Exhibit 10.1


 


SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of April 30, 2015, by and among Net Element, Inc., a Delaware corporation,
with headquarters located at 3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160 (the "Company"),
and the investors listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively,
the "Buyers").


 


WHEREAS:


 


A.           The
Company and the Buyers desire to enter into this transaction to purchase the Preferred Shares (as defined below) pursuant to the
Registration Statement (as defined below) which is currently effective, has up to $50,000,000 of initial offering price of unallocated
securities available for sale as of the date hereof (but which is currently subject to the limitation set forth in General Instruction
I.B.6 of Form S-3) and has been declared effective in accordance with the Securities Act of 1933, as amended (the "1933
Act"), by the United States Securities and Exchange Commission (the "SEC").


 


B.      The
Company has authorized a new series of convertible preferred stock of the Company designated as Series A Convertible Preferred
Stock, par value $0.01 per share, the terms of which are set forth in the certificate of designations for such series of preferred
stock (the "Certificate of Designations") in the form attached hereto as Exhibit A (together with any convertible
preferred shares issued in replacement thereof in accordance with the terms thereof, the "Preferred Shares"),
which Preferred Shares shall be convertible or redeemable into the Company's common stock, par value $0.0001 per share (the "Common
Stock") in accordance with the terms of the Certificate of Designations (as converted or redeemed, collectively, the "Conversion
Shares"). The Conversion Shares shall be issued pursuant to the Registration Statement, or, if such Registration Statement
is not available at the time of issuance of such Conversion Shares, as securities exempt from registration pursuant to Section
3(a)(9) of the 1933 Act.


 


C.      Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, at the Closing
(as defined below) that aggregate number of Preferred Shares set forth opposite such Buyer's name in column (3) on the Schedule
of Buyers attached hereto (which aggregate amount for all Buyers shall be 5,500).


 


D.           The
Preferred Shares shall be entitled to Dividends and to certain Make-Whole Amounts (each, as defined in the Certificate of Designations),
which may be paid in shares of Common Stock that have been registered for resale (the "Additional Shares").


 


E.           The
Preferred Shares, the Conversion Shares and the Additional Shares collectively are referred to herein as the "Securities".


 




    	 



    	 



    

  


NOW, THEREFORE,
the Company and each Buyer hereby agree as follows:


 


1.          PURCHASE
AND SALE OF Preferred Shares.


 


(a)  Closing.
Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell
to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing Date (as defined below),
the number of Preferred Shares in an aggregate amount as is set forth opposite such Buyer's name in column (3) on the Schedule
of Buyers (the "Closing").


 


(b)  Purchase
Price. The aggregate purchase price for the Preferred Shares to be purchased by each such Buyer at the Closing (the "Purchase
Price") shall be the amount set forth opposite each Buyer's name in column (4) on the Schedule of Buyers (less, in the
case of [            ] (the "Lead Investor"), any amounts withheld pursuant to
Section 4(f)). Each Buyer shall pay $1,000 per each Preferred Share to be purchased by each Buyer at the Closing.


 


(c)  Closing
Date. The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the
date hereof (or such later date as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Schulte Roth & Zabel LLP, 919
Third Avenue, New York, New York 10022, subject to notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below.


 


(d)  Form
of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Preferred Shares to be
issued and sold to such Buyer at the Closing (less, in the case of the Lead Investor, any amounts withheld pursuant to Section
4(f)) by wire transfer of immediately available funds in accordance with the Company's written wire instructions and (ii) the
Company shall deliver to each Buyer the Preferred Shares (allocated in the amounts as such Buyer shall request) which such Buyer
is then purchasing hereunder, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.


 


2.          BUYER'S
REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants
with respect to only itself that, as of the date hereof and as of the Closing Date:


 


(a)  Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by such Buyer of the transactions
contemplated by this Agreement has been duly authorized by all necessary action on the part of such Buyer. This Agreement has been
duly executed by such Buyer, and when delivered by such Buyer in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Buyer, enforceable against it in accordance with its terms, except as such enforceability may
be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.


 






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(b)  No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such
Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, in the aggregate, reasonably be expected to have a material adverse effect on the ability
of such Buyer to perform its obligations hereunder.


 


(c)  Qualified
Institutional Investor and Accredited Investor Status.  Such Buyer is a "qualified institutional buyer"
("QIB") as such term is defined in Rule 144A under the 1933 Act and/or an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D, as indicated on the signature page of such Buyer.


 


3.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Buyers
that, as of the date hereof and as of the Closing Date:


 


(a)  Shelf
Registration Statement.


 


(i)          The
Company has prepared and filed in conformity with the requirements of the 1933 Act and the published rules and regulations
thereunder (the "Rules and Regulations") adopted by the SEC a "shelf" registration statement on
Form S-3 (No. 333-199432), which became effective on December 10, 2014, including a base prospectus, (the "Base
Prospectus") relating to Common Stock, preferred stock, warrants, subscription rights or units of
the Company that may be sold from time to time by the Company, in accordance with Rule 415 of the 1933 Act, and such
amendments thereof as may have been required to the date of this Agreement. The Company was at the time of the filing of the
Registration Statement eligible to use Form S-3. The term "Registration Statement" as used in this Agreement
means such registration statement, including all exhibits, financial schedules and all documents and information deemed to be
part of the Registration Statement by incorporation by reference or otherwise, as amended from time to time, including the
information (if any) contained in the form of final prospectus filed with the SEC pursuant to Rule 424(b) of the Rules and
Regulations and deemed to be part thereof at the time of effectiveness pursuant to Rules 430A and 430B of the Rules and
Regulations. The term "Preliminary Prospectus" means the Base Prospectus, together with any preliminary
prospectus supplement used or filed with the SEC pursuant to Rule 424 of the Rules and Regulations. The term
"Prospectus" means the Base Prospectus, any Preliminary Prospectus and any amendments or further
supplements to such prospectus filed with the SEC, and including, without limitation, the final prospectus supplement (the
"Prospectus Supplement"), filed pursuant to and within the limits described in Rule 424(b) with the SEC in
connection with the proposed sale of the Securities contemplated by this Agreement through the date of such prospectus
supplement. Unless otherwise stated herein, any reference herein to the Registration Statement, any Preliminary Prospectus,
the Statutory Prospectus (as hereinafter defined) and the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein, including pursuant to Item 12 of Form S-3 under the 1933 Act, which were filed under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), on or before the date hereof or are so
filed hereafter. Any reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus, the Statutory Prospectus or the Prospectus shall be deemed
to refer to and include any such document filed or to be filed under the 1934 Act after the date of the Registration
Statement, any such Preliminary Prospectus, Statutory Prospectus or Prospectus, as the case may be, and deemed to be
incorporated therein by reference.


 






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(ii)         The
Company was at the time of the filing of the Registration Statement eligible to use Form S-3. As of the date of this Agreement,
the Company is eligible to use Form S-3 under the 1933 Act and it meets the transaction requirements with respect to the aggregate
market value of securities being sold pursuant to this offering and during the twelve (12) months prior to this offering, in accordance
with General Instruction I.B.6 of Form S-3. The Company filed with the SEC the Registration Statement on such Form S-3, including
a Base Prospectus, for registration under the 1933 Act of the offering and sale of the Securities, and the Company has prepared
and used a Preliminary Prospectus in connection with the offer and sale of the Securities. When the Registration Statement or any
amendment thereof or supplement thereto was or is declared effective and as of the date of the most recent amendment to the Registration
Statement, it (i) complied or will comply, in all material respects, with the requirements of the 1933 Act and the Rules and Regulations
and the 1934 Act and the rules and regulations of the SEC thereunder and (ii) did not or will not, contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements
therein not misleading. When any Preliminary Prospectus or Prospectus was first filed with the SEC (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule 424 of the Rules) and when any amendment thereof or supplement
thereto was first filed with the SEC, such Preliminary Prospectus or Prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the 1933 Act and the Rules and Regulations and did not or will not, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements therein not misleading.


