PROMISSORY NOTE AND LOAN AGREEMENT


 


	$500,000	May 14, 2012


 


FOR VALUE RECEIVED,
the undersigned, Net Element, Inc., a Delaware corporation ("Net Element"), hereby promises, as of May 14, 2012
(the “Effective Date”), to pay to Enerfund, LLC, a Florida limited liability company (“Enerfund”),
at 1450 S. Miami Avenue, Miami, Florida, the principal sum of FIVE
HUNDRED THOUSAND DOLLARS ($500,000) (as reduced pursuant to the terms hereof pursuant to conversion or otherwise, the "Loan
Amount"), together with interest on the unpaid principal balance thereof, from and after the date hereof at the times and
upon the terms and conditions sets forth herein (the “Interest”).


 


1.       Loan.
Net Element hereby agrees to borrow from Enerfund, and Enerfund hereby agrees to make a loan in the Loan Amount to Net Element
in accordance with the provisions hereof. This loan shall be evidenced by this Convertible Promissory Note and Loan Agreement (this
"Note").


 


2.       Funding
of Loan. On and after the Effective Date, Enerfund will disburse the Loan Amount by one or more wire transfers of immediately
available funds to Net Element. The date upon which such wire transfer is completed will be a “Funding Date.”


 


(a)       Net
Element funding instructions: bank wire using Bank of America Direct banking system wire template.


 


(b)       Purpose
of Funding. Net Element shall use the Loan Amount for working capital and acquisitions.


 


3.       Interest.
From the Funding Date the Loan Amount shall accrue Interest at the rate of 5% per annum and shall be repaid on the Maturity Date
(as defined below).


 


4.       Loan
Repayment; Prepayment. Net Element shall repay the Loan Amount, and any interest accrued and unpaid thereon on November
1, 2012 (subject to acceleration in accordance with the terms hereof, the “Maturity Date”). Net Element shall be entitled
to prepay the Loan Amount fully or partially at any time without penalty or charge; provided that any such prepayment amount shall
be applied first to the payment of any interest accrued on the Loan Amount and outstanding by the date of such prepayment and second
to the repayment of the Loan Amount.


 


5.       Collateral.
None.


 


6.       Events
of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Loan Agreement:


 


(a)       Voluntary
Bankruptcy or Insolvency Proceedings. Net Element shall: (i) apply for or consent to the appointment of a receiver, trustee,
liquidator, or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability, to pay
its debts generally as they mature, (iii) make a general assignment for the benefit of any of its creditors, (iv) be dissolved
or liquidated in full or in part, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case
or other proceeding commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or






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(b)       Involuntary
Bankruptcy or Insolvency Proceedings. Net Element seeks the appointment of a receiver, trustee, liquidator, or custodian of
Net Element or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization, or other relief with respect to Net Element or the debts thereof under any bankruptcy, insolvency, or other similar
law or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged
within sixty (60) days of commencement; or


 


(c)       Failure
to Pay Loan Amount or Interest when Due. Net Element fails to pay the Loan Amount and/or accrued interest when due and payable
(whether on the Maturity Date or due to an Event of Default) or and such failure continues for sixty (60) calendar days from the
date of such failure.


 


Upon occurrence of
any Event of Default, Enerfund may accelerate repayment of the Loan Amount (in which case the entire unpaid balance of the Loan
Amount, together with all accrued and unpaid interest thereon, shall become immediately due and payable without demand or notice)
and may take any actions to obtain repayment of principal, interest and costs associated with any collection effort.


 


7.       Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts
made and to be performed entirely within such state.


 


8.       Arbitration.


 


(a)       The
Parties hereby submit to the exclusive jurisdiction of the American Arbitration Association (AAA). Any and all disputes and controversies
arising under, relating to or in connection with this Note shall be settled exclusively by arbitration by a panel of one (1) arbitrator
under the Commercial Rules of the AAA and the appointing authority shall be the AAA. The English language shall be used as the
written and spoken language for the arbitration and all matters connected with all references to arbitration.


