Exhibit 4.1


 





REGISTRATION RIGHTS AGREEMENT


 


REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as of July 6, 2016, by and between NET ELEMENT, INC., a Delaware
corporation (the “Company”), and ESOUSA HOLDINGS, LLC, an Illinois limited liability company (together
with its permitted assigns, the “Buyer”). Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Common Stock Purchase Agreement by and between the parties hereto, dated as of the
date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”).


 


WHEREAS:


 


A.Upon the terms
and subject to the conditions of the Purchase Agreement, (i) the Company has agreed to issue to the Buyer, and the Buyer has
agreed to purchase, up to Ten Million Dollars ($10,000,000) of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”), pursuant to Section 1 of the Purchase Agreement (such shares, the “Purchase Shares”),
and (ii) the Company has agreed to issue to the Buyer such number of shares of Common Stock as is required pursuant to Section
4(e) of the Purchase Agreement (the “Commitment Shares”); and


 


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


 


NOW, THEREFORE,
in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:


 


1.DEFINITIONS.


 


As used in this Agreement,
the following terms shall have the following meanings:


 


a.“Person”
means any person or entity including any corporation, a limited liability company, an association, a partnership, an organization,
a business, an individual, a governmental or political subdivision thereof or a governmental agency.


 


b.“Register,”
“registered,” and “registration” refer to a registration effected by preparing and filing
one or more registration statements of the Company in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act
or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration
or ordering of effectiveness of such registration statement(s) by the U.S. Securities and Exchange Commission (the “SEC”).


 





c.“Registrable
Securities” means (i) all of the Commitment Shares and (ii) such number of additional Purchase Shares as reasonably determined
by the Company, which may from time to time be, issued or issuable to the Buyer upon purchases of the Available Amount under the
Purchase Agreement, and any shares of capital stock issued or issuable with respect to the Purchase Shares, the Commitment Shares
or the Purchase Agreement as a result of any stock split, stock dividend, recapitalization, exchange or similar event, without
regard to any limitation on purchases under the Purchase Agreement.


 






      


     


    

 


d.“Registration
Statement” means a registration statement of the Company covering only the sale of the Registrable Securities.


 


2.REGISTRATION.


 


a.Mandatory Registration.
The Company shall use reasonable commercial efforts to file with the SEC the Registration Statement within Ten (10) Business Days
from the date hereof. The Registration Statement shall register only the Registrable Securities and no other securities of the
Company. The Buyer shall have a reasonable opportunity to review and comment upon such Registration Statement or any amendment
to such Registration Statement and any related prospectus prior to its filing with the SEC. The Buyer shall furnish all information
reasonably requested by the Company for inclusion therein. The Company shall use its reasonable commercial efforts to have the
Registration Statement or any amendment declared effective by the SEC as soon as reasonably practicable. Subject to Section 3(e),
the Company shall use reasonable commercial efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated
under the 1933 Act and available for sales of all of the Registrable Securities at all times until the earlier of (i) the date
as of which the Buyer may sell all of the Registrable Securities without restriction pursuant to Rule 144 promulgated under the
1933 Act (or successor thereto) or (ii) the date on which the Buyer shall have sold all the Registrable Securities and no Available
Amount remains under the Purchase Agreement (the “Registration Period”). The Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.


 


b.Rule 424 Prospectus.
The Company shall, as required by applicable securities regulations, from time to time file with the SEC, pursuant to Rule 424
promulgated under the 1933 Act, a prospectus and prospectus supplements, if any, to be used in connection with sales of the Registrable
Securities under the Registration Statement. The Buyer shall have two (2) Business Days to review and comment upon such prospectus
prior to its filing with the SEC. The Buyer shall use its reasonable commercial efforts to comment upon such prospectus within
two (2) Business Days from the date the Buyer receives the final version of such prospectus.


 


c.Sufficient Number
of Shares Registered. In the event the number of shares available under the Registration Statement is insufficient to cover
the Registrable Securities, the Company shall, to the extent necessary and permissible, amend the Registration Statement or file
a new registration statement (a “New Registration Statement”), so as to cover all such Registrable Securities
as soon as practicable after the Buyer notifies in writing the Company about the necessity therefor. The Company shall use its
reasonable commercial efforts to have such amendment and/or New Registration Statement become effective as soon as reasonably practicable
following the filing thereof.


 


3.RELATED OBLIGATIONS.


