Exhibit 10.1


 





COMMON STOCK PURCHASE AGREEMENT


 


COMMON STOCK PURCHASE
AGREEMENT (the “Agreement”), dated as of July 6, 2016, by and between NET ELEMENT, INC., a Delaware
corporation (the “Company”), and ESOUSA HOLDINGS, LLC, a New York limited liability company (the “Buyer”).
Capitalized terms used herein and not otherwise defined herein are defined in Section 10 hereof.


 


WHEREAS:


 


Subject to the terms
and conditions set forth in this Agreement, the Company wishes to sell to the Buyer, and the Buyer wishes to buy from the Company,
up to Ten Million Dollars ($10,000,000) of the Company’s common stock, par value $0.0001 (the “Common Stock”).
The shares of Common Stock to be purchased hereunder are referred to herein as the “Purchase Shares.”


 


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


 


		1.	PURCHASE OF COMMON STOCK. 



 


Subject to the terms
and conditions set forth in this Agreement, the Company has the right to sell to the Buyer, and the Buyer has the obligation to
purchase from the Company, Purchase Shares as follows:


 


(a)Commencement of Purchases
of Common Stock. After the Commencement Date (as defined below), the purchase and sale of Purchase Shares hereunder shall occur
from time to time upon written notices by the Company to the Buyer on the terms and conditions as set forth herein following the
satisfaction of the conditions (the “Commencement”) as set forth in Sections 6 and 7 below (the date of satisfaction
of such conditions, the “Commencement Date”).


  


(b)The
Company’s Right to Require Regular Purchases. Subject to the terms and conditions of this Agreement, on any given Business
Day after the Commencement Date (as often as every other Business Day), the Company shall have the right but not the obligation
to direct the Buyer by its delivery to the Buyer of a Purchase Notice from time to time, and the Buyer thereupon shall have the
obligation, to buy the number of Purchase Shares specified in such notice, up to 50,000 Purchase Shares (with such amounts increasing
as the Common Stock price increases), on such Business Day (as long as such notice is delivered on or before 5:00 p.m. Eastern
time on such Business Day) (each such purchase, a “Regular Purchase”) at the Purchase Price on the Purchase
Date; however, in no event shall the Purchase Amount of a Regular Purchase exceed One Million Dollars ($1,000,000) per Business
Day. The number of Purchase Shares for each Regular Purchase may be increased to up to 75,000 Purchase Shares if the Consolidated
Closing Bid Price of the Common Shares is not below $0.50 per share on the date of the applicable Purchase Notice and to up to
100,000 Purchase Shares if the Consolidated Closing Bid Price of the Common Shares is not below $1.00 per share on the date of
the applicable Purchase Notice. The Company may deliver additional Purchase Notices to the Buyer from time to time so long as
the most recent purchase has been completed.  The share amounts in the first sentence of this Section 1(b) shall be appropriately
adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or other similar transaction.


 






     


     


    

 


(c)VWAP
Purchases. Subject to the terms and conditions of this Agreement, in addition to the Company’s right to require
Regular Purchases as described in Section 1(b) above, with one Business Day’s prior written notice (as long as such notice
is delivered on or before 5:00 p.m. Eastern time on the Business Day immediately preceding the VWAP Purchase Date), the Company
shall also have the right but not the obligation to direct the Buyer by the Company’s delivery to the Buyer of a VWAP Purchase
Notice from time to time, and the Buyer thereupon shall have the obligation, to buy, at the VWAP Purchase Price, the number of
shares of Common Stock indicated by the Company in the applicable VWAP Purchase Notice (such number to not exceed the lesser of
(i) two (2) times the maximum number of shares allowed to be sold for a Regular Purchase with applicable Consolidated Closing
Bid Prices or (ii) twenty percent (20%) of the trading volume of the Common Stock on the Principal Market during normal trading
hours on the VWAP Purchase Date) (each such purchase, a “VWAP Purchase”). The Company may deliver a VWAP Purchase
Notice to the Buyer on or before 5:00 p.m. Eastern time on a date on which the Company also submitted a Purchase Notice for a
Regular Purchase. Each VWAP Purchase Notice must be accompanied by instructions to the Company’s Transfer Agent to immediately
issue to the Buyer an amount of Common Stock equal to the VWAP Purchase Share Estimate, a good faith estimate by the Company of
the number of Purchase Shares that the Buyer shall have the obligation to buy pursuant to the VWAP Purchase Notice. In no event
shall the Buyer, pursuant to any VWAP Purchase, purchase a number of Purchase Shares that exceeds the VWAP Purchase Share Estimate
issued on the VWAP Purchase Date in connection with such VWAP Purchase Notice. The Buyer will immediately return to the Company
any amount of Common Stock issued pursuant to the VWAP Purchase Share Estimate that exceeds the number of Purchase Shares the
Buyer actually purchases in connection with such VWAP Purchase. Following each VWAP Purchase Date, the Buyer shall submit to the
Company a confirmation of the VWAP Purchase in form and substance reasonably acceptable to the Company. The Company may deliver
additional VWAP Purchase Notices to the Buyer from time to time so long as the most recent purchase has been completed and so
long as the Consolidated Closing Bid Price is not below $0.25 on the Purchase Date. The Company may, by written notice to the
Buyer, in its sole discretion at any time after the date of this Agreement, suspend or terminate this Section 1(c) and its right
to direct the Buyer to make VWAP Purchases.


