Document:

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

Execution Version 

REGISTRATION RIGHTS AGREEMENT 

            THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and
entered into as of May 30, 2014, between XCELMOBILITY, INC., a Nevada
corporation (the “Company”), and HANOVER HOLDINGS I, LLC, a
New York limited liability company (the “Investor”). 

            In
connection with the Securities Purchase Agreement, dated as of May 30, 2014,
entered into by the Company and the Investor (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investor (i) a note of the Company (the “Note”), which will, among
other things, be convertible into shares of the Company's common stock, $0.001
par value per share (the ”Common Stock”) to the Investor (as
converted, the “Conversion Shares”) in accordance with the terms
of the Note and (ii) a warrant of the Company (the “Warrant”),
which will, among other things, be exercisable into shares of Common Stock to
the Investor (as converted, the “Warrant Shares”) in accordance
with the terms of the Warrant. 

            To
induce the Investor to consummate the transactions contemplated by the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the 1933 Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws. 

           
The Company and the Investor hereby agrees as follows: 

            Section
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Securities Purchase Agreement shall have the meanings
given such terms in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings: 

           
“Initial Registration Statement” means the initial Registration
Statement filed pursuant to this Agreement. 

            “Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind. 

            
“Prospectus” means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated by the SEC
pursuant to the 1933 Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus. 

            “Effectiveness
Deadline” means, (i) with respect to the Initial Registration Statement
required to be filed hereunder, the earlier of (A) the 120th calendar
day after the date of hereof in the event that
such Registration Statement is subject to a limited or full review by the SEC
and (B) the fifth Trading Day after the date the Company is notified (orally or
in writing, whichever is earlier) by the SEC that such Registration Statement
will not be reviewed or will not be subject to further review, and (ii) with
respect to any additional Registration Statements which may be required pursuant
to Section 2, the earlier of (A) the 90th calendar day following the
date on which an additional Registration Statement is required to be filed
hereunder in the event that such Registration Statement is subject to a limited
or full review by the SEC and (B) the fifth Trading Day after the date the
Company is notified (orally or in writing, whichever is earlier) by the SEC that
such Registration Statement will not be reviewed or will not be subject to
further review. 

            “Filing
Deadline” means, with respect to the Initial Registration Statement
required hereunder, the 45th calendar day following the date hereof
and, with respect to any additional Registration Statements which may be
required pursuant to Section 2, the earliest practical date on which the Company
is permitted to file such additional Registration Statement related to the
Registrable Securities (taking into account any Staff position with respect to
date on which the Staff will permit such additional Registration Statement to be
filed with the SEC). 

            “Registrable
Securities” means, as of any date of determination, (a) all Conversion
Shares then issuable upon conversion in full of the Note (assuming on such date
the Note is converted in full without regard to any conversion limitations
therein), (b) all Warrant Shares then issuable upon exercise in full of the
Warrant (assuming on such date the Warrant is exercised in full without regard
to any exercise limitations therein), and (c) any securities issued or then
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that any such
Registrable Securities shall cease to be Registrable Securities for so long as
(x) a Registration Statement with respect to the sale of such Registrable
Securities is declared effective by the SEC under the 1933 Act and such
Registrable Securities have been disposed of in accordance with such effective
Registration Statement, or (y) such Registrable Securities have been previously
sold in accordance with Rule 144. 

            “Registration
Statement” means any registration statement required to be filed
hereunder pursuant to Section 2, including (in each case) the Prospectus,
amendments and supplements to any such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
any such registration statement. 

            
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the 1933
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such rule. 

            
“Rule 415” means Rule 415 promulgated by the SEC pursuant to the
1933 Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the
same purpose and effect as such Rule. 

2

            “SEC”
means the United States Securities and Exchange Commission. Section 2.
Registration Statement Requirements.