 


(b)  Prospectus.
As of the Applicable Time (as defined below) and as of the Closing Date, neither (x) the General Use Free Writing Prospectus(es)
(as defined below) issued at or prior to the Applicable Time, the Statutory Prospectus (as defined below), all considered together
(collectively, the "General Disclosure Package"), nor (y) any individual Limited Use Free Writing Prospectus (as
defined below), when considered together with the General Disclosure Package, included, includes or will include any untrue statement
of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes
no representations or warranties as to information contained in or omitted from any Issuer Free Writing Prospectus, in reliance
upon, and in conformity with, written information furnished to the Company by or on behalf of the Buyers, specifically for use
therein. As used in this subsection and elsewhere in this Agreement:


 






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(i)          "Applicable
Time" means 5:30 p.m. (New York time) on the date of this Agreement or such other time as agreed to by the Company and
the Buyers.


 


(ii)         "Statutory
Prospectus" as of any time means the Preliminary Prospectus included in the Registration Statement immediately prior to
that time.


 


(iii)        "Issuer
Free Writing Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 under the 1933 Act,
relating to the Securities in the form filed or required to be filed with the SEC or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule 433(g) under the 1933 Act.


 


(iv)        "General
Use Free Writing Prospectus" means any Issuer Free Writing Prospectus that is identified on Schedule I to this Agreement.


 


(v)         "Limited
Use Free Writing Prospectus" means any Issuer Free Writing Prospectus that is not a General Use Free Writing Prospectus.


 


(c)  Organization.
Each of the Company and its "Subsidiaries" (which, for the purposes of this Agreement means any entity or joint
venture which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest) are entities
duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed, and have requisite
power and authorization to own or lease their properties and conduct their business as now being conducted and as described in
the Registration Statement, the General Disclosure Package and the Prospectus. The Company has no significant Subsidiaries (as
such term is defined in Rule 1-02 of Regulation S-X promulgated by the SEC) other than as listed in Exhibit 21.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (the "Annual Report"). The Subsidiaries
are the only subsidiaries, direct or indirect, of the Company. The Company and each of the Subsidiaries are duly qualified as a
foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of
the conduct of their business makes such qualification necessary, except to the extent that the failure to be so qualified or be
in good standing would not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, "Material
Adverse Effect" means any material adverse effect on (i) the business, properties, assets, operations, results of operations,
condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated
hereby or on the other Transaction Documents, or (iii) the authority or the ability of the Company to perform its obligations under
the Transaction Documents or consummate any transactions contemplated by this Agreement or the other Transaction Documents. The
outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable and are owned by the Company or another Subsidiary free and clear of all liens, encumbrances and equities and claims,
except as described in the Registration Statement and the Annual Report; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests
in the Subsidiaries are outstanding.


 






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(d)  Authorization;
Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement, the Certificate of Designations, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)),
the Lock-Up Agreements (as defined in Section 3(yy)), the Voting Agreement (as defined in Section 4(n)) and each of the other agreements
entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "Transaction
Documents") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of
the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Preferred Shares, the reservation for issuance and the issuance of the Conversion
Shares and the Additional Shares pursuant to the terms of the Certificate of Designations have been duly authorized by the Company's
Board of Directors, and, other than NASDAQ's Listing of Additional Shares notification in connection with the transactions contemplated
hereby, no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This
Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
The Certificate of Designations in the form attached hereto as Exhibit A has been filed with the Secretary of State of the
State of Delaware and is in full force and effect, enforceable against the Company in accordance with its terms and has not been
amended.


 


(e)  Issuance
of Securities. The outstanding shares of Common Stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; the Securities to be issued and sold by the Company have been duly authorized and when issued and paid
for as contemplated herein in accordance with the terms of the Transaction Documents will be free from all taxes, liens and charges
with respect to the issue thereof, validly issued, fully paid and non-assessable; and no preemptive rights of stockholders exist
with respect to any of the Securities or the issue and sale thereof. As of the Closing, a number of shares of Common Stock shall
have been duly authorized and reserved for issuance which equals or exceeds (the "Required Reserve Amount") the
maximum number of shares of Common Stock issued and issuable pursuant to the terms of the Preferred Shares, which amount initially
reserved is 9,501,850 shares of Common Stock (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction occurring after the date hereof) to issue the shares of Common Stock pursuant to the terms of the Certificate
of Designations (without taking into account any limitations on the conversion of the Preferred Shares set forth in the Certificate
of Designations). As of the date hereof, there are 152,539,968 shares of Common Stock authorized and unissued. Neither the offering
nor sale of the Securities as contemplated by this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock. Upon issuance pursuant to the Certificate of Designations,
the Conversion Shares and the Additional Shares will be validly issued, fully paid and nonassessable and free from all preemptive
or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded
to a holder of Common Stock. Except as set forth in the Registration Statement and the Prospectus, there are no securities or instruments
issued by the Company containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities.


 






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(f)  Equity
Capitalization. The Company has or will have, as the case may be, an authorized, issued and outstanding capitalization as is
set forth in the Registration Statement and the Prospectus (subject, in each case, to the issuance of shares of Common Stock upon
exercise of stock options and warrants disclosed as outstanding in the Registration Statement and the Prospectus and the grant
or issuance of options or shares under existing equity compensation plans or stock purchase plans described in the Registration
Statement or the Prospectus), and such authorized capital stock conforms to the description thereof set forth in the Registration
Statement and the Prospectus. Except as disclosed in the Registration Statement and the Prospectus (i) none of the Company's capital
stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company;
(ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries; (iii) there are
no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness (as defined in the Certificate of Designations) of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound; (iv) other than the financing statements perfecting the lien on the Company's
Subsidiaries processing portfolios income stream in connection with the credit facility from RBL Capital Group, LLC, there are
no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with
the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities or instruments
of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities
or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred
in the ordinary course of the Company's or any of its Subsidiary's' respective businesses and which, in the aggregate, do not or
would not have a Material Adverse Effect. The Company has furnished or made available to the Buyers true, correct and complete
copies of the Company's Amended and Restated Certificate of Incorporation, as amended and as in effect on the date hereof (the
"Certificate of Incorporation"), and the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"), and the terms of all securities convertible into, or exercisable or exchangeable for shares of Common
Stock and the material rights of the holders thereof in respect thereto. All of the Securities conform to the description thereof
contained in the Registration Statement and the Prospectus. The form of certificates for the Securities will conform to the corporate
law of the jurisdiction of the Company's incorporation.


 






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(g)  Disclosure.


 


(i)          The
SEC has not issued an order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus
or the Prospectus relating to the proposed offering of the Securities, and no proceeding for that purpose or pursuant to Section
8A of the 1933 Act has been instituted or, to the Company's knowledge, threatened by the SEC. The Registration Statement conforms,
and the Prospectus and any amendments or supplements thereto will conform to the requirements of the 1933 Act and the Rules and
Regulations. The documents incorporated, or to be incorporated, by reference in the Prospectus, at the time filed with the SEC
conformed in all material respects, or will conform in all respects, to the requirements of the 1934 Act, or the 1933 Act, as applicable,
and the Rules and Regulations. The Registration Statement and any amendments and supplements thereto do not contain, and on the
Closing Date will not contain, any untrue statement of a material fact and do not omit, and on the Closing Date will not omit,
to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus
and any amendments and supplements thereto do not contain, and on the Closing Date will not contain, any untrue statement of a
material fact; and do not omit, and on the Closing Date will not omit, to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading.


 


(ii)         Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and
sale of the Securities or until any earlier date that the Company notified or notifies the Buyers as described in the next sentence,
did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained
in the Registration Statement or the Prospectus, including any document incorporated by reference therein that has not been superseded
or modified. If at any time following issuance of an Issuer Free Writing Prospectus, there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances, not misleading,
the Company has notified or will notify promptly the Buyers so that any use of such Issuer Free Writing Prospectus may cease until
it is amended or supplemented.


 






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(iii)        The
Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company
understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business and the
transactions contemplated hereby furnished by or on behalf of the Company is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during
the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists
with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2. For purposes
of this Agreement, "Person" means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.


 





(h)  Offering
Materials. The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection
with the offering and sale of the Securities other than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus
and other materials, if any, permitted under the 1933 Act. The Company will file with the SEC all Issuer Free Writing Prospectuses
in the time required under Rule 433(d) under the 1933 Act. The Company has satisfied or will satisfy the conditions in Rule 433
under the 1933 Act to avoid a requirement to file with the SEC any electronic road show.


