaid principal balance of all amounts
outstanding hereunder, whichever is less (the “Principal”), plus simple interest
thereon from the date first set forth above until paid at an annual interest
rate equal to the lower of five percent (5%) or the lowest rate permissible by
law, and in accordance with the provisions of Section 2 below. Principal and
interest hereof will be paid or converted pursuant to the terms hereof.

 

The following is a statement of the rights of the Holder and the conditions to
which this Note is subject, and to which the Holder, by the acceptance of this
Note, agrees:

 

1. Definitions. As used in this Note, the following terms, unless the context
otherwise requires, have the following meanings:

 

1.1 “Company” will mean XcelMobility, Inc. and will include any corporation,
partnership, limited liability company or other entity that will succeed to or
assume the obligations of the Company under this Note.

 

1.2 “Holder” will mean any person who will at the time be the registered holder
of this Note.

 

2. Payment of Principal and Interest; Conversion

 

2.1 Interest shall be computed on the basis of a year of 365 days for the actual
number of days elapsed and shall be paid on the date of each conversion or
prepayment of any outstanding Principal hereunder and on the Maturity Date (as
defined below).

 

2.2 The Company may prepay, at its option, all or any part of the Debt at any
time and from time to time prior to the Maturity Date in full satisfaction and
accord of the Company’s obligations under this Note. Any prepayment shall be
credited first to accrued but unpaid interest and the balance to Principal, and
interest shall cease to accrue on the amount of Principal so paid.

 

   

 

 

2.3 At any time prior to August 6, 2016, Holder at its option and upon prior
written notice to the Company, may convert in whole or in part the Debt into
shares of common stock, par value $0.001 per share, of the Company (the “Common
Stock”) at the then applicable Conversion Price. The “Conversion Price” shall
initially be $0.001, but shall be subject to adjustment as set forth in Section
4.1 below for any stock dividend, stock split, reverse stock split,
reclassification, recapitalization or other similar event after the date hereof.

 

2.4 On December 31, 2016 (the “Maturity Date”), all outstanding Principal,
accrued and unpaid interest thereon (the “Debt”) shall be due hereunder.

 

2.5 In the event of a conversion of this Note, the Holder will surrender the
original copy of this Note for conversion at the principal office of the Company
at the time of such closing. Holder agrees to execute all necessary documents in
connection with the conversion of this Note. If upon such conversion of this
Note a fraction of a share would result, then the Company will round up to the
nearest whole share.

 

2.6 If this Note is physically surrendered for conversion as required by this
Section 2 and the outstanding Principal of this Note is greater than the
Principal portion of the Debt being converted, then the Company shall as soon as
practicable and in no event later than five (5) business days after receipt of
this Note issue and deliver to the Holder a new Note representing the
outstanding Principal not converted.

 

3. Issuance of Consideration on Conversion. As soon as practicable after a
conversion of this Note pursuant to Section 2 and receipt of the original Note
and related documents, but in no event later than five (5) trading days, the
Company at its expense will cause to be issued in the name of and delivered to
the Holder, a certificate or certificates for the number of shares of securities
to which the Holder will be entitled on such conversion (bearing such legends as
may be required by applicable state and federal securities laws in the opinion
of legal counsel for the Company), together with any other securities and
property, if any, to which the Holder is entitled on such conversion under the
terms of this Note.

 

4. Adjustment Provisions. The number and character of shares of common stock
issuable upon conversion of this Note and the Conversion Price therefor, are
subject to adjustment upon occurrence of the following events:

 

4.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. The
Conversion Price of this Note shall be adjusted to reflect any stock dividend,
stock split, reverse stock split, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of common stock.

 

4.2 Adjustment for Reorganization, Consolidation, Merger. In the event (a) of
any reorganization of the Company, (b) the Company consolidates with or merges
into another entity, (c) the Company sells all or substantially all of its
assets to another entity and then distributes the proceeds to its shareholders,
or (d) the Company issues or otherwise sells securities representing more than
50% of the voting power of the Company in a single or series of related
transactions immediately after giving effect to such transaction or series of
related transaction (each of such events shall be referred to herein as a
“Liquidation Event”), then, and in each such case, the Holder, upon the
conversion of this Note at any time after the consummation of any Liquidation
Event shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the conversion of this Note prior to such consummation,
the stock or other securities or property to which the Holder would have been
entitled upon the consummation of such Liquidation Event if the Holder had
converted this Note immediately prior thereto, all subject to further adjustment
as provided in this Note, and the successor or purchasing entity in a
Liquidation Event (if other than the Company) shall duly execute and deliver to
the Holder a supplement hereto acknowledging such entity’s obligations under
this Note.

 

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4.3 No Change Necessary. The form of this Note need not be changed because of
any adjustment in the Conversion Price.