 


With respect to the
Registration Statement and whenever any Registrable Securities are to be registered pursuant to Sections 2(a) and (c), including
on any New Registration Statement, the Company shall use its reasonable commercial efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following
obligations:


 






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a.The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any Registration
Statement and the prospectus used in connection with such Registration Statement, as may be necessary to keep the Registration
Statement or any New Registration Statement effective at all times during the Registration Period, subject to Section 3(e)
hereof and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement or any New Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement. Should the Company file a post-effective amendment to the Registration Statement
or a New Registration Statement, the Company will use its reasonable commercial efforts to have such filing declared effective
by the SEC within sixty (60) consecutive Business Days as of the date of filing, which
such period shall be extended for an additional thirty (30) Business Days if the Company
receives a comment letter from the SEC in connection therewith.


 








b.The Company shall
submit to the Buyer for review and comment any disclosure in the Registration Statement, any New Registration Statement and all
amendments and supplements thereto (other than prospectus supplements that consist only of a copy of a filed Form 10-K, Form 10-Q
or a Current Report on Form 8-K or any amendment as a result of the Company’s filing of a document that is incorporated
by reference into the Registration Statement or New Registration Statement) containing information provided by the Buyer for inclusion
in such document and any descriptions or disclosure regarding the Buyer, the Purchase Agreement, including the transaction contemplated
thereby, or this Agreement at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form
to which Buyer reasonably and timely objects. Upon request of the Buyer, the Company shall provide to the Buyer all disclosure
in the Registration Statement or any New Registration Statement and all amendments and supplements thereto (other than prospectus
supplements that consist only of a copy of a filed Form 10-K, Form 10-Q or Current Report on Form 8-K or any amendment as a result
of the Company’s filing of a document that is incorporated by reference into the Registration Statement or New Registration
Statement) at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which Buyer
reasonably and timely objects. The Buyer shall use its reasonable commercial efforts to comment upon
the Registration Statement or any New Registration Statement and any amendments or supplements thereto within two (2) Business
Days from the date the Buyer receives the final version thereof.


 


c.Upon request of
the Buyer, the Company shall furnish to the Buyer, (i) upon the effectiveness of a Registration Statement, a copy of the prospectus
included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as the Buyer
may reasonably request) and (ii) such other documents, including copies of any preliminary or final prospectus, as the Buyer may
reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Buyer.


 


d.The Company shall
use reasonable commercial efforts to (i) register and qualify, unless an exemption from registration and qualification is available,
the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such
jurisdictions in the United States as the Buyer reasonably requests, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Buyer who holds
Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.


 






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e.As promptly as
reasonably practicable after becoming aware of such event or facts, the Company shall notify the Buyer in writing if the Company
has determined that the prospectus included in any Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and as promptly as reasonably practical (taking into account the
Company’s good faith assessment of any adverse consequences to the Company and its stockholders of premature disclosure of
such event or facts) prepare a prospectus supplement or amendment to such Registration Statement to correct such untrue statement
or omission, and, upon the Buyer’s request, deliver a copy of such prospectus supplement or amendment to the Buyer. In providing
this notice to the Buyer, the Company shall not include any other information about the facts underlying the Company’s determination
and shall not in any way communicate any material nonpublic information about the Company or the Common Stock to the Buyer. The
Company shall also promptly notify the Buyer in writing (i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness
shall be delivered to the Buyer by facsimile or e-mail on the same day of such effectiveness), (ii) of any request by the SEC for
amendments or supplements to any Registration Statement or related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. In no event shall the
delivery of a notice under this Section 3(e), or the resulting unavailability of a Registration Statement, without regard to its
duration, for disposition of securities by Buyer be considered a breach by the Company of its obligations under this Agreement.


 


f.The Company shall
use its reasonable commercial efforts to prevent the issuance of any stop order or other suspension of effectiveness of any Registration
Statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order
or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest practical time and to notify the
Buyer of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.


 


g.The Company shall
(i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) secure designation and quotation of all the Registrable Securities if the Principal Market (as such term
is defined in the Purchase Agreement) is an automated quotation system. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section.


 


h.The Company shall
cooperate with the Buyer to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to any Registration Statement and enable such certificates to be
in such denominations or amounts as the Buyer may reasonably request and registered in such names as the Buyer may request.


 


i.Within one (1)
Business Day after any Registration Statement is ordered effective by the SEC, the Company shall deliver to the Transfer Agent
for such Registrable Securities (with copies to the Buyer) confirmation that such Registration Statement has been declared effective
by the SEC in the form attached hereto as Exhibit A.


