Document:

XcelMobility Inc. - Exhibit 10.2 - Filed by newsfilecorp.com

 

 

International Strategic Leaders Inc. (ISL) 

  Tokyo Japan 

AND 

NETQIN MOBILE (BEIJING) TECHNOLOGY CO.,

LTD. 
Beijing China

AND 

Shenzhen CCPower Corporation

Shenzhen, China 

____________________________________________________________________________

FINAL PARTNER and OPERATING AGREEMENT

____________________________________________________________________________

Page 1 of 11 

June 17, 2011 

THIS NON LEGALLY BINDING, COOPERATION AGREEMENT ("AGREEMENT")
or (“MOU”) IS ENTERED INTO EFFECTIVE 30 DAY OF June YEAR 2011 (THE “EFFECTIVE
DATE”)

BY AND BETWEEN : 

1. International Strategic Leaders Inc. (ISL) a company
incorporated under the laws of Tokyo, Japan and presently having its registered
office at Daiichihidaka bldg 5F, 1-5-3 Nihonbashi Hon-cho Chuo-Ku Tokyo Japan.

Hereinafter referred to as “FIRST PARTY”, (which
expression shall, unless repugnant to the subject or context shall mean and
include its successors, assigns and administrators) 

AND 

2. NETQIN MOBILE (BEIJING) TECHNOLOGY CO., LTD., a
Company, with its principal place of business at the offices of No.4
Building, Heping Li East Street 11,Dongcheng District, Beijing,
China 100013 and the company is represented by Mr. Lin Yu in
the capacity of CEO. Hereinafter referred to as “SECOND PARTY”
(which expression shall, unless repugnant to the subject or context shall
mean and include its successors, assigns and administrators). 

3. Shenzhen CCPower Corporation, a Company, with its
principal place of business at the offices of Room 706, Cyber Times Tower
B, Tairan Road, Futian District, Shenzhen, China, 518040 

Hereinafter referred to as “THIRD PARTY” (which
expression shall, unless repugnant to the subject or context shall mean and
include its successors, assigns and administrators) 

CCPower is engaged in the business of providing a mobile
internet platform, specifically a high speed mobile browser, called Mach5
Browser, with patented compression technology. NetQin is engaged in the
business of providing Mobile Security Solutions, specifically an
antivirus and mobile manager platform and services. ISL is engaged in the
business of Value Added Service Provider and desires to promote and
distribute NetQin and CCPower’s products, as well as joint
solutions created by combining both CCPower and NetQin’s
individual solutions within the territories described in Annex C
(collectively, the “Application Services”). NetQin and CCPower
desire to accept and provide the FIRST PARTY with such Services on the terms
and conditions set forth in this Agreement. 

1. DEFINITIONS 

Application Services: refers to any combination of
CCPower and/or NetQin’s current or future mobile security software offerings
and/or services, including but limited to Mach5 PC, Mach5 Security, Mach5 Secure
Browser, NetQin Antivirus and NetQin Mobile Manager.

Devices : refers to Android based smart phones as well
as tablet pads.

Page 2 of 11 

Preload or Preloading: installation of one or more of
CCPower and/or NetQin’s Application Services onto a specified Android based
mobile device, in such a way that it can be automatically activated once it has
been distributed to a retail outlet or end user. Additional platforms outside of
Android are not covered in this agreement, but can be added in the future if
agreed upon by both parties.

End-user : shall mean the user who uses CCPower
and/or NetQin’s Application Services installed on the consumers’ mobile device.

Paying Subscriber : represents an end user that has
activated one or more Application Services and has subscribed to pay for those
Services.

Territory : territory refers to the countries (as
defined in ANNEX C) in which the Application Service Provider can sell or resell
the Application Services.

Net Revenue: Combination of any prepayment or upfront
payment for Application Services as well as any ongoing or recurring (e.g.
monthly, bi-annual, annual, etc.) fee collected from end user or other reselling
parties, after all other parties, other than FIRST PARTY, SECOND PARTY and THIRD
PARTY, have been paid. Revenue is prior to any local taxes that are
applicable.

2. The three parties agree mutually on the following:

The SECOND PARTY and THIRD PARTY shall allow FIRST PARTY to
distribute and/or resell their individual or joint Application Services within
the defined Territory. FIRST PARTY shall have exclusive distribution rights to
all Mach5 branded Application Services specifically for the Japan market.