            (a)       
The Company shall prepare and, as soon as practicable, but in no event later
than the Filing Deadline, file with the SEC the Initial Registration Statement
on Form S-1, or such other form reasonably acceptable to the Investor, covering
the resale by the Investor of all or such portion of the Registrable Securities
(as determined on the date of such filing and the effective date of such
Registration Statement, as applicable) as permitted by the SEC (provided that
the Company shall use diligent efforts to advocate with the SEC for the
registration of all of the Registrable Securities) pursuant to Rule 415. In no
event shall the Company include any securities other than Registrable Securities
on any Registration Statement pursuant to this Section 2 without the prior
written consent of the Investor. The Company shall use its reasonable best
efforts to have such Initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms hereof, declared effective
by the SEC as soon as practicable, but in no event later than the applicable
Effectiveness Deadline. If at any time all Registrable Securities are not
covered by the Initial Registration Statement filed pursuant to this Section 2,
the Company shall file with the SEC one or more additional Registration
Statements so as to cover all of the Registrable Securities not covered by the
Initial Registration Statement, in each case, as soon as practicable (taking
into account any Staff position with respect to date on which the Staff will
permit such additional Registration Statement(s) to be filed with the SEC), but
in no event later than the applicable Filing Deadline for such additional
Registration Statement(s). By 9:30 a.m. New York time on the Business Day
following the effective date of each Registration Statement filed in accordance
herewith, the Company shall file with the SEC in accordance with Rule 424 under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to such Initial Registration Statement. 

            (b)       
If the staff of the SEC (the “Staff”) or the SEC seeks to
characterize any offering pursuant to a Registration Statement filed pursuant to
this Agreement as constituting an offering of securities that does not permit
such Registration Statement to become effective and be used for resales by the
Investor on a delayed or continuous basis under Rule 415 at then-prevailing
market prices (and not fixed prices) (or as otherwise may be reasonably
acceptable to the Investor), or if after the filing of the Initial Registration
Statement with the SEC pursuant to this Section 2, the Company is otherwise
required by the Staff or the SEC to reduce the number of Registrable Securities
included in such Initial Registration Statement, then the Company shall reduce
the number of Registrable Securities to be included in such Initial Registration
Statement (with the prior consent, not to be unreasonably withheld, of the
Investor as to the specific Registrable Securities to be removed therefrom)
until such time as the Staff and the SEC shall so permit such Registration
Statement to become effective and be used as aforesaid. Notwithstanding anything
in this Agreement to the contrary, if after giving effect to the actions
referred to in the immediately preceding sentence, the Staff or the SEC does not
permit such Registration Statement to become effective and be used for resales
by the Investor on a delayed or continuous basis under Rule 415 at
then-prevailing market prices (and not fixed prices) (or as otherwise may be
reasonably acceptable to the Investor), the Company shall not request
acceleration of the effective date of such Registration Statement, the Company
shall promptly (but in no event later than 48 hours) request the withdrawal of
such Registration Statement pursuant to Rule 477 under the 1933 Act, and the
Effectiveness Deadline shall automatically be deemed to have elapsed with
respect to such Registration Statement at such time as the Staff or the SEC has
made a final and non-appealable determination that the SEC will not permit such
Registration Statement to be so utilized (unless prior to such time the Company
and the Investor have received assurances from the Staff or the SEC reasonably
acceptable to the Investor that a new Registration Statement filed by the
Company with the SEC promptly thereafter may be so utilized). In the event of
any reduction in Registrable Securities pursuant to this paragraph, the Company
shall file additional Registration Statements as permitted by the Staff or the
SEC in accordance with this Section 2 until such time as all Registrable
Securities have been included in Registration Statements that have been declared
effective and the prospectus contained therein is available for use by the
Investor.