 


(d)Payment for
Purchase Shares. For each Regular Purchase, the Buyer shall pay to the Company an amount equal to the Purchase Amount applicable
to such Regular Purchase as full payment for such Purchase Shares via wire transfer of immediately available funds on the same
Business Day that the Buyer receives such Purchase Shares. For each VWAP Purchase, the Buyer shall pay to the Company an amount
equal to the VWAP Purchase Amount as full payment for such Purchase Shares via wire transfer of immediately available funds on
the third Business Day following the VWAP Purchase Date. All payments made under this Agreement shall be made in lawful money of
the United States of America via wire transfer of immediately available funds to such account as the Company may from time to time
designate by written notice in accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day
that is a Business Day.


 


(e)Purchase
Price Floor. The Company and the Buyer shall not effect any sales under this Agreement on any Purchase Date where the Consolidated
Closing Bid Price is less than the Floor Price. “Floor Price” means $0.50 per share of Common Stock,
which shall be appropriately adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split
or other similar transaction.


 


(f)Records of
Purchases. The Buyer and the Company shall each maintain records showing the remaining Available Amount at any given time and
the dates and purchase amounts for each purchase, or shall use such other method reasonably satisfactory to the Buyer and the Company
to reconcile the remaining Available Amount.


 


(g)Taxes.
The Company shall pay any and all transfer, stamp or similar taxes that may be payable with respect to the issuance and delivery
of any shares of Common Stock to the Buyer made under this Agreement.


 





 






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(h)Compliance
with Principal Market Rules. Notwithstanding anything in this Agreement to the contrary, and in addition to the limitations
set forth in Section 1(e), the total number of shares of Common Stock that may be issued under this Agreement, including the Commitment
Shares (as defined in Section 4(e) hereof), shall be limited to 2,362,724 shares of Common Stock (the “Exchange Cap”),
which equals 19.99% of the Company’s outstanding shares of Common Stock as of the date hereof, unless stockholder approval
is obtained to issue more than such 19.99%. The Exchange Cap shall be appropriately adjusted for any stock dividend, stock split,
reverse stock split or similar transaction. The foregoing limitation shall not apply if such stockholder approval has not been
obtained and at any time the Exchange Cap is reached and at all times thereafter the average price paid for all shares of Common
Stock issued under this Agreement is equal to or greater than $1.880 (the “Minimum Price”), a price equal to the Consolidated
Closing Bid Price on the date hereof (in such circumstance, for purposes of the Principal Market, the transaction contemplated
hereby would not be “below market” and the Exchange Cap would not apply). Notwithstanding the foregoing, the Company
shall not be required or permitted to issue, and the Buyer shall not be required to purchase, any shares of Common Stock under
this Agreement if such issuance would violate the rules or regulations of the Principal Market.


 


(i)Beneficial
Ownership Limitation. The Company shall not issue and the Buyer shall not purchase any shares of Common Stock under this Agreement
if such shares proposed to be issued and sold, when aggregated with all other shares of Common Stock then owned beneficially (as
calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the Buyer and its affiliates
would result in the beneficial ownership by the Buyer and its affiliates of more than 9.99% of the then issued and outstanding
shares of Common Stock.


 


2.BUYER’S
REPRESENTATIONS AND WARRANTIES.


 


The Buyer represents
and warrants to the Company that as of the date hereof and as of the Commencement Date:


 


(a)Investment
Purpose. The Buyer is entering into this Agreement and acquiring the Commitment Shares (as defined in Section 4(e) hereof)
and the Purchase Shares (the Purchase Shares and the Commitment Shares are collectively referred to herein as the “Securities”),
for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution
thereof; provided however, by making the representations herein, the Buyer does not agree to hold any of the Securities for any
minimum or other specific term.


 


(b)Accredited
Investor Status. The Buyer is either a “qualified institutional buyer” as such term is defined in Rule 144A(a)(1)
of the 1933 Act or an institutional “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation D
of the 1933 Act.


 


(c)Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings
of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire
the Securities.


 


(d)Information.
The Buyer has been furnished with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably requested by the Buyer, including, without limitation,
the SEC Documents (as defined in Section 3(f) hereof). The Buyer understands that its investment in the Securities involves a high
degree of risk. The Buyer (i) is able to bear the economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the
proposed investment in the Securities and (iii) has had an opportunity to ask questions of and receive answers from the officers
of the Company concerning the financial condition and business of the Company and other matters related to an investment in the
Securities. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities.