This distribution effort can be made directly to the end
consumer, which will be a B2C method. B2C distribution will be supported by the
creation of one or more local websites, which will not only allow users to
download the Application Services, but the website will also integrate a payment
engine, owned by a party/parties other than FIRST PARTY, SECOND PARTY and THIRD
PARTY, to allow users to purchase the Application Services directly from FIRST
Party. Preloading devices with the Application Services and allowing users to
obtain a paid subscription via the website for usage of the Application Services
will also be included in the B2C model.

The distribution effort can also be a B2B model, which would
include but is not limited to selling directly to a Telecommunication Operator,
directly to a handset manufacturer or to a Party/Parties, other than FIRST
PARTY, SECOND PARTY and THIRD PARTY, that resells or distributes the Application
Services. Payment by the consumer will be made through the Party/Parties instead
of via a web payment channel.

All parties agree that Mach5 branding and naming will be used
for all Application Services, and the NetQin name will only appear where it is
appropriate to specify that an application is “powered by” NetQin.

Parties shall work together to create a billing and payment
process for users to both subscribe to, as well as unsubscribe to. This will
involve working and integrating with a billing vendor, owned by a party/parties
other than FIRST PARTY, SECOND PARTY and THIRD PARTY, which shall be mutually
agreed by FIRST PARTY, SECOND PARTY and THIRD PARTY.

Payment for revenue generated from the Services shall be shared
between all parties as described in Annex A.

Page 3 of 11 

3. FIRST PARTY OBLIGATIONS: 

The FIRST PARTY agrees to the followings: 

	 	a. 	
      FIRST PARTY will explore opportunities to request and
      execute upon Preloading SECOND and THIRD PARTY’S Application Services on
      handset manufacturer’s Devices including but not limited to Sony, Fujitsu,
      Samsung, and HTC.

	 	 	 
	 	b. 	
      FIRST PARTY will work with handset manufacturers to
      ensure that the Preload has properly been executed, and that devices are
      distributed in a timely fashion via standard channels.

	 	 	 
	 	c. 	
      FIRST PARTY will assist SECOND and THIRD PARTY to review
      and QA their Application Services to ensure they are appropriately
      localized for the Territories in which they are being distributed and
      sold.

	 	 	 
	 	d. 	
      Where FIRST PARTY has relationships with local
      Telecommunication Operators or other Distributors that have relationships
      with local Telecommunication Operators, FIRST PARTY will work to set up
      billing and distribution relationships via these channels. These
      Telecommunication Operators and Distributors include, but are not limited
      to KDDI, Softbank Mobilie, NTT Docomo, E-Mobile, Mitsubishi Diamond
      Telecom and NEC.

	 	 	 
	 	e. 	
      FIRST PARTY shall not engage with parties that have
      competitive solutions to SECOND and THIRD PARTY Application Services
      during this contract term.

	 	 	 
	 	f. 	
      FIRST PARTY shall provide local support for end users and
      payment providers for B2C billing channel and payment. This will include,
      but is not limited to, working with the local billing and payment
      providers to integrate necessary backend systems, creating the appropriate
      billing processes, and obtaining cash to be distributed among all
      parties.

	 	 	 
	 	g. 	
      FIRST PARTY shall prepare a monthly report to SECOND and
      THIRD party which outlines which users unsubscribe to the service. This
      report will include all necessary data for SECOND and THIRD PARTY to “turn
      off” functionality that cannot be used when unsubscribed.

	 	 	 
	 	h. 	
      FIRST PARTY will help create and drive a local marketing
      campaign, which may or may not involve other parties.

	 	 	 
	 	i. 	
      FIRST PARTY shall provide payment and payment reporting
      to SECOND and THIRD PARTY according to specified payment terms and Annex
      B.

4. SECOND and THIRD PARTY OBLIGATIONS 

In addition to performing and providing the applications
related to the Application Services, SECOND and THIRD PARTY shall and do hereby
agree to perform the following activities: 

	 	a. 	
      SECOND and THIRD PARTY shall prepare appropriate tested
      and certified version(s) of Application Services to be Preloaded or
      available for download distribution, and bear all cost and implementation
      procedures associated with Preloading onto the device, setting up a local
      website and making Application Services available for
  download.