3

            (c)       
In addition, in the event that the Staff or the SEC requires the Investor
seeking to resell securities under a Registration Statement filed pursuant to
this Agreement to be specifically identified as an “underwriter” in order to
permit such Registration Statement to become effective, and the Investor does
not consent to being so named as an underwriter in such Registration Statement,
then, in each such case, the Company shall reduce the total number of
Registrable Securities to be registered on behalf of the Investor, until such
time as the Staff or the SEC does not require such identification or until the
Investor accepts such identification and the manner thereof. If notwithstanding
any such reduction, the Staff or the SEC still requires that the Investor be
specifically identified as an “underwriter” in order to permit such Registration
Statement to be declared effect, the Investor may, at its option, elect to have
no Registrable Securities of the Investor be included in such Registration
Statement; provided, that solely for purposes of Section 12(b) of the Note (as
defined in the Securities Purchase Agreement), such Registration Statement shall
be deemed to have been declared effective as of the date of such election by the
Investor. 

            Section
3. Registration Procedures. If and whenever the Company is required by
the provisions of Section 2 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:

           
(a)        subject to the timelines provided
in this Agreement, prepare and file the Registration Statement with the SEC,
with respect to such Registrable Securities and use its reasonable best efforts
to cause such Registration Statement to become and remain effective for the
period of the distribution contemplated thereby (determined as herein provided),
respond as promptly as commercially practicable to any comments received from
the SEC with respect to a Registration Statement or any amendment thereto and
file any pre-effective amendments with respect to a Registration Statement as
promptly as reasonable possible, and promptly provide to Investors copies of all
filings and SEC letters of comment (provided that the Company shall excise any
information contained therein which would constitute material non-public
information regarding the Company or any subsidiary) and notify the Investors
(by telecopier or by e-mail addresses provided by the Investors) on or before
the second business day thereafter that the Company receives notice that (i) the
SEC has no comments or no further comments on the registration statement, and
(ii) the registration statement has been declared effective; 

           
(b)        prepare and file with the SEC such
amendments and supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
prepare and file with the SEC such additional Registration Statements as may be
required hereunder and to keep each additional Registration Statement effective;

4

           
(c)        furnish to the Investors such
number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus) as such Investors reasonably may
request in order to facilitate the public sale or their disposition of the
securities covered by such Registration Statement or make them electronically
available; 

           
(d)        use its reasonable best efforts to
register or qualify the Registrable Securities covered by such Registration
Statement under the securities or “Blue Sky” laws of such jurisdictions as the
Investors shall request in writing, provided, however, that the Company shall
not for any such purpose be required to qualify to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to service of process in any such jurisdiction; 

           
(e)        if applicable, list the
Registrable Securities covered by such Registration Statement with the principal
market or exchange on which the Common Stock is then listed; 

           
(f)        promptly notify the Investors of
the Company’s becoming aware that a prospectus relating thereto is required to
be delivered under the 1933 Act, of the happening of any event or passage of
time of which the Company has knowledge as a result of which the prospectus
contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing or the financial statements included
therein ineligible for inclusion or which becomes subject to a SEC, state or
other governmental order suspending the effectiveness of the Registration
Statement covering any of the Registrable Securities. Each Investor hereby
covenants that it will not sell any Registrable Securities pursuant to such
prospectus during the period commencing at the time at which the Company gives
such Investor notice of the suspension of the use of such prospectus in
accordance with this Section 3(f) and ending at the time the Company gives such
Investor notice that such Investor may thereafter effect sales pursuant to the
prospectus, or until the Company delivers to such Investor or files with the SEC
an amended or supplemented prospectus. 

            (g)       
The Company shall cooperate with any broker-dealer through which an Investor
proposes to resell its Registrable Securities in effecting a filing with the
FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested
by any such Investor, and the Company shall pay the filing fee required by such
filing within two (2) business days of request therefor. 

            Section
4. Provision of Documents. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of the Investor that the
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request. 

5

            Section
5. Expenses. All expenses incurred by the Company in complying with
Section 2, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “Blue Sky” laws, fees of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) in connection with any filing with FINRA
pursuant to FINRA Rule 5110 that may be required to be made by any broker
through which an Investor intends to make sales of Registrable Securities,
transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.” The Company will pay all Registration
Expenses in connection with any Registration Statement described in Section
2.