 






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(e)No Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


 


(f)Transfer
or Sale. The Buyer understands that except as provided in the Registration Rights Agreement (as defined in Section 4(a) hereof):
(i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered
for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or (B) an exemption exists permitting such
Securities to be sold, assigned or transferred without such registration; (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that
term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations
of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register the Securities under
the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.


 


(g)Organization.
The Buyer is a limited liability company duly organized and validly existing in good standing under the laws of New York, and has
the requisite organizational power and authority to own its properties and to carry on its business as now being conducted.


 


(h)Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is a valid
and binding agreement of the Buyer enforceable against the Buyer in accordance with its terms, subject as to enforceability to
(i) general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and (ii) public policy
underlying any law, rule or regulation (including any federal or state securities law, rule or regulation) with regards to indemnification,
contribution or exculpation. The execution and delivery of the Transaction Documents by the Buyer and the consummation by it of
the transactions contemplated hereby and thereby do not conflict with the Buyer’s certificate of organization or operating
agreement or similar documents, and do not require further consent or authorization by the Buyer, its managers or its members.


 


(i)Residency.
The Buyer is a resident of the State of New York.


 


(j)No Prior
Short Selling. The Buyer represents and warrants to the Company that at no time prior to the date of this Agreement has any
of the Buyer, its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly,
any (i) “short sale” (as such term is defined in Section 242.200 of Regulation SHO of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) of the Common Stock or (ii) hedging transaction, which establishes a net
short position with respect to the Common Stock or any other Company’s securities.


 


3.REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. 


 


The Company represents
and warrants to the Buyer that as of the date hereof and as of the Commencement Date:


 






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(a)Organization
and Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in
which the Company, directly or indirectly, owns more than 50% of the voting stock or capital stock or other similar equity
interests) are corporations or limited liability companies duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated or organized, and have the requisite corporate or organizational power and
authority to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation or limited liability company to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on any of: (i)
the business, properties, assets, operations, results of operations or financial condition of the Company and its Subsidiaries,
if any, taken as a whole, or (ii) the authority or ability of the Company to perform its obligations under the Transaction Documents
(as defined in Section 3(b) hereof).


 


(b)Authorization;
Enforcement; Validity. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement, the Registration Rights Agreement and each of the other agreements entered into by the parties on the Commencement
Date and attached hereto as exhibits to this Agreement (collectively, the “Transaction Documents”), and to issue
the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation, the issuance
of the Commitment Shares and the reservation for issuance and the issuance of the Purchase Shares issuable under this Agreement,
have been duly authorized by the Company’s Board of Directors or duly authorized committee thereof, do not conflict with
the Company’s Amended and Restated Articles of Incorporation (as amended through the date hereof) or Bylaws (as mended through
the date hereof), and do not require further consent or authorization by the Company, its Board of Directors or its stockholders
(other than as contemplated by Section 1(h) hereof), (iii) this Agreement has been, and each other Transaction Document shall be
on the Commencement Date, duly executed and delivered by the Company and (iv) this Agreement constitutes, and each other Transaction
Document upon its execution on behalf of the Company, shall constitute, the valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such enforceability may be limited by (y) general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of creditors' rights and remedies and (z) public policy underlying any law, rule or regulation (including any federal
or states securities law, rule or regulation) with regards to indemnification, contribution or exculpation. The Board of Directors
of the Company or duly authorized committee thereof has approved the resolutions (the “Signing Resolutions”)
substantially in the form as set forth as Exhibit A-1 attached hereto to authorize this Agreement and the transactions contemplated
hereby. The Signing Resolutions are valid, in full force and effect and have not been modified or supplemented in any material
respect other than by the resolutions set forth in Exhibit A-2 attached hereto regarding the registration statement referred
to in Section 4 hereof.


 


(c)Capitalization.
As of the date hereof, the authorized capital stock of the Company consists of (i) 300,000,000 shares of Common Stock, par value
$0.0001, of which as of the date hereof, 11,819,531 shares are issued and outstanding, and (ii) 1,000,000 shares of preferred stock,
of which as of the date hereof no shares are issued and outstanding. All of such outstanding shares have been, or upon issuance
will be, validly issued and are fully paid and non-assessable. Except as disclosed in SEC Documents (as defined below), no shares
of the Company’s capital stock are 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 debt securities of the Company or any of its Subsidiaries,
(iii) 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, 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, any shares of capital
stock of the Company or any of its Subsidiaries, (iv) there are no material 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 (except the Registration
Rights Agreement), (v) 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, (vi) there are
no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities
as described in this Agreement and (vii) the Company does not have any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement. The Company will furnish to the Buyer upon Buyer’s written request
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”).