Page 4 of 11 

	 	b. 	
      SECOND and THIRD PARTY shall jointly work on a plan for
      creating and launching a fully integrated product, with a single
      installation and single billing and payment interface. This integrated
      product will be comprised of THIRD PARTY’S Mach5 Mobile Browser, SECOND
      PARTY’S Antivirus Security, and possibly components of SECOND PARTY’S
      Mobile Manager. These will be combined to create a single, fast and secure
      mobile web browser. This product will initially be launched on the Android
      platform, but it is the intention of both parties to also launch this
      product on Windows Mobile and Blackberry platforms. It is understood by
      SECOND and THIRD PARTY that development and integration work on this
      integrated product may not commence until a contract is in place to
      purchase this integrated product, with Parties, other than FIRST PARTY,
      SECOND PARTY and THIRD PARTY.

	 	 	 
	 	c. 	
      SECOND and THRID PARTY shall be responsible for the
      operation of the Applications distributed by FIRST PARTY, including but
      not limited to, providing technical support to FIRST PARTY and the
      customers support for using the Application Services.

	 	 	 
	 	d. 	
      SECOND and THIRD PARTY will provide to FIRST PARTY or,
      where applicable, the Customer or other Distribution Channels, bug fixes
      or software patches that are reasonably required to ensure proper
      operation of each Application in accordance with the User
    Documentation

	 	 	 
	 	e. 	
      SECOND and THIRD PARTY shall work with FIRST PARTY as
      well as an agreed upon billing and payment provider, to create and
      integrate a payment process and method which will support the B2C
      distribution method.

	 	 	 
	 	f. 	
      SECOND and THIRD PARTY intend to initially launch an
      integrated product in the Japan market, and may consider later rolling
      this integrated product out in the Korea and China markets.

	 	 	 
	 	g. 	
      Execute the terms of this Agreement according to the
      agreed terms and conditions herein.

5. CONFIDENTIAL INFORMATION 

Each Party agrees that during the Term of this Agreement and
thereafter (a) it will use Confidential Information belonging to the other Party
solely for the purpose(s) for which it was disclosed hereunder and (b) it will
not disclose Confidential Information belonging to the other Party to any other
party/parties (other than its employees and/or professional advisors on a
need-to-know basis who are bound by obligations of nondisclosure and limited use
at least as stringent as those contained herein). The Parties further agree that
except as necessary to perform their respective obligations hereunder or
otherwise expressly required by law, but only to the extent so authorized or
required, they will not publicly announce or otherwise disclose any of the terms
and conditions of this Agreement. In the event either party is requested or
ordered by a court of competent jurisdiction to disclose Confidential
Information belonging to the other Party, such Party will give the other Party
immediate notice of such request or order and, at the other Party’s request and
expense, resist such a request or order to the fullest extent permitted by law.
Each party will promptly (i) return to the other upon request any or all
Confidential Information of the other then in its possession or under its
control and (ii) erase or otherwise destroy all computer entries containing any
Confidential Information of the other then in its possession or under its
control and provide the other with written certification of such erasure or
destruction. The provisions of this Clause 6 shall survive any termination of
this Agreement. 

For the purposes of this Agreement, Confidential Information
shall include but not limited to the Invention, all data, materials, products,
technology, computer programs, Users, specifications, manuals, business plans,
software, marketing plans, business plans, financial information, prospective
investors, clients, and other information disclosed or submitted, orally,
in writing, or by any other media, from one Party to the other Party.

Page 5 of 11 

6. METHOD OF PAYMENT 

ALL PARTIES will pay the amount due to THE OTHER PARTY within
15 (fifteen) banking days from the date of the receipt of invoice by THE OTHER
PARTY as per Annex A. Method of payment is wire transfer or cheque subject to
THE OTHER PARTY preferences in writing.

It is the intention of both the SECOND and THIRD PARTY to have
FIRST PARTY accept all local payments, whether directly from customers, credit
card companies or other party/parties, other than FIRST PARTY, SECOND PARTY and
THIRD PARTY. FIRST PARTY will then pay SECOND and THIRD PARTY according to the
payment terms set out in Annex A.