 

5. Representations and Acknowledgments of the Holder. The Holder hereby
represents, warrants, acknowledges and agrees that:

 

5.1 The Holder represents and warrants to, and covenants with, the Company that:
(a) the Holder is an “accredited investor” as defined in Rule 501 of Regulation
D under the Act and that the Investor is knowledgeable, sophisticated and
experienced in making, and is qualified to make decisions with respect to
investments in securities presenting an investment decision like that involved
in the purchase of this Note and the Common Stock issuable upon conversion of
this Note (together, the “Securities”), including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Securities; (b) the Holder has
carefully read and fully understands the risks involved with an investment in
the Company, (c) the Holder is acquiring the Securities in the ordinary course
of business and for the Holder’s own account for investment only and with no
present intention of distributing any of such Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities; and (d) the Holder will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Securities except in
compliance with the Securities Act of 1933, as amended (the “Act”), applicable
state securities laws and the respective rules and regulations promulgated
thereunder.

 

5.2 The Holder has had the opportunity to ask questions of, and to receive
answers from, appropriate executive officers of the Company with respect to the
terms and conditions of the transactions contemplated hereby and with respect to
the business, affairs, financial condition and results of operations of the
Company. The Holder has had access to such financial and other information as is
necessary in order for the Holder to make a fully informed decision as to
investment in the Company, and has had the opportunity to obtain any additional
information necessary to verify any of such information to which the Holder has
had access.

 

5.3 The Holder further represents and warrants that the Holder has such business
or financial expertise as to be able to protect the Holder’s own interests in
connection with the purchase of the Securities.

 

5.4 The Holder’s investment in the Company represented by the Securities is
highly speculative in nature and is subject to a high degree of risk of loss in
whole or in part; the amount of such investment is within the Holder’s risk
capital means and is not so great in relation to the Holder’s total financial
resources as would jeopardize the financial condition of the Holder in the event
such investment were lost in whole or in part.

 

5.5 The Holder acknowledges, represents and agrees that no action has been or
will be taken in any jurisdiction outside the United States by the Company that
would permit an offering of the Securities, or possession or distribution of
offering materials in connection with the issuance of the Securities, in any
jurisdiction outside the United States where legal action by the Company for
that purpose is required. The Holder will comply with all applicable laws and
regulations in each foreign jurisdiction in which it purchases, offers, sells or
delivers Securities or has in its possession or distributes any offering
material, in all cases at its own expense.

 

 3 

 

 

5.6 The Holder understands that the issuance of the Securities to the Holder has
not been registered under the Act in reliance upon one or more specific
exemptions therefrom, including Regulation D and/or Regulation S, which
exemption depends upon, among other things, the accuracy of the Holder’s
representations. The Holder understands that the Securities must be held
indefinitely unless subsequently registered under the Act and qualified under
applicable state securities laws, or unless an exemption from such registration
and qualification requirements is otherwise available. The Holder acknowledges
that the Company has no obligation to register or qualify the Securities for
resale. The Holder acknowledges that the Company will refuse to register any
transfer of Securities that is not made in accordance with the provisions of
Regulation S, registered pursuant to the Act or otherwise exempt from such
registration. The Holder further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Securities, and requirements relating to the Company
which are outside of the Holder’s control, and which the Company is under no
obligation and may not be able to satisfy. Holder has been independently advised
as to the applicable holding period imposed in respect of the Securities by
securities legislation in the jurisdiction in which the undersigned resides and
confirms that no representation has been made respecting the applicable holding
periods for the Securities in such jurisdiction and it is aware of the risks and
other characteristics of the Securities and of the fact that the undersigned may
not resell the Securities except in accordance with applicable securities
legislation and regulatory policy.

 

5.7 For purposes of compliance with the Regulation S exemption for the offer and
sale of the Securities to non-U.S. Persons, if the Holder is not a “U.S.
Person,” as such term is defined in Rule 902(k) of Regulation S,1 the Holder
represents and warrants that the Holder is a person or entity that is outside
the United States, and further represents and warrants as follows:

 

 

1 Regulation S provides in part as follows:       1. “U.S. person” means: (i)
any natural person resident in the United States; (ii) any partnership or
corporation organized or incorporated under the laws of the United States; (iii)
any estate of which any executor or administrator is a U.S. person; (iv) any
trust of which any trustee is a U.S. person; (v) any agency or branch of a
foreign entity located in the United States; (vi) any non-discretionary account
or similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person; (vii) any discretionary
account or similar account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident in the
United States; and (viii) any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed by a
U.S. person principally for the purpose of investing in securities not
registered under the Securities Act of 1933, as amended, unless it is organized
or incorporated, and owned, by accredited investors (as defined in Rule 501(a))
who are not natural persons, estates or trusts.       2. The following are not
“U.S. persons”: (i) any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or (if an
individual) resident in the United States; (ii) any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person if:
(A) an executor or administrator of the estate who is not a U.S. person has sole
or shared investment discretion with respect to the assets of the estate; and
(B) the estate is governed by foreign law; (iii) any trust of which any
professional fiduciary acting as trustee is a U.S. person, if a trustee who is
not a U.S. person has sole or shared investment discretion with respect to the
trust assets, and no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person; (iv) an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country; (v) any agency
or branch of a U.S. person located outside the United States if: (A) the agency
or branch operates for valid business reasons; and (B) the agency or branch is
engaged in the business of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the jurisdiction where
located; and (vi) the International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans.