 






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(d)Issuance
of Securities. The Commitment Shares have been duly authorized and, upon issuance in accordance with the terms hereof, the
Commitment Shares shall be (i) validly issued, fully paid and non-assessable and (ii) free from all taxes, liens and charges with
respect to the issuance thereof. At least an additional 10,000,000 shares of Common Stock have been duly authorized and reserved
for issuance upon future purchase as Purchase Shares under this Agreement. Upon issuance and payment therefore in accordance with
the terms and conditions of this Agreement, such Purchase Shares shall be validly issued, fully paid and non-assessable and free
from all 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.


 


(e)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 reservation for issuance and issuance of the Purchase
Shares) will not (i) result in a violation of the Certificate of Incorporation, including any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company, or the Bylaws or (ii) 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 the Company or any of its Subsidiaries is a party,
or result, to the Company’s knowledge, in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations of the Principal Market 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, except
in the case of defaults, terminations, amendments, accelerations, cancellations and violations under clause (ii), which could not
reasonably be expected to result in a Material Adverse Effect. Except as disclosed in Schedule 3(e), neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate of Incorporation, including any Certificate of
Designation, Preferences and Rights of any outstanding series of preferred stock of the Company, or Bylaws or their organizational
charter or bylaws, respectively. Except as disclosed in Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation
of any term of or is in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for possible violations,
defaults, terminations or amendments that could not reasonably be expected to have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, ordinance, or regulation
of any governmental entity, except for possible violations, the sanctions for which either individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect. Except as specifically contemplated by this Agreement, reporting
obligations under the 1934 Act or as required under the 1933 Act or applicable state securities laws or the filing of a Listing
of Additional Shares Notification Form with the Principal Market, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency
in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except for reporting obligations under the 1934 Act, all consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the preceding sentence shall be obtained or effected on or
prior to the Commencement Date. The Company is not subject to any notices or actions from or to the Principal Market, except as
disclosed in the Current Report on Form 8-K filed by the Company with the SEC on December 17, 2015 and other than routine matters
incident to listing on the Principal Market and not involving a violation of the rules of the Principal Market. To the Company’s
knowledge, except as disclosed in the Current Report on Form 8-K filed by the Company with the SEC on December 17, 2015, the Principal
Market has not commenced any delisting proceedings against the Company.


 






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(f)SEC Documents;
Financial Statements. The Company filed current Form 10 information with the SEC over 12 months ago. The Company has filed
all reports and other materials required to be filed by Section 13 or 15(d) of the 1934 Act, as applicable, during the preceding
12 months (other than certain Form 8-K reports) (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”).


 


(g)Absence of
Certain Changes. Since December 31, 2015, there has been no material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries taken as a whole.


 


(h)Acknowledgment
Regarding Buyer’s Status. The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the 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 the Buyer’s purchase of the Securities. The Company further represents to the 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 and advisors.


 


(i)Intellectual
Property Rights. To the Company’s knowledge, the Company and its Subsidiaries own or possess adequate rights
or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights (collectively, “Intellectual Property”) necessary to conduct their respective businesses as now conducted,
or to the extent that the failure to own, possess, license or otherwise hold adequate rights to use Intellectual Property would
not, individually or in the aggregate, have a Material Adverse Effect. To the Company’s knowledge, none of the Company’s
active and registered Intellectual Property will expire or terminate by the terms and conditions thereof within two years from
the date of this Agreement which could reasonably be expected to have a Material Adverse Effect. The Company and its Subsidiaries
do not have any knowledge of any infringement by the Company or its Subsidiaries of any Intellectual Property of others
and there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened
against, the Company or its Subsidiaries regarding Intellectual Property, which could reasonably be expected to have a Material
Adverse Effect.


 






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(j)Environmental
Laws. To the Company’s knowledge, the Company and its Subsidiaries (i) are in material compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of the environment or human health and safety
and with respect to hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) have received all material permits, licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in material compliance with all terms and conditions of any such permit, license or approval,
except where, in each of the three foregoing clauses, the failure to so comply or receive such approvals could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.


 


(k)Title.
The Company has good and marketable title to all personal property owned by them that is material to the business of the Company
free and clear of all liens, encumbrances and defects except such as 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 or could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Any real property and facilities held under lease by the Company,
to the Company’s knowledge, are held by them under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property and buildings by the Company.


 


(l)Application
of Takeover Protections. The Company and its board of directors have taken or will take prior to the Commencement Date all
necessary action, if any, in order to render inapplicable 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
or the laws of the state of its incorporation which is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the Buyer’s
ownership of the Securities.


 


4.COVENANTS.


 


(a)Filing
of Form 8-K and Registration Statement. The Company agrees that it shall, within the time required under the 1934 Act, file
a Current Report on Form 8-K disclosing this Agreement and the transaction contemplated hereby. The Company shall use reasonable
commercial efforts to file with the SEC within Ten (10) Business Days from the date hereof a new registration statement covering
the sale of the Securities by the Buyer in accordance with the terms of the Registration Rights Agreement between the Company
and the Buyer, dated as of the date hereof (“Registration Rights Agreement”).