7. TERMS & TERMINATION 

	 	a. 	
      Terms. This Agreement is not legally binding,
      however shall become effective as of the date first written above (the
      “Effective Date”) and shall continue in full force for a 3 month probation
      period with an automatic renewal of one calendar year in case none of the
      parties resigns beforehand. Thereafter, this Agreement may be renewed for
      further periods of one (1) year, provided mutual written agreement of the
      parties is reached in this respect. .

	 	 	 	 
	 	b. 	
      Termination. This Agreement shall come into force
      on the date abovementioned and shall be valid for the Term thereof unless
      terminated by either party as stated hereunder:

	 	 	 	 
	 		i. 	
      If the other Party commits a breach of any material terms
      or conditions/obligation of this Agreement and fails to cure the breach
      within 30 days after receipt of written notice from the other
  party.

	 	 	 	 
	 		ii. 	
      Either Party may terminate this Agreement by giving the
      other party advance written notice of 90 days of its intention to
      terminate the Agreement.

	 	 	 	 
	 		iii. 	
      This Agreement shall be automatically terminated, if
      either party is dissolved, wound up or goes into liquidation, or a trustee
      or receiver is appointed by operation of a lawful order of a court of
      competent jurisdiction to take over the assets of either party, or it
      ceases to carry on its business as described in this
  Agreement.

8. INDEMNIFICATION 

Each party shall indemnify and hold harmless the other Party
from and against any losses, costs, claims, damages, or liabilities incurred by
the other party as a result of the negligent or intentional acts or omissions of
the other party, its employees, agents, or sub-contractors or as a result of or
related to the breach of any term or condition of this Agreement.

Page 6 of 11 

9. FORCE MAJEURE 

Notwithstanding anything else in this Agreement, no default,
delay or failure to perform on the part of either party shall be considered a
breach of this Agreement, if such default, or failure to perform is shown to be
due to causes beyond reasonable control of the party charged with a default,
including, but not limited to, causes such as strikes, lockouts or other labor
disputes, riots, civil disturbances, actions or inactions of governmental
authorities or suppliers, epidemics, war, embargoes, sever weather, fire
earthquakes, act of God or the public enemy, nuclear disasters, supplier delay,
breakdown of communication facilities, breakdown of web host, breakdown of
internet service provider or default of a common carrier or other events beyond
that party to breach. 

10. GOVERNING LAW 

This Agreement shall be governed by and interpreted or
construed in accordance with the laws of Japan without regard to its principles
regarding conflict of laws. Any and all disputes arising out of or in connection
with this Agreement shall be finally settled by the competent courts of Tokyo
Japan.

11. NOTICES 

Any notice or other document to be given by a party under this
Agreement shall be in writing and shall be considered to have been given if hand
delivered to the other party's representative or sent by registered post or
facsimile to the other party at the address or relevant facsimile number (with
proof of receipt by the other party) for that party set out below, or such other
address as one party may from time to time designate by written notice to the
other: 

If to FIRST PARTY :

International Strategic Leadership Inc.
Daiichi
Hidaka Building 5F, 1-5-3 Nihonbashi Hon-cho Chuo-Ku Tokyo Japan 

Tel      +81-3-6202-5877

Fax     +81-3-3527-9940 

If to SECOND PARTY :

NETQIN MOBILE (BEIJING) TECHNOLOGY CO., LTD.

Building 4,No.11, Hepingli East Street,
DongCheng District,
Beijing, PR China,100013 

Tel     +8610 85655555

Fax     +8610-85655518 

If to THIRD PARTY :

Shenzhen CCPower Corporatoin. 
Room 706, Cyber
Times Tower B,
Tairan Road, Futian District, Shenzhen, China,

Postcode: 518040 

Tel      +
86-755-8358-9696 
Fax     
+86-755-8348-7881 

Page 7 of 11 

12. DELAY; NON-WAIVER 

No failure or delay on the part of any of the Parties to
exercise any power or right or remedy under this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise by any of the Parties
thereto of any power or right hereunder preclude any further or other exercise
thereof or the exercise of any power or right. The rights and remedies herein
provided are cumulative and not exclusive of any rights and remedies provided by
law.

13. ENTIRE AGREEMENT AND AMENDMENTS

This Agreement and the Annexes attached hereto embodies the
entire understanding between the Parties concerning the subject matter hereof,
and any prior or contemporaneous representations, either oral / written or of
any nature whatsoever, are hereby superseded. This Agreement may only be
modified, amended or waived, with the written consent of all its Parties. 