 


(i)   Ineligible
Issuer Status. At the time of filing the Registration Statement and (ii) as of the date hereof (with such date being used as
the determination date for purposes of this clause (ii)), the Company was not and is not an "ineligible issuer" (as defined
in Rule 405 under the 1933 Act, without taking into account any determination by the SEC pursuant to Rule 405 under the 1933 Act
that it is not necessary that the Company be considered an ineligible issuer), including, without limitation, for purposes of Rules
164 and 433 under the 1933 Act with respect to the offering of the Securities as contemplated by the Registration Statement.


 






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(j)   Financial
Statements. The consolidated financial statements of the Company and the Subsidiaries, together with related notes and schedules
as set forth or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus, present
fairly in all material respects the financial position of the Company and the consolidated Subsidiaries and the results of operations
and cash flows of the Company and the consolidated Subsidiaries, at the indicated dates and for the indicated periods. Such consolidated
financial statements and related schedules have been prepared in accordance with United States generally accepted accounting principles,
consistently applied throughout the periods involved ("GAAP"), except as disclosed therein, and all adjustments
necessary for a fair presentation of results for such periods have been made. The summary and selected consolidated financial and
statistical data included or incorporated by reference in the Registration Statement, the General Disclosure Package and the Prospectus
presents fairly in all material respects the information shown therein, at the indicated dates and for the indicated periods, and
such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of
the Company. All disclosures, if any, contained in the Registration Statement, the General Disclosure Package and the Prospectus
regarding "non-GAAP financial measures" (as such term is defined by the Rules and Regulations) comply in all material
respects with Regulation G of the 1934 Act and Item 10 of Regulation S-K under the 1933 Act, to the extent applicable. The Company
and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet
obligations or any "variable interest entities" within the meaning of Financial Accounting Standards Board Interpretation
No. 46), not disclosed in the Registration Statement, the General Disclosure Package and the Prospectus. There are no financial
statements (historical or pro forma) that are required to be included in the Registration Statement, the General Disclosure Package
or the Prospectus that are not included as required. No other information provided by or on behalf of the Company to the Buyers
which is not included in the SEC Documents (as defined below) contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were
made, not misleading.


 


(k)   Accountants.
Daszkal Bolton LLP, who have certified certain of the financial statements filed with the SEC as part of, or incorporated by reference
in, the Registration Statement, the General Disclosure Package and the Prospectus, has represented to the Company that it is an
independent registered public accounting firm with respect to the Company and the Subsidiaries within the meaning of the 1933
Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States).


 


(l)    Weaknesses
or Changes in Internal Accounting Controls. Except as described in Item 9A of the Company's Form 10-K for the period ended
December 31, 2014, neither the Company nor any of the Subsidiaries has during the twelve months prior to the date hereof (i) received
any notice or correspondence from any accountant relating to any material weakness in any part of the system of internal accounting
controls of the Company or any of its Subsidiaries (ii) become aware of any material weakness in its internal control over financial
reporting or change in internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.


 


(m)  Sarbanes-Oxley.
The principal executive officer and principal financial officer of the Company have made all certifications required by Sections
302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith (the
"Sarbanes-Oxley Act") with respect to all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC, and the statements contained in any such certification are complete and correct. The Company and all
of the Company's directors and officers are in compliance in all respects with all applicable effective provisions of the Sarbanes-Oxley
Act.


 


(n)   Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by The NASDAQ Capital Market (the "Principal
Market"), any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers or directors, whether of a civil or criminal nature or otherwise,
in their capacities as such, except as set forth in the Registration Statement, the General Disclosure Package and the Prospectus.
The matters set forth in the Registration Statement, the General Disclosure Package and the Prospectus, in the aggregate, do not
or would not reasonably be expected to have a Material Adverse Effect.


 






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(o)   Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except for Permitted Liens which do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any
real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases conforming in all material respects to the description thereof set forth in the Registration Statement,
the General Disclosure Package and the Prospectus.


 


(p)   Taxes.
The Company and each of its Subsidiaries (i) has made or filed all U.S. federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


 


(q)   Absence
of Certain Changes. Since the respective dates as of which information is given in the Registration Statement, the General
Disclosure Package and the Prospectus, as each may be amended or supplemented, there has been no material adverse change and no
material adverse development in the business, assets, properties, operations, condition (financial or otherwise), results of operations
or prospects of the Company or its Subsidiaries and there has not been any material transaction entered into by the Company or
the Subsidiaries (including, without limitation, (i) declaration or payment of any dividends, (ii) sale of any assets, in the aggregate,
in excess of $100,000 or (iii) any capital expenditures, in the aggregate, in excess of $100,000), other than transactions in the
ordinary course of business and transactions described in the Registration Statement, the General Disclosure Package and the Prospectus,
as each may be amended or supplemented. The Company and the Subsidiaries have no material contingent obligations which are not
disclosed in the Company's consolidated financial statements which are included in the Registration Statement, the General Disclosure
Package and the Prospectus. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to
any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so. The Company, individually,
and the Company and its Subsidiaries, on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Agreement, "Insolvent"
means, with respect to any Person, (i) the present fair saleable value of such Person's assets is less than the amount required
to pay such Person's total Indebtedness, (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital
with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.


 






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(r)    No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares
and reservation for issuance and issuance of the Conversion Shares and the Additional Shares) will not (i) result in a violation
of its Certificate of Incorporation or Bylaws, any memorandum of association, articles of incorporation, certificate of formation,
bylaws, any certificate of designations or other constituent documents of the Company or any of its Subsidiaries, any capital
stock of the Company or any of its Subsidiaries or the articles of association or bylaws of the Company or any of its Subsidiaries
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties is bound, or (iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including other foreign, federal and state securities laws and regulations and the rules and regulations of the Principal
Market and including all applicable laws of the State of Delaware and any foreign, federal and state laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries
is bound or affected.


 


(s)   Contracts.
There is no document, contract or other agreement required to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or filed as required by the 1933 Act or the Rules and
Regulations. Each description of a contract, document or other agreement in the Registration Statement and the Prospectus accurately
reflects in all material respects the terms of the underlying contract, document or other agreement. Each contract, document or
other agreement described in the Registration Statement and Prospectus or listed in the exhibits to the Registration Statement
or incorporated by reference is in full force and effect and is valid and enforceable by and against the Company in accordance
with its terms (except as rights to indemnity and contribution thereunder may be limited by federal or state securities laws and
matter of public policy and except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principle). Neither the
Company nor any of its Subsidiaries nor, to the Company's knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement or any other agreement or instrument to which the Company
or its Subsidiaries is a party or by which the Company or its Subsidiaries or their respective properties or businesses may be
bound, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case in
which the default or event, in the aggregate, would have a Material Adverse Effect.


 






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(t)    Regulatory
Approvals. Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation
of the transactions herein contemplated (except such additional steps as may be required by the SEC, the Financial Industry Regulatory
Authority, Inc. (the "FINRA"), the Principal Market or such additional steps as may be required under state securities
or Blue Sky laws) has been obtained or made and is in full force and effect.


 


(u)   Conduct
of Business. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under any certificate
of designations of any outstanding series of preferred stock of the Company (if any), its Certificate of Incorporation or Bylaws
or their organizational charter or memorandum of association or articles of incorporation or articles of association or bylaws,
respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except for possible violations which would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


(v)   Intellectual
Property. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor ("Intellectual Property Rights") necessary to conduct their respective businesses as now
conducted. Each of patents owned by the Company or any of its Subsidiaries is listed in the Registration Statement and the Prospectus.
Except as set forth in the Registration Statement and the Prospectus, none of the Company's Intellectual Property Rights have expired
or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within three (3) years
from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries
of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of
the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to
any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights. There are no outstanding
options, licenses or agreements of any kind relating to the Intellectual Property Rights of the Company that are required to be
described in the Registration Statement, the General Disclosure Package and the Prospectus and are not described therein in all
material respects. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual
Property Rights of any other person or entity that are required to be set forth in the Prospectus and are not described therein
in all material respects. None of the technology employed by the Company and material to the Company's business has been obtained
or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge,
any of its officers, directors or employees or, to the Company's knowledge, otherwise in violation of the rights of any persons;
the Company has not received any written or oral communications alleging that the Company has violated, infringed or conflicted
with, or, by conducting its business as set forth in the Registration Statement, the General Disclosure Package and the Prospectus,
would violate, infringe or conflict with, any of the Intellectual Property Rights of any other person or entity. The Company knows
of no infringement by others of Intellectual Property Rights owned by or licensed to the Company.