 






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j.The Company agrees
to take all other reasonable actions as necessary and reasonably requested by the Buyer to expedite and facilitate disposition
by the Buyer of Registrable Securities pursuant to any Registration Statement.


 


4.OBLIGATIONS OF
THE BUYER.


 


a.The Buyer has furnished
to the Company in Exhibit B hereto such information regarding itself, the Registrable Securities held by it and the intended
method of disposition of the Registrable Securities held by it as required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the Company may reasonably request. The Company shall
notify the Buyer of any other information the Company requires from the Buyer in connection with any Registration Statement hereunder.
The Buyer will as promptly as practicable notify the Company of any material change in the information set forth in Exhibit
B, other than changes in its ownership of the Common Stock.


 


b.The Buyer agrees
to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any amendments
and supplements to any Registration Statement hereunder.


 


c.The Buyer agrees
that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in
Section 3(f) or any notice of the kind described in 3(e), the Buyer will immediately discontinue disposition of Registrable Securities
pursuant to any registration statement(s) covering such Registrable Securities until the Buyer’s receipt (which may be accomplished
through electronic delivery) of the copies of the filed supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e). In addition, upon receipt of any notice from the Company of the kind described in the first sentence of
Section 3(e), the Buyer will immediately discontinue purchases or sales of any securities of the Company unless such purchases
or sales are in compliance with applicable U.S. securities laws. Notwithstanding anything to the contrary, the Company shall cause
its Transfer Agent to deliver as promptly as practicable shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which the Buyer has received
a Purchase Notice or VWAP Purchase Notice (both as defined in the Purchase Agreement) prior to the Buyer’s receipt of a notice
from the Company of the happening of any event of the kind described in Section 3(f) or 3(e) and for which the Buyer has not yet
settled.


 


5.EXPENSES OF REGISTRATION.


 


All reasonable expenses
of the Company, other than sales or brokerage commissions and fees and disbursements of counsel for the Buyer, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing
and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by
the Company.


 






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6.INDEMNIFICATION.


 


a.In connection with
the Registration Statement or any New Registration Statement, the Company will indemnify the Buyer, its members, directors, officers,
employees, agents and representatives (each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses,
(collectively, “Claims”) reasonably incurred in defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency or body or
the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material
fact in the Registration Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made
in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state
a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files
any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not
misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1933 Act or the Securities Exchange
Act of 1934, as amended (the “1934 Act”), any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration
Statement or any New Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”).
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (A) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon or in conformity
with information furnished to the Company by such Indemnified Person; (B) with respect to any superseded prospectus, shall not
inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any other Indemnified Person) if the untrue statement or omission of material fact
contained in the superseded prospectus was corrected in the revised prospectus, as then amended or supplemented; (C) shall not
be available to the extent such Claim is based on a failure of the Buyer to deliver, or to cause to be delivered, the prospectus
made available by the Company, if such prospectus was theretofore made available by the Company pursuant to Section 3(c) or Section
3(e); and (D) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company.


 


b.In connection with
the Registration Statement or any New Registration Statement, the Buyer agrees to indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, its directors, officers, employees, agents and representatives
(collectively, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based
upon any Violation, in each case to the extent that such Violation occurs in connection with (i) information about the Buyer, its
affiliates, its controlling persons and/or Buyer’s or its affiliates’, designees’ or agents’ plan of distribution
of the Registrable Securities, including, without limitation, the information set forth on Exhibit B attached hereto, in
each case provided from time to time by or on behalf of the Buyer to the Company or any of its directors, officers, employees,
counsel, accountants, agents or other representatives or updated from time to time by or on behalf of the Buyer; or (ii)
from the failure of the Buyer to deliver or to cause to be delivered the prospectus made available by the Company. Such indemnity
shall survive the transfer of the Registrable Securities by the Buyer pursuant to Section 7.


 






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c.Promptly after
receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim
in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be, and upon
such notice, the indemnifying party shall not be liable to the Indemnified Person or Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Person or Indemnified Party in connection with the defense thereof; provided, however,
that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation
by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel
in such proceeding. The Indemnified Party or Indemnified Person shall cooperate with the indemnifying party in connection with
any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised 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 written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.
No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, 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 Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation.
Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person 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 Indemnified Person or Indemnified Party under
this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.


 


7.ASSIGNMENT OF
REGISTRATION RIGHTS.