	For International Strategic Leadership Inc. 	 	For NETQIN MOBILE (BEIJING) 
	 	 	TECHNOLOGY CO., LTD. 
	 	 	 
	Daiichi
      Hidaka Building 5F, 1-5-3 	 	 
	Nihonbashi
      Hon-cho Chuo-Ku Tokyo Japan 	 	Building 4,No.11, Hepingli East Street, 
	 	 	DongCheng District, Beijing, PR  
	 	 	China,100013
	 	 	 
	 	 	 
	Name: 	 	 
	 	 	Name:    
	Position: 	 	 
	 	 	Position: 
	Date: 	 	 
	 	 	Date: 

	For Shenzhen CCPower Corporation 	 	 
	  	 	 
	CC Power
      Corporatoin. 	 	 
	Room 706, Cyber
      Times Tower B, 	 	 
	Tairan Road,
      Futian District, Shenzhen, 	 	 
	China, 	 	 
	Postcode:
      518040	 	 
	  	 	 
	 	 	 
	Name: 	 	 
	  	 	 
	Position: 	 	 
	  	 	 
	Date: 	 	 

Page 8 of 11 

Annex A 

Revenue Share:

FIRST PARTY will receive 30% of Net Revenue from all
Application Services.

SECOND PARTY will receive 40% of Net Revenue from Mach5
Security and 0% from Mach5 Browser. 

THIRD PARTY will receive 30% of Net Revenue from Mach5 Security
and 70% of revenue from Mach5 Browser.

Upon completion of an integrated Mach5 Secure Browser
Application Service, SECOND and THIRD PARTY will create a separate Annex to this
agreement with their agreed upon share of the revenue to be split from this
Application Service.

If 40% of Net Revenue of Mach5 Security to SECOND PARTY drops
below an average price us US$1 per user per month, parties will consider a new
revenue share model.

Page 9 of 11 

Annex B 

Within 10 days of the close of the previous month, FIRST PARTY
will provide the following report to SECOND and THIRD PARTY. Within 10 days of
receipt of the report, SECOND and THIRD PARTY will issue FIRST PARTY an invoice
for payment. Payment will be made within 10 days of receipt of invoice:

  		Device Subscriptions (monthly subscriptions) 		
				
		A:
        Paying Monthly Subscribers (Mach5 Web)
      		
		A1:
        Paying Monthly Subscribers (Mach5 Security)
      		
		B:
        Payout rate (JPY) 	TBD 	
				
		 		
		Monthly
        Payment Due Mach5 Web (A*B) 		
		Monthly
        Payment Due Mach5 Security(A1*B)
      		
		          		

  		Device Subscriptions (6 month (bi-annual) subscriptions)
      		
				
		A:
        Monthly bi-annual Paying Subscribers
        (Mach5 Web) 		
		A1:
        Monthly bi-annual Paying Subscribers
        (Mach5 Security) 		
		B:
        Payout rate (JPY) 	TBD 	
				
		 		
		Monthly
        Payment Due Mach5 Web (A*B) 		
		Monthly
        Payment Due Mach5 Security (A1*B)
      		
		    		

Page 10 of 11 

Annex C 

Countries covered in “Territory” 

Asia Pacific:
Japan 

All additional countries to be added in the future will require
only a modification of Annex C, and signatures from each party.

Page 11 of 11XcelMobility Inc. - Exhibit 10.3 - Filed by newsfilecorp.com

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE
UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR ANY SUCH LAW. 

XcelMobility Inc. 

CONVERTIBLE PROMISSORY NOTE 

	$100,000.00 	August 30, 2011 

          FOR
VALUE RECEIVED, the undersigned, XcelMobility Inc., a Nevada corporation (the
“Company”) promises to pay to the order of Empa Trading Ltd., or
permitted assigns (hereinafter, with any subsequent holder, the
“Holder”) the principal sum of $100,000.00 (one hundred thousand
US dollars) (the “Principal”), with interest on the unpaid principal from
June 5, 2011 at a rate of five percent (5.00%) simple interest per annum.
Interest shall be calculated on the basis of the actual number of days elapsed
over a 365-day year, shall commence to accrue effective June 5, 2011 and shall
continue on the outstanding principal until paid in full. 

          This
Note replaces in its entirety that certain Convertible Promissory Note by and
between CC Mobility Limited, a company organized under the laws of Hong Kong and
the Holder dated June 5, 2011 (the “Old Note”). It is expressly agreed and
understood that Holder has surrendered or caused to be surrendered the Old Note,
and that such Old Note is effectively null and void. 