 

 4 

 

 

(a) The Holder is not acting and purchasing (or proposes to purchase) the
Securities on behalf of any other persons, entities or accounts and is not
acquiring the Securities for the account or benefit of a U.S. Person. Holder
represents and warrants that the Holder is not a “U.S. Person” (as defined in
Rule 902(k) under the Act) and was located outside the United States at the time
any offer to buy the Securities was made and at the time the buy offer was
originated by the undersigned.

 

(b) If the Holder is a legal entity, it has not been formed specifically for the
purpose of investing in the Company.

 

(c) The Holder hereby represents that he, she or it has satisfied and fully
observed the laws of the jurisdiction in which he, she or it is located or
domiciled, in connection with the acquisition of the Securities, including (i)
the legal requirements of the Holder’s jurisdiction for the acquisition of the
Securities, (ii) any foreign exchange restrictions applicable to such
acquisition, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, which may
be relevant to the holding, redemption, sale, or transfer of the Securities; and
further, the Holder agrees to continue to comply with such laws as long as he,
she or it shall hold the Securities.

 

(d) To the knowledge of the Holder, without having made any independent
investigation, neither the Company nor any person acting for the Company, has
conducted any “directed selling efforts” in the United States as the term
“directed selling efforts” is defined in Rule 902 of Regulation S, which, in
general, means any activity undertaken for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the marketing in the
United States for any of the Securities being offered. Such activity includes,
without limitation, the mailing of printed material to investors residing in the
United States, the holding of promotional seminars in the United States, and the
placement of advertisements with radio or television stations broadcasting in
the United States or in publications with a general circulation in the United
States, which discuss the offering of the Securities. To the knowledge of the
Holder, the Securities were not offered to the undersigned through, and the
undersigned is not aware of, any form of general solicitation or general
advertising, including without limitation, (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, and (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.

 

(e) The Holder will offer, sell or otherwise transfer the Securities, only (i)
pursuant to a registration statement that has been declared effective under the
Act, (ii) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S in a transaction meeting the requirements of
Rule 904 (or other applicable Rule) under the Act, or (iii) pursuant to another
available exemption from the registration requirements of the Act, subject to
the Company’s right prior to any offer, sale or transfer pursuant to clauses
(ii) or (iii) to require the delivery of an opinion of counsel, certificates or
other information reasonably satisfactory to the Company for the purpose of
determining the availability of an exemption.

 

6. Miscellaneous.

 

6.1 Waiver and Amendment. Any provision of this Note may be amended, waived or
modified only upon the written consent of the Company and the Holder.

 

6.2 Restrictions on Transfer. This Note may only be transferred in compliance
with applicable U.S. state and federal laws. All rights and obligations of the
Company and the Holder will be binding upon and benefit the successors, assigns,
heirs, and administrators of the parties.

 

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6.3 Company Representation. The Company represents to the Holder that the
Company is a corporation duly organized, validly existing, authorized to
exercise all its corporate powers, rights and privileges, and in good standing
in the State of Nevada and has the corporate power and corporate authority to
own and operate its properties and to carry on its business as now conducted;
all corporate action on the part of the Company, its officers, directors, and
shareholders necessary for the authorization, execution, delivery, and
performance of all obligations under this Note have been taken; this Note
constitutes a legally binding and valid obligation of the Company enforceable in
accordance with its terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other laws or court decisions relating to
or affecting the rights of creditors generally, and such enforcement may be
limited by equitable principles of general applicability.

 

6.4 No Assignment. Holder may not transfer or assign all or any part of this
Note except upon prior written notice to the Company and with the Company’s
prior written consent, which consent shall not be unreasonably withheld; except
that Holder may transfer this Note or part thereof to any of its affiliates.

 

6.5 Governing Law. This Note will be governed by the laws of the State of Nevada
(U.S.A.) applicable to contracts between Nevada residents wholly to be performed
in Nevada, U.S.A..

 

 6 

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date
first above written.

 

  XcelMobility, Inc.   a Nevada corporation       By:       Renyan Ge     Chief
Executive Officer

 

Agreed and Accepted by the Holder:

 

Biz Wit Holdings Ltd.

a British Virgin Islands company

 

By:       Zhixiong Wei     President  

 

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