 


The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. The Buyer may not
assign its rights under this Agreement without the prior written consent of the Company.


 


8.AMENDMENT OF
REGISTRATION RIGHTS.


 


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 Buyer.


 


9.MISCELLANEOUS.


 


a.Any notices, consents
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); (iii) upon receipt, when sent
by electronic message (provided the recipient responds to the message and confirmation of both electronic messages are kept on
file by the sending party); or (iv) one (1) Business Day after timely deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall
be:


 






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If to the Company:


 


NET ELEMENT, INC.


 


3363 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


 


If to the Buyer:


 


ESOUSA HOLDINGS, LLC


317 Madison Avenue, Suite 1621


New York, NY 10017


Telephone:212-732-4300


Facsimile:212-732-1131


Attention:Rachel Glicksman,
Managing Member


Email:wallstguy@hotmail.com


 


or at such other address and/or facsimile
number and/or to the attention of such other person as the recipient party has specified by written notice given to each other
party one (1) Business Day prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, and recipient facsimile number, (C) electronically generated by the sender’s electronic mail containing
the time, date and recipient email address or (D) provided by a nationally recognized overnight delivery service, shall be rebuttable
evidence of receipt in accordance with clause (i), (ii), (iii) or (iv) above, respectively. Any party to this Agreement may give
any notice or other communication hereunder using any other means (including messenger service, ordinary mail or electronic mail),
but no such notice or other communication shall be deemed to have been duly given unless it actually is received by the party for
whom it is intended.


 


b.No failure or delay
in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.


 


c.The
corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Florida. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the County of Miami-Dade, Florida 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. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
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 HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 






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d.This Agreement,
the Purchase Agreement and the other Transaction Documents constitute the entire understanding among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement, the Purchase Agreement and the other Transaction Documents
supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and persons acting on their
behalf with respect to the subject matter hereof and thereof.


 


e.Subject to the
requirements of Section 7, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.


 


f.The headings in
this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.


 


g.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 or pdf (or
other electronic reproduction of a) 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 or pdf (or other electronic reproduction of
a) signature.


 


h.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 the 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.


 


i.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.


 


j.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.


 


* * * * *


 


 






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IN WITNESS WHEREOF, the parties have
caused this Registration Rights Agreement to be duly executed as of day and year first above written.


  


 





	 	 	 	 
	 	 	 	 
	 	THE
    COMPANY:	 
	 	 	 	 
	 	NET ELEMENT, INC.	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Oleg Firer	 
	 	Name:	Oleg Firer	 
	 	Title: 	CEO	 
	 	 	 	 
	 	 	 	 
	 	BUYER:	 
	 	 	 	 
	 	ESOUSA HOLDINGS, LLC	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Rachel Glicksman	 
	 	Name:	Rachel Glicksman	 
	 	Title: 	Managing Member	 
	 	 	 	 
	 	 	 	 







 


 


 



     


     


    







 


EXHIBIT A


 





FORM OF NOTICE OF EFFECTIVENESS OF
REGISTRATION STATEMENT


 


[Date]


 


Continental Stock Transfer & Trust
Company


17 Battery Place, 8th Floor


New York, NY 10004


E-mail: mmullings@continentalstock.com


Attention: Michael G. Mullings


 


RE: NET ELEMENT, INC.


 


Ladies and Gentlemen:


 


We refer to that certain Common Stock Purchase
Agreement, dated as of July 6, 2016 (the “Purchase Agreement”), entered into by and between NET ELEMENT,
INC., a Delaware corporation (the “Company”) and ESOUSA HOLDINGS, LLC (the “Buyer”)
pursuant to which the Company has agreed to issue to the Buyer shares of the Company’s Common Stock, par value $0.0001 per
share (the “Common Stock”), in an amount up to Ten Million Dollars ($10,000,000), in accordance with the terms
of the Purchase Agreement. In connection with the transactions contemplated by the Purchase Agreement, the Company has registered
with the U.S. Securities and Exchange Commission (the “SEC”) the sale by the Buyer of the following shares of
Common Stock:


 


		(1)	up to [Total # of Purchase Shares] shares of Common Stock to be issued upon purchase from
the Company by the Buyer from time to time (the “Purchase Shares.”); and



 


		(2)	[___________] shares of Common Stock to be issued
to the Buyer as a commitment fee (the “Commitment Shares”).