          1.   
   Interest Payments. Unless converted or repaid as set
forth hereunder, accrued interest will be due and payable upon the Maturity
Date. 

          2.  
    Application of Payments. All payments of
principal and interest shall be in lawful money of the United States of America,
except as set forth below in connection with conversion of this Note. All
payments on account of the indebtedness evidenced by this Note shall be applied
first to any and all costs, expenses and other charges then owed the Holder by
the Company, second, to accrued and unpaid interest, and thereafter to the
unpaid principal balance hereof. All payments so received after demand or
acceleration shall be applied in such manner as the Holder may determine in its
sole and absolute discretion. 

          3.    
  Maturity Date. Unless converted pursuant to the terms of this
Note or unless earlier accelerated by the terms of this Note, the principal
amount hereof, together with all unpaid accrued interest hereon and all other
fees, costs and charges, if any, shall be due and payable on the date which is
five (5) years from the original date of this Note (the “Maturity
Date”). No payments of principal or interest are required hereunder
until the Maturity Date, except as otherwise provided herein. 

          4.   
   Conversion. The outstanding Principal and accrued but
unpaid interest thereon (the “Debt”) shall be converted as
follows: 

                    4.1     
Upon a Qualified Financing. Unless earlier converted pursuant to
Section 4.2 below, if within twelve (12) months of the date hereof the
Company completes cumulative financing, including this one, yielding aggregate
gross proceeds or borrowings to the Company of at least two million dollars
($2,000,000) (the “Qualified Financing”), the Holder agrees to
exchange the Debt simultaneously with the initial closing of such Qualified
Financing as follows: 

                              (a)
In the event of a debt Qualified Financing (“Qualified Debt
Financing”), the Holder may at its option exchange in whole or in
part this Note for a promissory note (or other evidence of indebtedness) in the
same form and with the same terms and conditions as those issued in such
Qualified Debt Financing and in a principal amount equal to the then outstanding Debt. 

1

                              (b)
In the event of an equity Qualified Financing (“Qualified Equity
Financing”), the Holder may at its option convert the Debt into
shares of capital stock of the same class and series and with the same rights,
preferences and privileges as those issued in such Qualified Equity Financing,
at a price per share equal to the purchase price paid by investors in such
Qualified Equity Financing. 

                              To
the extent the other participants in the Qualified Financing are required to
execute or deliver any other documents or meet any qualifications as a condition
to their investment, the Holder’s exchange shall be subject to the same
requirements and qualifications. 

                    4.2     
Conversion by Mutual Agreement of Holder and the Company. At any time,
and from time to time, as applicable, prior to the Maturity Date, the Company
and the Holder may mutually agree on a date (each, an “Agreed Conversion
Date”) to convert in whole or in part the Debt into shares of common stock
of the Company on the following terms: 

	 	a) 	
      Holder will be issued share units comprising
of;

	 		(i) .	
      One (1) common share to be purchased at a price of $0.50,
      and

	 		(ii) .	
      One (1) warrant that is convertible into one (1) common
      share at a price of $1.00, and expires August 30, 2013, and

	 		(iii) .	
      One (1) warrant that is convertible into one (1) common
      share at a price of $1.50, and expires August 30,
2014.

                              Notwithstanding
the foregoing, the amount of Debt which the Company and the Holder may elect to
convert shall be limited to the extent necessary to ensure that, following such
conversion, the total number of shares of Company common stock then beneficially
owned by the Holder and its affiliates and any other persons whose beneficial
ownership of Company common stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the
total number of issued and outstanding shares of Company common stock (including
for such purpose the shares of Company common stock issuable upon such
conversion). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Holder may waive such limitation
on conversion contained in this Section 4.2 or increase or decrease such
limitation percentage to any other percentage as specified in a written notice
to the Company. 

                    4.3      Upon
a 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 Company, at its
sole discretion, may convert any outstanding Debt into securities or cash, as
the case may be, equal to the VWAP per share of common stock of the Company for
the previous ten (10) trading days prior to the Liquidation Event. In the event
the Company does not convert any outstanding Debt, then 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. 