 






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(w)  Manipulation
of Prices. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Agent,
sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the
Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.


 


(x)   Investment
Company Act. Neither the Company nor any Subsidiary is, and upon consummation of the sale of the Securities, and for so long
any Buyer holds any Securities, will be, an "investment company," a company controlled by an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company"
as such terms are defined in the Investment Company Act of 1940, as amended.


 


(y)   Internal
Accounting Controls.


 


(i)          Except
as described in Item 9A of the Company’s Form 10-K for the period ended December 31, 2014, the Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability
for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference.


 


(ii)         Except
as described in Item 9A of the Company’s Form 10-K for the period ended December 31, 2014, the Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company's management, including its principal executive officer or officers
and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.


 






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(z)   Industry
and Market Data. The statistical, industry-related and market-related data included in the Registration Statement, the General
Disclosure Package and the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes
are reliable and accurate, and such data agree in all material respects with the sources from which they are derived.


 


(aa)  Money
Laundering Laws. The operations of the Company and the Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the "Money
Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any or its Subsidiaries with respect to the Money Laundering Laws is pending or, to
the Company's knowledge, threatened.


 








(bb)  Office
of Foreign Assets Control.  Neither the Company nor any director, officer, agent, employee or affiliate of the Company
is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department
("OFAC").  Neither the Company nor any subsidiary or affiliate (a) will directly or indirectly use the proceeds
of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other
person or entity currently subject to any U.S. sanctions administered by OFAC; (b) is knowingly engaged in, or will knowingly
engage in, any dealings or transactions or be otherwise associated with such persons or entities described in clause (a) above.





 


(cc)  Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that, in the aggregate, do not or would not have a Material Adverse Effect.


 


(dd)  Employee
Benefits. The Company and each Subsidiary is in compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company and each Subsidiary would have any material liability; the Company and each
Subsidiary has not incurred and does not expect to incur material liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended
(the "Code"); and each "pension plan" for which the Company or any Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such qualification.


 






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(ee)  Employee
Relations.


 


(i)          Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The
Company and its Subsidiaries believe that its relations with its employees are good. No executive officer of the Company or any
of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters, except where such
violation would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect.


 


(ii)         The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect.


 


(ff)  Transactions
with Affiliates. To the Company's knowledge, there are no affiliations or associations between any member of the FINRA and
any of the Company's officers, directors or 5% or greater securityholders, except as set forth in the Registration Statement. There
are no relationships or related-party transactions involving the Company or any of the Subsidiaries or, to the knowledge of the
Company, any other person required to be described in the Prospectus which have not been described as required.


 


(gg)  Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect. The term "Environmental Laws" means all federal, state, local
or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.


 






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(hh)  Listing;
1934 Act Registration. The Common Stock is listed for trading on the Principal Market. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common Stock under the 1934 Act or the quotation of the
Common Stock on the Principal Market, nor has the Company received any notification that the SEC or the Principal Market is contemplating
terminating such registration or quotation. Without limiting the generality of the foregoing, the Company is not in violation of
any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the two
(2) years prior to the date hereof, the Common Stock has been designated for quotation on the Principal Market. During the two
(2) years prior to the date hereof, (i) trading in the Common Stock has not been suspended by the SEC or the Principal Market and
(ii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such certificates, authorizations or permits would not have, in the aggregate, a Material Adverse
Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.





 





(ii)   
Contributions; Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer,
agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for,
or on behalf of, the Company or any of its Subsidiaries (i) used any funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended ("FCPA"); or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.


 







(jj)  No
Integrated Offering. The Company has not sold or issued any securities that would be integrated with the offering of the Securities
contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC. None
of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any Person acting
on their behalf will take any action or steps referred to in the preceding sentence that would cause the offering of the Securities
to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.


 






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(kk)  Brokerage
Fees; Commissions. Except as set forth in any of the Transaction Documents, the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries is a party to any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or the Buyers for a brokerage commission, finder's fee or like payment (other than
any payment to the Agent (as defined below)) in connection with the offering and sale of the Securities. The Company shall pay,
and hold the Buyer harmless against, any liability, loss or expense (including, without limitation, attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim. The Company acknowledges that it has engaged Revere Securities LLC as placement
agent (the "Agent") in connection with the sale of the Securities. Other than the Agent, neither the Company nor
any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities.


 





(ll)  Consents.
Other than the Nasdaq's Listing of Additional Shares notification in connection with the transactions contemplated hereby, the
filing of the Certificate of Designations with the Secretary of State of the State of Delaware, and filing of the Prospectus Supplement
and Current Report on Form 8-K with the SEC with respect to the transactions contemplated hereby and the other Transaction Documents,
neither the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing
or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for
it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any of its
Subsidiaries is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing
Date, and the Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company or any of its
Subsidiaries from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The
Company is not in violation of the listing requirements of the Principal Market and has no knowledge of any facts that would reasonably
lead to delisting or suspension of the Common Stock in the foreseeable future. The issuance by the Company of the Securities shall
not have the effect of delisting or suspending the Common Stock from the Principal Market.


 


(mm)  Acknowledgment
Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an "affiliate" of the Company
or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of
more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges
that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer
or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and
thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents to each Buyer that the
Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and
its representatives.


 






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(nn)  Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares and Additional Shares issuable pursuant
to the terms of the Certificate of Designations will increase in certain circumstances. The Company further acknowledges that its
obligation to issue Conversion Shares and Additional Shares pursuant to the terms of the Certificate of Designations is absolute
and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders
of the Company.


 


(oo)  Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to exempt the Company's issuance of the Securities and any Buyer's ownership of the Securities from the provisions of
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Certificate of Incorporation of the Company or the laws of the state of its incorporation
which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of Securities and each Buyer's ownership of the Securities. Except as set forth in the Registration
Statement and the Prospectus, the Company does not have any stockholder rights plan or similar arrangement relating to accumulations
of beneficial ownership of Common Stock or a change in control of the Company.


 


(pp)  Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.


 


(qq)  Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated
or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed
or that otherwise would be reasonably likely to have a Material Adverse Effect.


 


(rr)  Transfer
Taxes. On the Closing Date, all stock transfer or other similar taxes (other than income or similar taxes) which are required
to be paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.


 


(ss)  [Intentionally
omitted]


 


(tt)   U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Code and the Company shall so certify
upon any Buyer's request.


 


(uu)  Shell
Company Status. The Company is not, and has not been since October 5, 2012, an issuer identified in Rule 144(i)(1) of the 1933
Act. On October 5, 2012, the Company filed a Current Report on Form 8-K (as amended by a Current Report on Form 8-K/A filed by
the Company with the SEC on November 19, 2012) containing current "Form 10 information" (as defined in Rule 144 (i)(3))
with the SEC reflecting its status as an entity that was no longer an issuer described in Rule 144(i)(1)(i).


 






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(vv)  Bank
Holding Company. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act of
1956, as amended (the "BHCA") and to regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.


 


(ww)  SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely (other than certain
Current Reports on Form 8-K) filed all reports, schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof, and all exhibits
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). The Company has delivered to the Buyers or their respective representatives
true, correct and complete copies of the SEC Documents not available on the EDGAR system. As of their respective filing dates,
the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their
respective filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
No other information provided by or on behalf of the Company to the Buyers which is not included in the SEC Documents contains
any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein,
in the light of the circumstance under which they are or were made, not misleading.


 


(xx)  Placement
Agent Agreement. The Company has entered into an Equity Distribution Agreement, dated as of January 15, 2015, with the Agent.


 






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(yy)  Lock-Up
Agreements. The Company and each of the parties set forth on Exhibit B hereto has executed and delivered to the Company
a lock-up agreement in the form attached hereto as Exhibit C (collectively, the "Lock-Up Agreements").