 


(b)Blue
Sky. The Company shall take such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify
(i) the initial issuance of the Securities to the Buyer under this Agreement and (ii) any subsequent sale of the Securities by
the Buyer, in each case, under applicable securities or “Blue Sky” laws of the states of the United States in such
states as is reasonably requested by the Buyer from time to time, and shall provide evidence of any such action so taken to the
Buyer at its written request.


 


(c)Listing.
The Company shall promptly secure the listing of all of the Securities upon each national securities exchange and automated quotation
system that requires an application by the Company for listing, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) or traded (including, if at any time applicable, the OTC Bulletin Board, or the OTCQB
or OTCQX market places of the OTC Markets) and shall maintain such listing, so long as any other shares of Common Stock
shall be so listed. The Company shall use its reasonable commercial efforts to maintain the Common Stock’s listing on the
Principal Market in accordance with the requirements of the Registration Rights Agreement. Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result in the delisting or suspension of the Common Stock
on the Principal Market, unless the Common Stock is immediately thereafter traded on the New York Stock Exchange, the NYSE MKT,
the Nasdaq Global Select Market, the Nasdaq Global Market, the OTC Bulletin Board, or the OTCQB or OTCQX market places of the
OTC Markets. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section.


 






    -8- 


     


    

 


(d)Limitation
on Short Sales and Hedging Transactions. The Buyer agrees that beginning on the date of this Agreement and ending on the date
of termination of this Agreement as provided in Section 10(k), the Buyer and its agents, representatives and affiliates shall not
in any manner whatsoever enter into or effect, directly or indirectly, any (i) “short sale” (as such term is defined
in Section 242.200 of Regulation SHO of the 1934 Act) of the Common Stock or (ii) hedging transaction, which establishes a net
short position with respect to the Common Stock or any other Company’s securities.


 


(e)Issuance
of Commitment Shares. Upon the earlier of (i) on or one (1) Business Day after the date when the registration statement covering
the sale of the Securities by the Buyer shall have been declared effective under the 1933 Act by the SEC and no stop order with
respect to the registration statement shall be pending or threatened by the SEC or (ii) six months after the date of this Agreement,
the Company shall issue to the Buyer as consideration for the Buyer entering into this Agreement such number of shares of Common
Stock that would have a value equivalent to Two Hundred Thousand Dollars ($200,000) calculated using the average of volume weighted
average price for the Common Stock traded on the Principal Market during normal trading hours during the three (3) Trading Days
period immediately preceding the date of issuance of such shares (the “Commitment Shares”). Upon Buyer’s
execution and delivery of this Agreement, the Buyer’s irrevocable commitment pursuant to Section 1 hereof to purchase the
Purchase Shares shall be deemed full and sufficient consideration for the Commitment Shares, and the Commitment Shares shall vest
and be deemed to be earned as of the date that all parties enter into all Transaction Documents.


 


(f)Due
Diligence. The Buyer shall have the right, from time to time as the Buyer may reasonably deem appropriate, to perform reasonable
due diligence on the Company during normal business hours and subject to reasonable prior notice to the Company. The Company and
its officers and employees shall provide information and reasonably cooperate with the Buyer in connection with any reasonable
request by the Buyer related to the Buyer’s due diligence of the Company, including, but not limited to, any such request
made by the Buyer in connection with (i) the filing of the registration statement described in Section 4(a) hereof and (ii) the
Commencement; provided, however, that at no time is the Company required or permitted to disclose material nonpublic information
to the Buyer or breach any obligation of confidentiality or non-disclosure to a third party or make any disclosure that
could cause a waiver of attorney-client privilege. Except as may be required by law, court order or governmental authority, each
party hereto agrees not to disclose any Confidential Information of the other party to any third party and shall not use the Confidential
Information of such other party for any purpose other than in connection with, or in furtherance of, the transactions contemplated
hereby. Each party hereto acknowledges that the Confidential Information shall remain the property of the disclosing party and
agrees that it shall take all reasonable measures to protect the secrecy of any Confidential Information disclosed by the other
party.


 


(g)Disposition
of Securities. The Buyer shall not sell any Securities except as provided in this Agreement, the Registration Rights Agreement
and the “Plan of Distribution” section of the prospectus included in the Registration Statement. The Buyer shall not
transfer any Securities except pursuant to sales described in the “Plan of Distribution” section of the prospectus
included in the Registration Statement or pursuant to Rule 144 under the 1933 Act. In the event of any sales of Securities pursuant
to the Registration Statement, the Buyer will (i) effect such sales pursuant to the “Plan of Distribution” section
of the prospectus included in the Registration Statement, and (ii) will comply with all applicable prospectus delivery requirements.