 


In connection with the transactions contemplated
by the Purchase Agreement, the Company has filed a registration statement on Form S-1 (File No. 333_______) (the “Registration
Statement”) with the SEC relating to the sale by the Buyer of the Purchase Shares and the Commitment Shares. Accordingly,
we advise you that (i) the SEC has entered an order declaring the Registration Statement effective under the Securities Act of
1933 Act (the “1933 Act”) on ______, 2016, (ii) we have no knowledge, after review of the stop order notification
website maintained by the SEC, that any stop order suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and (iii) the Purchase Shares and the Commitment Shares are available for
sale under the 1933 Act pursuant to the Registration Statement. Accordingly, and in reliance on certain covenants made by the Buyer
regarding the manner of sale of the Shares, certificates representing the Shares may be issued without any restrictive legend.


 


Very truly yours,


 


Net Element, Inc.


 


By: ____________________


Name: ________________


Title: ________________


 


CC:ESOUSA HOLDINGS, LLC


 




     


     


    

 


EXHIBIT B


 


Information About The Buyer Furnished
To The Company By The Buyer


Expressly For Use In Connection With
The Registration Statement and Prospectus


 


Rachel Glicksman is the Managing Member
of ESOUSA Holdings, LLC (“ESOUSA Holdings”). Rachel Glicksman may be deemed to be a beneficial owner of common
stock held by ESOUSA Holdings. Rachel Glicksman disclaims beneficial ownership of the common stock held by ESOUSA Holdings.


 


Plan of Distribution


 


The common stock offered by this prospectus
is being offered by ESOUSA Holdings, the selling stockholder. The common stock may be sold or distributed from time to time by
the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents
at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. The sale of the common stock offered by this prospectus may be effected in one or more of the
following methods:


 


		·	ordinary brokers’ transactions;



 


		·	transactions involving cross or block trades;



 


		·	through brokers, dealers, or underwriters who may act solely as agents;



 


		·	“at the market” into an existing market for the common
stock;



 


		·	in other ways not involving market makers or established business
markets, including direct sales to purchasers or sales effected through agents;



 


		·	in privately negotiated transactions; or



 


		·	any combination of the foregoing.



 


In order to comply with the securities laws
of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in
certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption
from the registration or qualification requirement is available and complied with.


 


The selling stockholder may also sell shares
of common stock under Rule 144 promulgated under the Securities Act, if available, rather than under this prospectus. In addition,
the selling stockholder may transfer the shares of common stock by other means not described in this prospectus.


 


Brokers, dealers, underwriters, or agents
participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions
from the selling stockholder and/or purchasers of the common stock for whom the broker-dealers may act as agent. ESOUSA Holdings
has informed us that each such broker-dealer will receive commissions from ESOUSA Holdings which will not exceed customary brokerage
commissions.


 


ESOUSA Holdings is an “underwriter”
within the meaning of the Securities Act.


 


Neither we nor ESOUSA Holdings can presently
estimate the amount of compensation that any agent will receive. We know of no existing arrangements between ESOUSA Holdings, any
other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares offered by this prospectus.
At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth
the names of any agents, underwriters, or dealers and any compensation from the selling stockholder, and any other required information.
Pursuant to a requirement of the Financial Industry Regulatory Authority, or FINRA, the maximum commission or discount and other
compensation to be received by any FINRA member or independent broker-dealer shall not be greater than eight percent (8%) of the
gross proceeds received by us for the sale of any securities being registered pursuant to Rule 415 under the Securities Act.


 






     


     


    

 


We will pay all of the expenses incident
to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters, broker-dealers,
or agents. We have agreed to indemnify ESOUSA Holdings and certain other persons against certain liabilities in connection with
the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity
is unavailable, to contribute amounts required to be paid in respect of such liabilities. ESOUSA Holdings has agreed to indemnify
us against liabilities under the Securities Act that may arise from certain written information furnished to us by ESOUSA Holdings
specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect
of such liabilities.


 


Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that
in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.


 


ESOUSA Holdings and its affiliates have
agreed not to engage in any direct or indirect short selling or hedging of our common stock during the term of the Purchase Agreement.


 


We have advised ESOUSA Holdings that while
it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated
under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling stockholder,
any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing,
or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security
in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered hereby
this prospectus.


 


We may suspend the sale of shares by ESOUSA
Holdings pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to
be supplemented or amended to include additional material information.


 


This offering will terminate on the date
that all shares offered by this prospectus have been sold by ESOUSA Holdings.