 


(zz)  No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced.


 


(aaa) Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the
date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company's
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice
of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with,
the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.


 


(bbb) Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, except as disclosed in the Registration Statement and
the Prospectus, (i) has any outstanding Indebtedness, (ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected to
result in a Material Adverse Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would not result, in the aggregate, in a Material Adverse
Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in
the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. The Registration Statement and the
Prospectus provide a detailed description of the material terms of any such outstanding Indebtedness. The Company hereby represents
that loans of up to an aggregate principal amount of $6,035,000 remain available to the Company pursuant that certain Loan and
Security Agreement, dated June 30, 2014, among RBL Capital Group, LLC, as lender, and TOT Group, Inc., TOT Payments, LLC, TOT BPS,
LLC, TOT FBS, LLC, Process Pink, LLC, TOT HPS, LLC and TOT New Edge, LLC, as co-borrowers subject only to the satisfaction or waiver
of the conditions precedents to each subsequent funding specified in Section 5.01(e) thereof.


 


(ccc) No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.


 






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(ddd) No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company's
ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.


 


4.           COVENANTS.


 


(a)   Best
Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement.


 


(b)   Maintenance
of Registration Statement.


 


(i)           For
so long as any of the Securities remain outstanding or are potentially issuable under the Certificate of Designations, the Company
shall use its reasonable best efforts to maintain the effectiveness of the Registration Statement for the issuance thereunder of
the Registrable Securities (as defined below); provided that, if at any time while the Preferred Shares are outstanding, (x) the
Company shall be ineligible to utilize Form S-3 (or any successor form) for the purpose of issuance of all of the Registrable Securities
or (y) the Registration Statement does not, at any time, cover a sufficient number of shares of Common Stock for issuances pursuant
to the terms of the Certificate of Designations, in each case, without any regard to any limitation or restriction on issuances
of shares set forth in the Certificate of Designations, the Company shall promptly amend or supplement the Registration Statement
or, if necessary, file a new registration statement in order to register such number of Registrable Securities not covered by the
Registration Statement or to maintain the effectiveness of the Registration Statement or such other registration statement for
this purpose. For the purpose of this Agreement, "Registrable Securities" means (i) the Conversion Shares
and the Additional Shares issued or issuable pursuant to the terms of the Preferred Shares and (ii) any shares of capital stock
of the Company issued or issuable with respect to the Preferred Shares, the Conversion Shares and/or the Additional Shares as a
result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, in each case, without regard
to any limitations on issuance or conversion thereof.


 






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(ii)           If, on
any day after the Closing Date, issuances of all of the Registrable Securities cannot be made pursuant to the terms of the Certificate
of Designations pursuant to the Registration Statement (including, without limitation, because of a failure to keep the Registration
Statement effective, failure to file or cause to become effective any supplements or amendments thereto or other public filings
necessary, failure to disclose such information as is necessary for sales to be made pursuant to the Registration Statement, a
suspension or delisting of the Common Stock on its principal trading market or exchange, failure to register or list a sufficient
number of shares of Common Stock) (a "Maintenance Failure") then, as partial relief for the damages to any Buyer
by reason of any such delay in or reduction of its ability to receive Registrable Securities pursuant to the terms of the Certificate
of Designations (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay
to each Buyer an amount in cash equal to one and one-half percent (1.5%) of the aggregate Purchase Price of such Buyer's Preferred
Shares paid by such Buyer on each of the following dates: (i) the initial day of a Maintenance Failure; and (ii) on every thirtieth
(30th) day (pro-rated for periods totaling less than thirty (30) days) after the initial day after a Maintenance Failure until
such Maintenance Failure is cured. The Company shall also pay the reasonable fees of legal counsel of such Investor to enforce
the provisions hereof. The payments to which an Investor shall be entitled pursuant to this Section 4(b) are referred to herein
as "Registration Delay Payments." Registration Delay Payments shall be paid on the initial day of a Maintenance
Failure, as applicable, and thereafter on the earlier of (I) the thirtieth (30th) day after the event or failure giving rise to
the Registration Delay Payments has occurred and (II) the third (3rd) Business Day after the event or failure giving rise to the
Registration Delay Payments is cured. In the event the Company fails to make Registration Delay Payments when due in a timely manner,
such unpaid portion of the Registration Delay Payments shall bear interest at the rate of one and one-half percent (1.5%) per month
(prorated for partial months) until paid in full.


 


(c)   Prospectus
Supplement and Blue Sky. In the manner required by law, the Company shall have delivered to the Buyers, and as soon as practicable
after the Closing, the Company shall file, the Prospectus Supplement with respect to the Securities as required under and in conformity
with the 1933 Act, including Rule 424(b) thereunder. If required, the Company, on or before the Closing Date, shall take such action
as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale
to the Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of
the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the
Closing Date.


 


(d)   Use
of Proceeds. The Company will use the proceeds from the sale of the Securities solely as set forth on Schedule 4(d).


 


(e)   Listing.
The Company shall promptly secure the listing of all of the Conversion Shares and Additional Shares upon each securities exchange
and automated quotation system, if any, upon which the Common Stock is then listed, including the Principal Market (subject to
official notice of issuance) and shall use its reasonable best efforts to maintain, in accordance with the Transaction Documents,
such listing of all Conversion Shares and Additional Shares from time to time issuable under the terms of the Transaction Documents.
The Company shall maintain the authorization for quotation of the Common Stocks on the Principal Market or if such authorization
is not able to be maintained, on another Eligible Market (as defined in the Certificate of Designations). Neither the Company nor
any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the
Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(e).


 






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(f)   Fees.
The Company shall reimburse the Lead Investor (a Buyer) or its designee(s) (in addition to any other expense amounts paid to any
Buyer or its counsel prior to the date of this Agreement) for all costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and
implementation of the transactions contemplated by the Transaction Documents and due diligence in connection therewith) in an amount
not to exceed, without the prior approval of the Company, $65,000 (the "Legal Fee Cap"), which amount, at the
option of the Buyer, may be withheld by such Buyer from its Purchase Price at the Closing to the extent not previously reimbursed
by the Company. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the Agent and all fees payable to the Bank in connection with the Deposit
Account Control Agreement. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any claim relating to any
such payment.


 


(g)   Pledge
of Securities. The Company acknowledges and agrees that the Securities may be pledged by any holder of Securities (an "Investor")
in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a
pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document. The Company hereby agrees, subject to applicable securities laws,
to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by an Investor.


 






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(h)   Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day after
this Agreement has been executed, the Company shall issue a press release reasonably acceptable to the Buyers and file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the
1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement, the Certificate of Designations,
the form of Lock-Up Agreement and the Voting Agreement) as exhibits to such filing (including all attachments), the "8-K
Filing"). As of immediately following the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any
material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers, directors,
employees, affiliates or agents, that is not disclosed in the 8-K Filing or in prior filings with the SEC. In addition, effective
upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate. The Company understands and confirms that each of the Buyers will rely on the foregoing in effecting transactions
in securities of the Company. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees, affiliates and agents, not to, provide any Buyer with any material, nonpublic information regarding
the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express prior written
consent of such Buyer. If a Buyer has, or believes it has, received any such material, nonpublic information regarding the Company
or any of its Subsidiaries from the Company, any of its Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents, it may provide the Company with written notice thereof in which case the Company shall, within two (2) Trading
Days (as defined in the Certificate of Designations) of receipt of such notice, make public disclosure of such material, nonpublic
information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees, affiliates and agents, in addition to any other remedy provided herein or in the Transaction
Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, affiliates or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees, affiliates or agents for any such disclosure. To the extent the Company
or any of its or their respective officers, directors, employees, affiliates or agents delivers any material, non-public information
to a Buyer without such Buyer's consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality
to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect
to, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or
agents not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law, regulation or any Eligible Market on which the Company's
securities are then listed or quoted (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release). Without the prior written consent of any applicable
Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement,
release or otherwise other than in connection with the Registration Statement unless such disclosure
is required by law, regulation or any Eligible Market on which the Company's securities are then listed or quoted. As
used herein, "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in
The City of New York are authorized or required by law to remain closed.