                    
4.4      Partial Conversion or Exchange.
All rights with respect to such portion of the Debt converted or exchanged
pursuant to Section 4.1, Section 4.2 or Section 4.3 shall
terminate upon such conversion or exchange. Notwithstanding the foregoing, the
Holder agrees to surrender this Note to the Company for cancellation as to that
portion of the Note that the Holder elects to convert or exchange as soon as
possible following such conversion or exchange, and the Company shall
execute and deliver a new promissory note, upon the same terms and conditions
set forth herein, evidencing the right of the Holder to the balance of the
principal that was not converted or exchanged (and accrued but unpaid interest
thereon, as applicable). 

2

          5.   
   Mechanics of Conversion. As promptly as practicable after
the conversion of this Note, this Note shall be cancelled, and the Company will
issue and deliver to the Holder a certificate or certificates (bearing such
legends as may be required by applicable state and federal securities laws in
the opinion of legal counsel for the Company) representing the full number of
securities issuable upon such conversion (and the issuance of such certificate
or certificates shall be made without charge to the Holder of the Note for any
issuance tax in respect thereof or other cost incurred by Company in connection
with such conversion and the related issuance of shares). 

          6.   
   Default. The Company will be in default if any of the
following occurs (each an “Event of Default”): (a) the Company fails to
make payment of the principal amount or an interest payment when due and fails
to cure the default within ten (10) days of the date of delivery of notice from
Holder to the Company of the default; (b) the Company fails in any material
respect to comply with or to perform when due any other material term,
obligation, covenant, or condition contained in this Note, and fails to cure the
default within ten (10) days of the date of delivery of notice from Holder to
the Company of the default; (c) the Company shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed; and/or (d) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and shall not have been dismissed within
sixty (60) days of filing. Upon an Event of Default, Holder may declare the
entire unpaid principal and accrued interest amount immediately due and payable,
all without further demand, presentment or notice, or grace period, all of which
hereby are expressly waived. 

          7. 
     Prepayment. At any time prior to the
Maturity Date the Company may prepay, in whole or in part, the Debt 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. 

          8.    
  Miscellaneous. 

                    8.1      Restrictions
on Transfer. This Note may only be transferred in compliance with applicable
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. 

                    
8.2      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. 

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

                    
8.4      Notices. Any notice required or
permitted under this Note shall be given in writing and shall be deemed
effectively given (i) at the time of personal delivery, if delivery is in
person; (ii) one (1) business day after deposit with an express overnight
courier for United States deliveries, or two (2) business days after such
deposit for deliveries outside of the United States, with proof of delivery from
the courier requested; (iii) three (3) business days after deposit in the United
States mail by certified mail (return receipt requested) for United States
deliveries when addressed to the party to be notified; or (iv) one (1) business
day after transmission by telecopier with confirmation of successful
transmission. Notices shall be delivered to the Holder and the Company (Attn:
CEO), to such address and contact information as the respective parties have
designated. 

                    8.5     
Severability. In the event any one or more of the provisions contained in
this Note shall, for any reason, be held to be invalid, illegal, or
unenforceable in whole or in part or in any respect, or in the event any one or
more of the provisions of this Note operate or would prospectively operate to
invalidate this Note, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Note. In such instance, this Note shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein and the remaining provisions of this Note shall remain
operative and in full force and effect and in no way shall be affected,
prejudiced or disturbed thereby. 

3

                    8.6      Governing
Law. This Note shall be governed by, and construed and enforced in
accordance with, the laws of Hong Kong and each of the Parties hereby
irrevocably submits to the non-exclusive jurisdiction of the Hong Kong courts in
respect of any claim or matter arising under this Note. 

                    8.7      Signature
in Counterparts. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. The parties hereto confirm that any
facsimile, scanned or emailed copy of another party’s executed counterpart of
this Agreement (or its signature page thereof) will be deemed to be an executed
original thereof. 

[Remainder of Page Intentionally Left Blank; Signature Page
Follows] 

4 

          IN
WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to be
signed in its name as of the date first above written. 

XcelMobility Inc. 

By: /s/ Renyan
Ge                                  
 
Name: Renyan
Ge                                   
 
Title: Chief Executive
Officer                
 

 

Agreed and Accepted: August __, 2011 

Empa Trading Ltd. 

By:
/s/                                                     
   
Name: ________________________
Title:
_________________________

[Signature Page to XcelMobility Inc. Convertible Promissory
Note] 

5

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