 


(b)       Each
Party hereby irrevocably waives any right it may have to object to an action being brought in the AAA, to claim that the claim
has been brought in an inconvenient forum or to claim that the AAA does not have exclusive jurisdiction, provided that proceedings
may be brought in another jurisdiction in order to enforce a judgment of the courts of the AAA.


 


9.       Notices.
All notices, requests, demands, and other communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when delivered personally or by verifiable facsimile transmission, unless
such delivery is made on a day that is not a business day, in which case such delivery will be deemed to be made on the next succeeding
business day and (ii) on the next business day after timely delivery to a reputable overnight courier, to
the parties at the following addresses:






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		(a)	If to Enerfund, to:



 


ENERFUND, LLC


1450 S. Miami Ave


Miami, FL 33130


Attention: Mike Zoi


Fax: 305-358-7876


 


or to such other Person or address as Enerfund
shall furnish by notice to the other parties in writing.


 


		(b)	If to Net Element, to:



 


Net Element, Inc.


1450 S. Miami Ave


Miami, FL
33130


Attention: CFO


Fax: 305-358-7876


 


10.       Attorneys
Fees. In the event of a dispute between the parties, the prevailing party shall be entitled to all reasonable attorneys’
fees and costs incurred in connection with any trial, arbitration, or other proceeding as well as all other relief granted in any
suit or other proceeding.


 


11.       U.S.
Dollar Denominated. Except where specifically provided otherwise, all transactions herein shall be in U.S. Dollars.


 


12.       Entire
Understanding. This Note contains the entire understanding between the parties hereto and supersedes any and all prior
agreements, understandings, and arrangements relating to the subject matter hereof. No amendment, modification or other change
to, or waiver of any provision of, this Note may be made unless such amendment, modification or change is set forth in writing
and is signed by each of the parties hereto.


 


13.       Counterparts.
This Note may be executed in several counterparts, each of which shall be deemed an original and all of which together shall constitute
the same agreement. This Note, once executed by a party, may be delivered to the other party hereto by facsimile transmission.


 


14.       Assignment.
Upon the transfer by Enerfund of the debt pursuant to this Note or any portion thereof, the rights of Enerfund hereunder with
respect to the debt or portion thereof so transferred shall be assigned automatically to the transferee thereof, and such transferee
shall thereupon be deemed to be a party to this Note as though an original signatory hereto, as long as: (i) Net Element is, within
a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee,
and (ii) the transferee agrees in writing with Net Element to be bound by all of the provisions hereof.


 


15.       Headings.
The headings in this Note are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.


 


16.       Third
Party Beneficiaries. This Note 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.






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17.       Limitation
of Interest. In no event shall the amount of interest due or payable hereunder exceed the maximum rate of interest allowed
by applicable law, as amended from time to time, and in the event any such payment is paid by Net Element or received by Enerfund,
then such excess sum shall be credited as a payment of principal, unless Net Element shall notify Enerfund in writing that Net
Element elects to have such excess sum returned to it forthwith.


 


18.       Successors
and Assigns. The terms and conditions of this Note shall inure to the benefit of the respective heirs, successors, representatives
and assigns of the parties; provided that Net Element may not assign its interest in or obligations under this Note without the
prior written consent of Enerfund.


 


19.       Loss
or Mutilation of Note. Upon receipt by Net Element of evidence reasonably satisfactory to Net Element of the loss, theft,
destruction or mutilation of this Note, in the case of loss, theft or destruction, or the surrender and cancellation of this Note,
in the case of mutilation, Net Element shall execute and deliver to Enerfund a new promissory note in the exact form of this Note.


 


[Signatures are on next
page.]


 



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IN WITNESS WHEREOF,
the parties hereto have executed this Note as of the day and year first above written.


 


	NET ELEMENT, INC.	 	ENERFUND, LLC	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Jonathan New	 	By:	/s/ Mike Zoi	 
	Name: Jonathan New	 	Name: Mike Zoi	 
	Title: CFO	 	Title: Managing Member	 


 


 


 


 


 


       








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