 






    -9- 


     


    

 


(h)The
Company agrees that, without prior consent of the Buyer, during the lesser of (i) thirty (30) months from the date hereof or (ii)
the period when the Buyer still owns the Commitment Shares and Purchase Shares, the Company will not issue any floating conversion
rate or variable priced securities convertible into Common Stock if such convertible securities shall have no floor price associated
therewith. Nothing contained in this Section 4(h) or otherwise shall restrict the Company in effecting any at-the-market
offerings with a registered broker-dealer.


 


5.TRANSFER AGENT
INSTRUCTIONS.


 


So long as the Buyer
complies with its obligations in Section 4(g), all of the Purchase Shares to be issued under this Agreement shall be issued without
any restrictive legend unless the Buyer expressly consents otherwise. The Company shall issue irrevocable instructions to the Transfer
Agent, and any subsequent transfer agent, to issue Common Stock in the name of the Buyer for the Purchase Shares (the “Irrevocable
Transfer Agent Instructions”). On or promptly after the date when the registration statement covering the sale of the
Securities by the Buyer shall have been declared effective under the 1933 Act by the SEC and no stop order with respect to the
registration statement shall be pending or threatened by the SEC, the Company shall deliver to the Transfer Agent an instruction
with respect to the issuance of the Commitment Shares.


 


		6.	CONDITIONS TO THE COMPANY’S RIGHT TO COMMENCE



			SALES OF SHARES OF COMMON STOCK UNDER THIS AGREEMENT.



 


The right of the Company
hereunder to commence sales of the Purchase Shares is subject to the satisfaction of each of the following conditions on or before
the Commencement Date (the date that the Company may begin sales of Purchase Shares):


 


		(a)	The Buyer shall have executed each of the Transaction Documents to which the Buyer is a party and
delivered the same to the Company; and



 


		(b)	A registration statement covering the sale of the
Securities by the Buyer shall have been declared effective under the 1933 Act by the SEC and no stop order with respect to the
registration statement shall be pending or threatened by the SEC.



 


		7.	CONDITIONS TO THE BUYER’S OBLIGATION TO MAKE PURCHASES OF SHARES OF COMMON STOCK.



 


The obligation of the
Buyer to buy Purchase Shares under this Agreement is subject to the satisfaction of each of the following conditions on or before
the Commencement Date (the date that the Company may begin sales of Purchase Shares) and once such conditions have been initially
satisfied, there shall not be any ongoing obligation to satisfy such conditions after the Commencement has occurred:


 


(a)The Company
shall have executed each of the Transaction Documents to which the Company is a party and delivered the same to the Buyer;


 


(b)The Company shall have issued
to the Buyer the Commitment Shares;


 


(c)The Common Stock
shall be authorized for quotation on the Principal Market;


 






    -10- 


     


    

 


(d)The Board of
Directors of the Company or a duly authorized committee thereof shall have adopted resolutions substantially
in the form attached hereto as Exhibit A-1, which shall be in full force and effect without
any amendment or supplement thereto as of the Commencement Date;


 


(e)As of the Commencement
Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting future
purchases of Purchase Shares hereunder, 10,000,000 shares of Common Stock;


 


(f)The Irrevocable
Transfer Agent Instructions, in form acceptable to the Buyer, shall have been signed by the Company and the Buyer and have been
delivered to the Transfer Agent;


 


(g)A registration
statement covering the sale of (i) all of the Commitment Shares and (ii) such number of additional Purchase Shares as reasonably
determined by the Company shall have been declared effective under the 1933 Act by the SEC and no stop order with respect thereto
shall be pending or threatened by the SEC. The Company shall have prepared and delivered to the Buyer a final and complete form
of prospectus, dated and current as of the Commencement Date, to be used by the Buyer in connection with any sales of any Securities,
and to be filed by the Company one (1) Business Day after the Commencement Date pursuant
to Rule 424(b). The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate
the issuance of the Commitment Shares and the Purchase Shares pursuant to this Agreement in compliance with such laws;


 


(h)No
Event of Default has occurred and is continuing, or any event which, after notice and/or lapse
of time, would become an Event of Default has occurred; and


 


(i)On
or prior to the Commencement Date, the Company shall take all necessary action, if any, and such actions as reasonably requested
by the Buyer, in order to render inapplicable any control share acquisition, business combination, stockholder
rights plan or poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under
the Certificate of Incorporation or the laws of the state of its incorporation, that is or could become applicable to the Buyer
as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of the Securities
and the Buyer's ownership of the Securities.