           
Section 6. Indemnification. 

            (a)       
In the event any Registrable Securities are included in any Registration
Statement under this Agreement, to the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend the Investor,
each of its directors, officers, shareholders, members, partners, employees,
agents, advisors, representatives (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such
title or any other title) and each Person, if any, who controls the Investor
within the meaning of Section 15 of the 1933 Act or Section 20 of the Securities
Exchange Act of 1934 Act, as amended (the “1934 Act”) and each of
the directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) of such controlling Persons (each, an “Investor
Party” and collectively, the “Investor Parties”), against
any losses, obligations, claims, damages, liabilities, contingencies, judgments,
fines, penalties, charges, costs (including, without limitation, court costs,
reasonable attorneys’ fees, costs of defense and investigation), amounts paid in
settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, lawsuit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an Investor Party
is or may be a party thereto (“Indemnified Damages”), to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other “Blue Sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (as amended or supplemented) or in any prospectus supplement or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading (the matters in the foregoing
clauses (i) and (ii) being, collectively, “Violations”). Subject
to Section 6(c), the Company shall reimburse the Investor Parties, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Investor
Party arising out of or based upon a Violation which occurs in reliance upon and
in conformity with information furnished in writing to the Company by such
Investor Party for such Investor Party expressly for use in connection with the
preparation of such Registration Statement, prospectus or prospectus supplement
or any such amendment thereof or supplement thereto; (ii) shall not be available
to the Investor to the extent such Claim is based on a failure of the Investor
to deliver or to cause to be delivered the prospectus (as amended or
supplemented) made available by the Company (to the extent applicable),
including, without limitation, a corrected prospectus, if such prospectus (as
amended or supplemented) or corrected prospectus was timely made available by
the Company pursuant to Section 3 and then only if, and to the extent that,
following the receipt of the corrected prospectus no grounds for such Claim
would have existed; and (iii) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Party and shall survive the transfer of any
of the Registrable Securities by the Investor pursuant to Section 8(f). 

6

            (b)       
In connection with any Registration Statement in which the Investor is
participating, the Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Company Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case, to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information relating to the Investor furnished to the Company by the Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c) and the below provisos in this Section 6(b), the Investor will
reimburse a Company Party any legal or other expenses reasonably incurred by
such Company Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Investor, which consent
shall not be unreasonably withheld or delayed, provided further that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a
result of the applicable sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Company Party and
shall survive the transfer of any of the Registrable Securities by the Investor
pursuant to Section 8(f). 

7

           (c)       
Promptly after receipt by an Investor Party or Company Party (as the case may
be) under this Section 6 of notice of the commencement of any action or
proceeding (including, without limitation, any governmental action or
proceeding) involving a Claim, such Investor Party or Company Party (as the case may be) shall, if a Claim
in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Investor Party or the Company Party (as the case may be); provided,
however, an Investor Party or Company Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the indemnifying party has
agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Investor Party or Company Party (as the
case may be) in any such Claim; or (iii) the named parties to any such Claim
(including, without limitation, any impleaded parties) include both such
Investor Party or Company Party (as the case may be) and the indemnifying party,
and such Investor Party or such Company Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Investor Party or such Company Party and the
indemnifying party (in which case, if such Investor Party or such Company Party
(as the case may be) notifies the indemnifying party in writing that it elects
to employ separate counsel at the expense of the indemnifying party, then the
indemnifying party shall not have the right to assume the defense thereof on
behalf of the indemnified party and such counsel shall be at the expense of the
indemnifying party, provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for all Investor Parties or Company
Parties (as the case may be). The Company Party or Investor Party (as the case
may be) shall reasonably cooperate with the indemnifying party in connection
with any negotiation or defense of any such action or Claim by the indemnifying
party and shall furnish to the indemnifying party all information reasonably
available to the Company Party or Investor Party (as the case may be) which
relates to such action or Claim. The indemnifying party shall keep the Company
Party or Investor Party (as the case may be) reasonably apprised at all times as
to the status of the defense or any settlement negotiations with respect
thereto. No indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its prior written consent; provided,
however, the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the prior written
consent of the Company Party or Investor Party (as the case may be), consent to
entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Company Party or Investor Party (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Company Party. For the avoidance of doubt, the immediately preceding sentence
shall apply to Sections 6(a) and 6(b) hereof. Following indemnification as
provided for hereunder, the indemnifying party shall be subrogated to all rights
of the Company Party or Investor Party (as the case may be) with respect to all
third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Investor Party or Company Party (as the case may be) under this Section 6,
except to the extent that the indemnifying party is materially and adversely
prejudiced in its ability to defend such action. 