 


(i)   Additional
Preferred Shares; Variable Securities. So long as any Buyer beneficially owns any Securities, the Company will not issue any
Preferred Shares other than to the Buyers as contemplated hereby and the Company shall not issue any other securities that would
cause a breach or default under the Certificate of Designations. Other than in connection with the acquisition of the PayOnline
group of companies, and except for any issuances of securities to any of the Buyers, for so long as any Preferred Shares remain
outstanding or potentially may be issued hereunder, the Company shall not, in any manner, issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market price of the Common Stock, including by way of one or more reset(s)
to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less than the then applicable
Conversion Price (as defined in the Certificate of Designations) with respect to the Common Stock into which any of Preferred Shares
are convertible or redeemable, as applicable.


 






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(j)   Corporate
Existence. So long as any Buyer beneficially owns any Securities, the Company shall (i) maintain its corporate existence and
(ii) not be party to any Fundamental Transaction (as defined in Certificate of Designations) unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions set forth in the Certificate of Designations.


 


(k)   Reservation
of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized,
and reserved for the Required Reserve Amount. If at any time the number of shares of Common Stock authorized and reserved for issuance
is not sufficient to meet the Required Reserve Amount or the number of shares of Common Stock issued and issuable pursuant to the
terms of the Preferred Shares at any time exceeds the Required Reserve Amount initially reserved by the Company and the Company
is able under applicable securities laws to issue more shares pursuant to the Registration Statement or other registration statement,
the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize additional shares to meet the Company's obligations
under Section 3(e) and this Section 3(k), and, in the case of an insufficient number of authorized shares, obtain stockholder approval
of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in
the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Required Reserve
Amount. The initial number of shares of Common Stock reserved for conversions of the Preferred Shares and each increase in the
number of shares so reserved shall be allocated pro rata among the Buyers based on the number of Preferred Shares held by each
Buyer at the time of issuance of the Preferred Shares or increase in the number of reserved shares, as the case may be. In the
event a Buyer shall sell or otherwise transfer any of such Buyer's Preferred Shares, each transferee shall be allocated a pro rata
portion of the number of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and
allocated to any Person which ceases to hold any Preferred Shares (other than pursuant to a transfer of Preferred Shares in accordance
with the immediately preceding sentence) shall be allocated to the remaining Investors, pro rata based on the number of Preferred
Shares then held by such Investors.





 





(l)   
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any
law, ordinance or regulation of any governmental entity, including, without limitation, FCPA, OFAC regulations and Money Laundering
Laws, except where such violations would not result, in the aggregate, in a Material Adverse Effect. 







 






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(m)   Lock-Up.
The Company shall not amend or waive any provision of the Lock-Up Agreements except to extend the term of the lock-up period contained
therein and shall enforce the provisions of the Lock-Up Agreements in accordance with their terms. If any party to a Lock-Up Agreement
breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts to seek specific performance of
the terms of such Lock-Up Agreement.


 


(n)   Voting
Agreement. The Company shall use its reasonable best efforts to effectuate the transactions contemplated by the Voting Agreement
substantially in the form attached hereto as Exhibit D (the "Voting Agreement"), executed on or prior to
the Closing by the Company and each of Kenges Rakishev, Novatus Holding PTE. Ltd., a company organized under the laws of the British
Virgin Islands, Oleg Firer, Steven Wolberg, James Caan, Jonathan New, David P. Kelley II, William Healy, Beno Distribution, Ltd.,
a company organized under the laws of the British Virgin Islands, Cayman Invest S.A., a company organized under the laws of the
British Virgin Islands, and Mayor Trans Ltd., a company incorporated in the Republic of Seychelles holding, immediately prior to
the date hereof, no less than 50% of the issued and outstanding Common Stock (collectively, the "Principal Stockholders"). 
The Company shall not amend or waive any provision of the Voting Agreement and shall enforce the provisions of the Voting Agreement
in accordance with its terms. If any of the Principal Stockholders breaches any provision of the Voting Agreement, the Company
shall promptly use its best efforts to seek specific performance of the terms of such Voting Agreement in accordance with the terms
thereof.  In addition, if the Company receives any notice from any of the Principal Stockholders pursuant to the Voting Agreement,
the Company shall promptly, but in no event later than two (2) Business Days, deliver a copy of such notice to each Buyer.


 


(o)   Additional
Issuances of Securities.


 


(i)           For
purposes of this Section 4(o), the following definitions shall apply.


 


(1)           "Convertible
Securities" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares
of Common Stock.


 


(2)           "Options"
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.


 


(3)           "Common
Stock Equivalents" means, collectively, Options and Convertible Securities.


 


(ii)           From the
date hereof until the date no Preferred Shares are outstanding (the "Trigger Date"), the Company shall not, (x)
(i) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant
or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including
without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such
offer, sale, grant, disposition or announcement being referred to as a "Subsequent Placement"), or (ii) be party
to any solicitations, negotiations or discussions with regard to the foregoing or (y) directly or indirectly, (i) file any registration
statement with the SEC or file any amendment or supplement thereto, (ii) cause any registration statement to be declared effective
by the SEC or (iii) grant any registration rights to any Person that can be exercised prior to such date as set forth above.


 






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(iii)          From
the Trigger Date until the one (1) year anniversary of the Trigger Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this Section 4(o)(iii).


 


(1)           The
Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed or
intended issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered
Securities") in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities
to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Buyers at least fifty percent
(50%) of the Offered Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion of the aggregate number
of Preferred Shares purchased hereunder (the "Basic Amount") and (b) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as
such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the
"Undersubscription Amount"), which process shall be repeated until the Buyers shall have an opportunity to subscribe
for any remaining Undersubscription Amount.


 


(2)           To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth the portion of
such Buyer's Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the "Notice of Acceptance").
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available Undersubscription Amount"), each Buyer who has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the
total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the
extent its deems reasonably necessary. Notwithstanding anything to the contrary contained herein,
if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the
Company may deliver to the Buyers a new Offer Notice and the Offer Period shall expire on the tenth (10th) Business
Day after such Buyer's receipt of such new Offer Notice.


 



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(3)           The
Company shall have five (5) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the "Refused Securities")
pursuant to a definitive agreement (the "Subsequent Placement Agreement"), but only to the offerees described
in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement and (b) either
(x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any documents contemplated therein filed as exhibits thereto.


 


(4)           In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(o)(iii)(3) above), then each Buyer may, at its sole option and in its sole discretion, reduce the
number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(iii)(2) above multiplied by a
fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to Section 4(o)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer
so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(o)(iii)(1) above.


 


(5)           Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(o)(iii)(4) above if the Buyers have so elected, upon the terms and conditions specified
in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Buyers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance
to the Buyers and their respective counsel.


 


(6)           Any
Offered Securities not acquired by the Buyers or other persons in accordance with Section 4(o)(iii)(3) above may not be issued,
sold or exchanged until they are again offered to the Buyers under the procedures specified in this Agreement.


 






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(7)           The
Company and the Buyers agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement with respect
to such Offer nor any other transaction documents related thereto (collectively, the "Subsequent Placement Documents")
shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading as to any securities
of the Company owned by such Buyer prior to such Subsequent Placement and (y) the Buyers shall be entitled to the same registration
rights provided to the other investors in the Subsequent Placement.


 


(8)           Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by the Buyers, the Company shall either confirm in
writing to the Buyers that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in such a manner such that the Buyers will not be in possession of
material non-public information, by the fifteenth (15th) Business Day following delivery of the Offer Notice. If by
the fifteenth (15th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction
with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received
by the Buyers, such transaction shall be deemed to have been abandoned and the Buyers shall not be deemed to be in possession of
any material, non-public information with respect to the Company. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide each Buyer with another Offer Notice and each Buyer will again have the right
of participation set forth in this Section 4(o)(iii). The Company shall not be permitted to deliver more than one such Offer Notice
to the Buyers in any 60 day period (other than the Offer Notices contemplated by the last sentence of Section 4(o)(iii)(2) of this
Agreement).


 


(iv)        The
restrictions contained in subsections (ii) and (iii) of this Section 4(o) shall not apply in connection with the issuance of any
Excluded Securities (as defined in the Certificate of Designations).