 


		8.	EVENTS OF DEFAULT. 



 


An “Event
of Default” shall be deemed to have occurred at any time as the following events occurs:


 


(a)while any registration
statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness
of such registration statement lapses for any reason (including, without limitation, the
issuance of a stop order) or is unavailable to the Buyer for the sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement), and such lapse or unavailability continues for a period of thirty ten (10) consecutive Business Days or for
more than an aggregate of thirty (30) Business Days in any 365-day period, which is not in connection with a post-effective amendment
to any such registration statement or the filing of a new registration statement; provided, however, that in connection with any
post-effective amendment to such registration statement or filing of a new registration statement that is required to be declared
effective by the SEC, such lapse or unavailability may continue for a period of no more than sixty (60) consecutive Business Days,
which such period shall be extended for up to an additional thirty (30) Business Days if the Company receives a comment letter
from the SEC in connection therewith;


 


(b)the suspension
of the Common Stock from trading for a period of one (1) trading day;


 






    -11- 


     


    

 


(c)the delisting
of the Common Stock from the Principal Market, and the Common Stock is not promptly thereafter trading on the New York Stock Exchange,
the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the OTB Bulletin Board or the OTCQB marketplace or OTCQX
marketplace of the OTC Markets Group;


 


(d)the
Company’s breach of any representation or warranty (as of the dates made), covenant or other term or condition under any
Transaction Document if such breach could reasonably be expected to have a Material Adverse Effect and except only if such breach
continues uncured for a period of at least twenty (20) Business Days;


 


(e)if the Company
pursuant to or within the meaning of any Bankruptcy Law; (A) commences a voluntary case, (B) consents to the entry of an order
for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially
all of its and its Subsidiaries’ property, or (D) makes a general assignment for the benefit of its creditors;


 


(f)a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian of the Company or for all or substantially all of its and its Subsidiaries’ property, or (C) orders
the liquidation of the Company;


 


(g)if the Company
is listed on a national exchange or market (excluding the OTC Markets, OTC Bulletin Board or comparable market), if at any time
after the Commencement Date, the Exchange Cap is reached unless and until stockholder approval is obtained pursuant to Section
1(h) hereof. The Exchange Cap shall be deemed to be reached at such time if, upon submission of a Purchase Notice or VWAP Purchase
Notice under this Agreement, the issuance of such shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue under this Agreement without breaching the Company’s obligations under the rules or regulations of
the Principal Market; or


 


(h)the Company
ceases for more than one (1) Business Day to be eligible, through its Transfer Agent, to issue and transfer shares of Common Stock
electronically to third parties via the DTC FAST Program of DTC’s DWAC system.


 


So long as an Event of Default has occurred
and is continuing, or so long as the Consolidated Closing Bid Price is below the Floor Price, the Company may not require and the
Buyer shall not be obligated or permitted to purchase any shares of Common Stock under this Agreement.


 


9.CERTAIN DEFINED
TERMS. 


 


For purposes of this
Agreement, the following terms shall have the following meanings:


 


(a)“1933
Act” means the Securities Act of 1933, as amended.


 


(b)“Available
Amount” means initially Ten Million Dollars ($10,000,000) in the aggregate which amount shall be reduced by the Purchase
Amount each time the Buyer purchases shares of Common Stock pursuant to Section 1 hereof.


 


(c)“Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.


 


(d)“Business
Day” means any day on which the Principal Market is open for trading during normal trading hours (i.e., 9:30 a.m. to
4:00 p.m. Eastern Time), including any day on which the Principal Market is open for trading for a period of time less than the
customary time.


 






    -12- 


     


    

 


(e)“Consolidated
Closing Bid Price” means the consolidated closing bid price for the Common Stock on the Principal Market as reported
by the Principal Market.


 


(f)“Confidential Information”
means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection
of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Confidential Information may also include information
disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to the time of disclosure by the disclosing party; (ii)
becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no
action or inaction of the receiving party; (iii) is already in the possession of the receiving party at the time of disclosure
by the disclosing party as shown by the receiving party’s files and records immediately prior to the time of disclosure;
(iv) is obtained by the receiving party from a third party without a breach of such third party’s obligations of confidentiality;
(v) is independently developed by the receiving party without use of or reference to the disclosing party’s Confidential
Information, as shown by documents and other competent evidence in the receiving party’s possession; or (vi) is required
by law to be disclosed by the receiving party, provided that the receiving party gives the disclosing party prompt written notice
of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure.


 


(g)“Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.


 


(h)“Maturity
Date” means the date that is thirty (30) months from the Commencement Date.


 


(i)“Person”
means an individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency thereof.


 


(j)“Principal
Market” means the Nasdaq Capital Market; provided however, that in the event the Company’s Common Stock is ever
listed or traded on the New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the OTC
Bulletin Board or either of the OTCQB marketplace or the OTCQX marketplace of the OTC Markets Group, then the “Principal
Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded.


 


(k)“Purchase
Amount” means, with respect to any particular purchase made hereunder, the portion of the Available Amount to be purchased
by the Buyer pursuant to Section 1 hereof as set forth in a valid Purchase Notice or VWAP Purchase Notice which the Company delivers
to the Buyer.


 


(l)“Purchase
Date” means with respect to any Regular Purchase made hereunder, the Business Day of receipt by the Buyer of a valid
Purchase Notice that the Buyer is to buy Purchase Shares pursuant to Section 1(b) hereof.