8

            (d)       
No Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation. 

            (e)       
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred;
provided that the Investor shall promptly reimburse the Company for all
such payments to the extent a court of competent jurisdiction determines that
any Investor Party was not entitled to such payments. 

            (f)       
The indemnity and contribution agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Company Party or Investor
Party against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law. 

            Section
7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however: (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) in connection with such
sale shall be entitled to contribution from any Person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any seller of Registrable Securities shall be limited in
amount to the amount of net proceeds received by such seller from the applicable
sale of such Registrable Securities pursuant to such Registration Statement.
Notwithstanding the provisions of this Section 7, the Investor shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by the Investor from the applicable
sale of the Registrable Securities subject to the Claim exceeds the amount of
any damages that the Investor has otherwise been required to pay, or would
otherwise be required to pay under Section 6(b), by reason of such untrue or
alleged untrue statement or omission or alleged omission. 

           
Section 8. Miscellaneous. 

            (a)       
Remedies. In the event of a breach by the Company or by the Investor of
any of their respective obligations under this Agreement, the Investor or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement.
Each of the Company and the Investor agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it shall not
assert or shall waive the defense that a remedy at law would be adequate. 

9

            (b)       
Compliance. The Investor covenants and agrees that it will comply with
the prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to a Registration Statement. 

            (c)       
Piggy-Back Registrations. If, at any time prior to the six month
anniversary of the date hereof, there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine to
prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the 1933 Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to the Investor a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, the Investor shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities the Investor requests to be registered; provided,
however, that the Company shall not be required to register any Registrable
Securities pursuant to this Section 8(c) that are the subject of a then
effective Registration Statement. 

            (d)       
Amendments and Waivers. No provision of this Agreement may be (i) amended
other than by a written instrument signed by both parties hereto or (ii) waived
other than in a written instrument signed by the party against whom enforcement
of such waiver is sought. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.

            (e)       
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Securities Purchase Agreement.

            (f)       
Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties. The
Company may not assign (except by merger) its rights or obligations hereunder
without the prior written consent of the Investor. The Investor may assign its
rights hereunder if: (i) the Investor agrees in writing with such transferee or
assignee (as the case may be) to assign all or any portion of such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such transfer or assignment (as the case may be); (ii) the Company is,
within a reasonable time after such transfer or assignment (as the case may be),
furnished with written notice of (a) the name and address of such transferee or
assignee (as the case may be), and (b) the securities with respect to which such
registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the
further disposition of such securities by such transferee or assignee (as the
case may be) is restricted under the 1933 Act or applicable state securities
laws if so required; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer or assignment
(as the case may be) shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement and the Note and/or Warrant,
as applicable; and (vi) such transfer or assignment (as the case may be) shall
have been conducted in accordance with all applicable federal and state
securities laws. The term “Investor” in this Agreement shall also include all
such transferees and assignees. 

10

            (g)       
Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof. 

            (h)       
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Securities Purchase Agreement. 

            (i)       
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable. 

            (j)       
Headings. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 

(Signature Pages Follow)

11

            IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above. 

XCELMOBILITY, INC. 

 

By: 
_________________________________
       
Name:
        Title: 

      
     IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above. 