 


(p)   Stockholder
Approval. The Company shall file with the SEC and provide each stockholder of the Company with an information statement complying
with the requirements of the 1934 Act and substantially in the form that has been previously reviewed and approved by the Buyers
and Schulte Roth & Zabel LLP informing such stockholders of the actions taken in accordance with the Resolutions and of the
Stockholder Approval (each, as defined below). In addition to the foregoing, if required by any governmental or regulatory agency,
the Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the Company (the
"Stockholder Meeting"), which shall be called at or prior to the Company's next annual meeting of stockholders,
but in no event later than the Stockholder Meeting Deadline (as defined below), a proxy statement (the "Proxy Statement"),
in a form reasonably acceptable to the Buyers after review by Schulte Roth & Zabel LLP, soliciting each such stockholder's
affirmative vote at the Stockholder Meeting for approval of resolutions (the "Resolutions") providing for the
issuance of all of the Securities as described in the Transaction Documents in accordance with applicable law, the provisions of
the Certificate of Incorporation and the rules and regulations of the Principal Market (such affirmative approval being referred
to herein as the "Stockholder Approval"), and the Company shall use its reasonable best efforts to solicit its
stockholders' approval of such Resolutions and to cause the Board of Directors of the Company to recommend to the stockholders
that they approve the Resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
Meeting Deadline. If, despite the Company's reasonable best efforts, the Stockholder Approval is not obtained at the Stockholder
Meeting, the Company shall cause an additional Stockholder Meeting to be held each calendar quarter thereafter until Stockholder
Approval is obtained. In connection with the stockholders' meeting contemplated by this Section 4(p), the Company shall (i) use
its best efforts to solicit its stockholders' approval of the Resolutions and (ii) cause at least a majority of the Board of Directors
of the Company to recommend to the stockholders that they approve the Resolutions. As used herein, "Stockholder Meeting
Deadline" means (i) the date that is sixty (60) days after the Closing Date in the event the Proxy Statement is subject
to review by the SEC and (ii) the date that is thirty (30) days after the Closing Date in the event the Proxy Statement is not
subject to review by the SEC.


 






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(q)   Conversion
Share Characteristics. If Conversion Shares and/or Additional Shares are issued pursuant to the terms of the Certificate of
Designations, the Company acknowledges and agrees that in accordance with Section 3(a)(9) of the 1933 Act, the Conversion Shares
and/or the Additional Shares, as applicable, shall take on the registered characteristics of the Preferred Shares with respect
to which such Conversion Shares and/or Additional Shares are being issued, and the holding period of such Preferred Shares may
be tacked on to the holding period of the Conversion Shares and/or Additional Shares, respectively.  The Company agrees not
to take any position contrary to this Section 4(q).


 


(r)   Reporting
Status. Until the date on which the Buyers shall have sold all of the Conversion Shares and Additional Shares and none
of the Preferred Shares are outstanding (the "Reporting Period"), the Company shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file
reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit
such termination, and the Company shall take all actions necessary to maintain its eligibility to issue Securities to the Buyers
on Form S-3.


 


(s)    Financial
Information. The Company agrees to send the following to each Buyer during the Reporting Period, unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR system (i) within one (1) Business Day after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K, any Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K (or any analogous reports under the 1934 Act) and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued
by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given to the
stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.


 






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(t)   Public
Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may
be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a "Public Information Failure") then, as partial relief for the damages to any Buyer
by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each such Buyer an amount in cash equal to one and one-half percent
(1.5%) of the aggregate Purchase Price of such Buyer's Securities on the day of a Public Information Failure and on every thirtieth
day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information
Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The Company shall
also pay the reasonable fees of legal counsel of such Investor to enforce the provisions hereof. The payments to which a holder
shall be entitled pursuant to this Section 4(t) are referred to herein as "Public Information Failure Payments."
Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which
such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments to such Buyer when due in a timely manner, such unpaid portion of the Public Information Failure Payment(s)
shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.


 


(u)   FATCA.
Notwithstanding anything to contrary contained herein and other Transaction Documents, if a payment made to a Buyer under any
Preferred Shares or Conversion Shares would be subject to U.S. federal withholding Tax imposed by FATCA if such Buyer were to
fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of
the Code, as applicable), such Buyer shall deliver to Company at the time or times prescribed by law and at such time or times
reasonably requested by the Company such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i)
of the Code) and such additional documentation reasonably requested by the Company as may be necessary for the Company to comply
with its obligations under FATCA and to determine that such Buyer has complied with such Buyer’s obligations under FATCA
or to determine the amount to deduct and withhold from such payment under FATCA. For purposes of this Section 4(u), "FATCA"
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof
and any agreements entered into pursuant to Section 1471(b)(1) of the Code.


 


(v)  Closing
Documents. On or prior to thirty (30) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered,
to each Buyer and Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents, Securities and any
other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.


 






    	32



    	 



    

 


5.           REGISTER;
TRANSFER AGENT INSTRUCTIONS.


 


(a)   Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Preferred Shares in which the Company shall record the name and address
of the Person in whose name the Preferred Shares have been issued (including the name and address of each transferee), the number
of Preferred Shares held by such Person, the number of Conversion Shares and Additional Shares issued and issuable pursuant to
the terms of the Preferred Shares. The Company shall keep the register open and available at all times during business hours for
inspection of any Buyer or its legal representatives.


 


(b)   Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent,
in the form of Exhibit E attached hereto (the "Irrevocable Transfer Agent Instructions") to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s),
for the Conversion Shares and the Additional Shares issuable pursuant to the terms of the Transaction Documents in such amounts
as specified from time to time by each Buyer to the Company upon conversion or redemption of the Preferred Shares or as payment
of Dividends with respect to the Preferred Shares. The Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5(b) will be given by the Company to its transfer agent, and any subsequent transfer
agent, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to each Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company
of the provisions of this Section 5, that each Buyer shall be entitled, in addition to all other available remedies, to an order
and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic
loss and without any bond or other security being required.


 


6.           CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.


 


The obligation of the Company
hereunder to issue and sell the Preferred Shares to each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:


 


(a)   Such
Buyer shall have executed this Agreement and delivered the same to the Company.


 


(b)   Such
Buyer shall have delivered its Purchase Price to the Company (less, in the case of the Lead Investor, the amounts withheld pursuant
to Section 4(f)) for the Preferred Shares being purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.


 






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(c)   The
representations and warranties of such Buyer shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality, which are accurate in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct in all material respects (except for those representations and warranties that are qualified by materiality, which
are accurate in all respects) as of such specified date), and such Buyer shall have performed, satisfied and complied in all respects
with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer
at or prior to the Closing Date.


 


(d)   No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.


 


7.           CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.


 


The obligation of each Buyer
hereunder to purchase the Preferred Shares at the Closing is subject to the satisfaction, at or before the Closing Date,
of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:


 


(a)   The
Company and each of its Subsidiaries shall have duly executed and delivered to such Buyer each of the following to which it is
a party each of the Transaction Documents, (ii) the Preferred Shares (allocated in such amounts as such Buyer shall request), being
purchased by such Buyer at the Closing pursuant to this Agreement.


 


(b)   Such
Buyer shall have received the opinion of Snell & Wilmer L.L.P., the Company's outside counsel, dated as of the Closing Date,
in substantially the form of Exhibit F attached hereto.


 


(c)   The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit E
attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company's transfer agent.


 


(d)   The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its U.S. Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within 10 Business Days of the Closing Date.


 


(e)   The
Company shall have delivered to such Buyer a certificate evidencing the Company's and each of its U.S. Subsidiaries' qualification
as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which
the Company and its Subsidiaries conduct business or a bring down of such good standing from Incorporating Services, Ltd., as of
a date within ten (10) days of the Closing Date.


 






    	34



    	 



    

 


(f)   The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation of the Company and each of its
U.S. Subsidiaries (other than the Subsidiaries formed in the State of Florida) as certified by the Secretary of State (or comparable
office) of the jurisdiction of formation of the Company and each of its Subsidiaries or a bring down of such good standing from
Incorporating Services, Ltd. within ten (10) days of the Closing Date.


 


(g)   The
Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(d) as adopted by the Company's Board of Directors in a form reasonably
acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and (iii) the Bylaws of the Company, each as in
effect at the Closing, in the form attached hereto as Exhibit G.


 


(h)   The
representations and warranties of the Company shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of the date
when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct in all material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date) and the Company
shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received
a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect and
as to such other matters as may be reasonably requested by such Buyer in the form attached hereto as Exhibit H.


 


(i)   The
Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common
Stock issued and outstanding as of a date within five (5) days of the Closing Date.


 


(j)   The
Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as
of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market, nor shall suspension by the SEC or
the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum listing maintenance requirements of the Principal Market.


 


(k)   The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.


 






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(l)   The
Registration Statement shall be effective and available for the issuance and sale of the Securities hereunder and the Company shall
have delivered to such Buyer the Prospectus and the Prospectus Supplement as required thereunder.


 


(m)   No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.


 


(n)   The
Company shall have delivered to each Buyer a Lock-Up Agreement in the form attached hereto as Exhibit C executed and delivered
by each of the Persons listed on Exhibit B hereto.


 


(o)   The
Voting Agreement in the form attached hereto as Exhibit D shall have been executed and delivered to such Buyer by the Company
and each of the Principal Stockholders.


 


(p)   The
Certificate of Designations in the form attached hereto as Exhibit A shall have been filed with the Secretary of State of
the State of Delaware and shall be in full force and effect, enforceable against the Company in accordance with its terms and shall
not have been amended.


 


(q)   The
Company shall have submitted to the Principal Market a Listing of Additional Shares notification in connection with the transactions
contemplated hereby and the Principal Market shall have approved, orally or in writing, the transactions contemplated by this Agreement
and the other Transaction Documents and the issuance of the Securities.


 


(r)   The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.


 


8.           TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on or before five
(5) Business Days from the date hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections
6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have
the option to terminate this Agreement with respect to such breaching party at the close of business on such date by delivering
a written notice to that effect to each other party to this Agreement and without liability of any party to any other party;
provided, however, that if this Agreement
is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the Lead Investor or its designee(s),
as applicable, for the expenses described in Section 4(f) above without giving effect to the Legal Fee Cap.


 






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9.           MISCELLANEOUS.


 


(a)   Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


(b)   Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which 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; provided that a facsimile
signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.


 


(c)   Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.


 


(d)   Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).


 






    	37



    	 



    

 


(e)   Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written
agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of at least sixty-five percent (65%) of the aggregate number of Registrable Securities
issued or issuable under the Transaction Documents as of the date hereof and shall include the Lead Investor so long as the
Lead Investor or any of its affiliates holds any Registrable Securities (the "Required Holders").
Any amendment or waiver effected in accordance with, and any amendment to this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on each Buyer and holders of Securities of the Company as applicable. No
such amendment shall be effective to the extent that it applies to less than all of the Buyers of Securities. No
consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees) also is offered to
all of the parties to the Transaction Documents or the holders of Preferred Shares, as the case may be. The Company has not,
directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing,
the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any
other obligation to provide any financing to the Company or otherwise.


 


(f)   Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Business Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail address for such communications shall be:


 


If to the Company:


 


Net Element, Inc.


363 NE 163rd Street, Suite 705


North Miami Beach, FL 33160


Telephone:        (786)
923-0515

Facsimile:         (786)
272-0696

E-mail:              swolberg@netelement.com


Attention:         Chief
Legal Officer


 


with
a copy (for informational purposes only) to:


 


Snell
& Wilmer L.L.P.


600
Anton Boulevard, 14th Floor


Costa
Mesa, CA 92626


 






    	38



    	 



    

 


Telephone: 714-427-7442


Facsimile:
714-427-7799


E-mail:           spavluk@swlaw.com


Attention:
Serge V. Pavluk


 


If
to the Transfer Agent:


 


Continental
Stock Transfer & Trust Company


17
Battery Place, 8th Floor


New
York, NY 10004


Telephone:       (212)
845-3217


Email:
mmullings@continentalstock.com


Attention:        Michael
G. Mullings


 


If
to a Buyer, to its address, facsimile number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's
representatives as set forth on the Schedule of Buyers,


 


with
a copy (for informational purposes only) to:


 


Schulte
Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:        (212) 756-2000

Facsimile:         (212) 593-5955

Attention:         Eleazer N. Klein, Esq.

E-mail:              eleazer.klein@srz.com


 


or to such other address, facsimile number
and/or email-address and/or to the attention of such other Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile
machine or e-mail containing the time, date, recipient facsimile number and an image of the first page of such transmission or
(C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.


 


(g)   Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Certificate of Designations).
A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned rights


 






    	39



    	 



    

 


(h)   No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k).


 


(i)   Survival.
Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and covenants hereunder.


 


(j)   Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.


 


(k)   Indemnification.
(i)    In consideration of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant
to Section 4(h) or (iv) the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
that is permissible under applicable law.


 






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(ii)        Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in
respect thereof is to be made against any indemnifying party under this Section 9(k), 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 Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least a majority of the Registrable Securities. The Indemnitee shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying
party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action
or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully 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, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, 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 Indemnitee of a release from all liability in respect to such Indemnified
Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all
rights of the Indemnitee 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 Indemnitee under this Section 9(k), except to
the extent that the indemnifying party is prejudiced in its ability to defend such action.


 


(iii)        The
indemnification required by this Section 9(k) 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 Liabilities are incurred.


 


(iv)        The
indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.


 


(v)        Except where
the following damages have been awarded to a third party and a party hereto has a duty of indemnification with respect to such
third party claim, in no event shall any claim for incidental, special, punitive or consequential damages of any nature whatsoever
be made by any party to the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby.


 






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(l)   No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.


 


(m)  Remedies.
Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or
other security.


 


(n)   Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.


 


(o)   Payment
Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.


 


(p)   Independent
Nature of Buyers' Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Buyers are in any way acting in concert or as a group, and the Company shall not assert any such claim with respect to
such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges, and each Buyer confirms,
that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that it has independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.


 


[Signature Page Follows]


 




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IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


 


	 	COMPANY:	 
	 	 	 
	 	NET ELEMENT, INC.	 
	 	 	 
	 	By:	 	 
	 	 	
        Name:

        
	 
	 	 	
        Title: 
	 


 


[Signature Page to Securities 

Purchase Agreement]


 




    	 



    	 



    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


 





	 	BUYERS:	
	 	 	
	 	[BUYER]	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:


 


	 	Check as appropriate:
	 	Accredited Investor	 ̈
	 	QIB	 ̈










 




    	44



    	 



    

 


SCHEDULE OF BUYERS


 





	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	 	 	 	 	 	 	 	 	 
	Buyer	 	Address, E-mail and

Facsimile Number	 	Number of Preferred

Shares	 	Purchase Price	 	Legal Representative's Address

and Facsimile Number
	 	 	 	 	 	 	 	 	 










 




    	 



    	 



    

 


EXHIBITS


 


	Exhibit A	Form of Certificate of Designations
	Exhibit B	Parties to Lock-Up Agreement
	Exhibit C	Form of Lock-Up Agreement
	Exhibit D	Form of Voting Agreement
	Exhibit E	Form of Irrevocable Transfer Agent Instructions
	Exhibit F	Form of Opinion of Company's Outside Counsel
	Exhibit G	Form of Secretary's Certificate
	Exhibit H	Form of Officers Certificate


 


SCHEDULES 


	 	 
	Schedule I	List of General Use Free Writing Prospectus
	Schedule 4(d)	Use of Proceeds


 




    	 



    	 



    

 


SCHEDULE I


 


None.


 




    	 



    	 



    

 


SCHEDULE 4(d)


 


Proceeds from the sale of the Preferred Stock
will be used (i) to pay all legal and other fees, costs and expenses related to and in connection with the transactions contemplated
by the Transaction Documents, but not to pay the fees and expenses of the Agent in an amount exceeding $250,000; (ii) for general
corporate purposes, including working capital, sales and marketing activities, general and administrative matters, repayment of
indebtedness, and capital expenditures; (iii) to pay the cash portion of the acquisition of PayOnline group of companies; and (iv)
for the purchase of residual distributions from agents.