HANOVER HOLDINGS I, LLC, a New York
Limited Liability Company 

 

By:
______________________________
Name:
Title:exh10_1.htm

 

Exhibit 10.1

 

 

 

Letter Agreement

 

June 2, 2014

 

Drew West

4196 Hobbs Landing Drive West

Dublin, Ohio 43017

Dear Mr. West:

 

On behalf of World Surveillance Group Inc. (the “Company”), I would like to invite you to join the Company’s Board of Directors as its Chairman of the Board on the terms set forth below.  I believe that your knowledge and experience will be an invaluable addition to the Company.

As compensation for your services as a director, the Company shall issue you (i) 300,000 either fully paid and non-assessable shares of common stock, par value $0.00001 per share, of the Company (the “Common Stock”), such shares to be subject to the restrictions of Rule 144 promulgated pursuant to the Securities Act of 1933, as amended, or (ii) options to purchase 300,000 shares of Common Stock, per fiscal quarter of service beginning in the third fiscal quarter of 2014.

You are being added to the Board of Directors as a Class II Director whose term shall expire at the 2015 Annual Meeting of Stockholders of the Company, unless reelected as a director by the shareholders of the Company at that time.   We plan on having at least monthly Board meetings, some of which will be in person and others to be telephonic.  All of your travel and accommodation expenses reasonably incurred in connection with in-person Board meetings will be reimbursed by the Company.

The Company does not yet have Directors and Officers liability insurance but intends to attempt to get such insurance as soon as it is reasonably and commercially able to do so.

Attached for your review, please find an Indemnification Agreement with the Company and copies of the Company’s Insider Trading Policy, Code of Ethics and Business Conduct, and Related Party Transaction Policy, which as a director of the Company you will be subject to.  As the Company is publicly traded, you will also be subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which requires, among other things, you to file Forms 3, 4 and 5s and comply with the short-swing profit rules – attached is a brief memo that discusses such rules.  Please do not hesitate to contact me or our General Counsel, Barbara Johnson, if you have any questions.

You acknowledge that you (a) understand the requirements of and the general terms under which you will serve as a director of the Company, (b) understand that as a director you will have a fiduciary duty to the Company and agree that you will at all times act in the Company’s best interests while acting in your capacity as a director of the Company, (c) will do your best to attend Board meetings and any meetings of committees of which you are then a member, (d) have read and will adhere to the Company’s Insider Trading Policy, Code of Ethics and Business Conduct, and Related Party Transaction Policy, (e) will comply with all applicable state and federal laws and regulations, including Sections 10 and 16 of the Exchange Act and the rules promulgated thereunder, (f) will act in accordance with the Company’s Restated Certificate of Incorporation and Amended and Restated By-Laws, as both may be amended from time to time, and the corporate law of the State of Delaware, (g) agree to hold all information and Board materials supplied to you regarding the Company in the strictest confidence and to not disclose such information or materials to any third party or use such information or materials other than in your capacity as a member of the Board of Directors of the Company, and (h) have no agreement which would be violated by your service as a director of the Company and you agree not to enter into any agreement while you are a director that creates a conflict of interest with this letter agreement.

 

State Road 405, Building M6-306A, Room 1400, Kennedy Space Center, FL 32815

(p) 321-452-3545   (f) 321-452-8965

 

  

  

  

 

If you are in agreement with these terms, I would appreciate it if you would execute two original copies of this letter agreement, which will also reflect your receipt and understanding of your obligations pursuant to the above identified policies and rules.  Please keep one copy of the letter agreement for your records, and return the other copy of the letter agreement to Barbara Johnson.

We very much look forward to working with you.

Very Truly Yours,

World Surveillance Group Inc.

 

 

 

	By:	 	 	 	 
	 	 	 	 	 
	 	Glenn D. Estrella	 	 	 
	 	President and CEO	 	 	 
	 	 	 	 	 
	 	 	 	Accepted and Agreed,	 
	 	 	 	 	 
	 	 	 	Drew West

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