 


(m) “Purchase Notice”
shall mean an irrevocable written notice from the Company to the Buyer directing the Buyer to buy Purchase Shares pursuant to Section
1(b) hereof as specified by the Company therein at the applicable Purchase Price on the Purchase Date.


 






    -13- 


     


    

 


(n)“Purchase
Price” means the lesser of (i) the Consolidated Closing Bid Price on the Purchase Date or (ii) the arithmetic average
of the three (3) lowest Consolidated Closing Bid Prices for the Common Stock during the ten (10) consecutive Business Days ending
on the Business Day immediately preceding such Purchase Date (to be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other similar transaction).


 


(o)“Sale
Price” means any trade price for the shares of Common Stock on the Principal Market during normal trading hours, as reported
by the Principal Market.


 


(p)“SEC”
means the United States Securities and Exchange Commission.


 


(q)“Transfer
Agent” means the transfer agent of the Company as set forth in Section 10(f) hereof or such other person who is then
serving as the transfer agent for the Company in respect of the Common Stock.


 


(r)“VWAP
Purchase Amount” means, with respect to any particular VWAP Purchase Notice, the portion of the Available Amount to be
purchased by the Buyer pursuant to Section 1(c) hereof as set forth by the Company in the applicable VWAP Purchase Notice.


 


(t)“VWAP
Purchase Date” means, with respect to any VWAP Purchase made hereunder, the Business Day following the receipt by
the Buyer of a valid VWAP Purchase Notice that the Buyer is to buy Purchase Shares pursuant to Section 1(c) hereof.


 


(u)“VWAP
Purchase Notice” shall mean an irrevocable written notice from the Company to the Buyer directing the Buyer to buy Purchase
Shares on the VWAP Purchase Date pursuant to Section 1(c) hereof as specified by the Company therein at the applicable VWAP Purchase
Price with the applicable the number of the shares of Common Stock specified therein pursuant to Section 1(c) hereof.


 


(v)“VWAP
Purchase Price” means the lesser of (i) the Consolidated Closing Bid Price on
the VWAP Purchase Date; or (ii) ninety-five percent (95%) of volume weighted average price for the Common Stock traded on the
Principal Market during normal trading hours on the VWAP Purchase Date (to be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, reverse stock split or other similar transaction).


 


(w) “VWAP
Purchase Share Estimate” means the number of shares of Common Stock that the Company has in its sole discretion irrevocably
instructed its Transfer Agent to issue to the Buyer via the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program in connection with a VWAP Purchase Notice pursuant to Section 1(c) hereof and issued to the Buyer’s
or its designee’s balance account with DTC through its Deposit Withdrawal At Custodian (DWAC) system on the VWAP Purchase
Date (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split
or other similar transaction).


 


10.MISCELLANEOUS.


 


(a)Governing
Law; Jurisdiction; Jury Trial. 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 and the other Transaction Documents 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 County of New York, Florida, for the adjudication
of any dispute hereunder or under the other Transaction Documents or in connection herewith or therewith, 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 HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.


 






    -14- 


     


    

 


(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 or pdf (or other electronic reproduction) 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) 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 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.


 


(e)Entire
Agreement. This Agreement and the Registration Rights Agreement 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 matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein 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 the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. The Company
acknowledges and agrees that is has not relied on, in any manner whatsoever, any representations or statements, written or oral,
other than as expressly set forth in this Agreement.


 


(f)Notices.
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:






    -15- 


     


    

 


 


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


 


If to the Transfer
Agent:


 


Continental Stock Transfer &
Trust Company


17 Battery Place, 8th
Floor


New York, NY 10004

Telephone: (212) 845-3217


E-mail: mmullings@continentalstock.com


Attention: Michael G. Mullings


 


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.


 


(g)Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Buyer, including by merger or consolidation. The Buyer may not assign its rights or obligations under this Agreement.


 


(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.


 


(i)Public Disclosure.
The Company shall be entitled, without the prior approval of the Buyer, to make any press release or other public disclosure (including
any filings with the SEC) with respect to the transactions contemplated hereby as is required by applicable law and regulations.



 


(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 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.


 






    -16- 


     


    

 


(k)Termination.
This Agreement may be terminated only as follows:


 


(i)If
pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case, a Custodian is appointed for the
Company or for all or substantially all of its and its Subsidiaries’ property, or the Company makes a general assignment
for the benefit of its creditors (any of which would be an Event of Default as described in Sections 8(e) and 8(f) hereof),
the Buyer will have the right, by delivering a prior five (5) Business Days’ notice to the Company, terminate this Agreement.


 


(ii)The
Company shall have the option to terminate this Agreement for any reason or for no reason upon sending to the Buyer a one (1) Business
Day prior notice without any liability whatsoever of either party to the other party under this Agreement.


 


(iii)
This Agreement shall automatically terminate on the date that the Company sells and the Buyer purchases the full Available Amount
as provided herein, without any action or notice on the part of any party and without any liability whatsoever of any party to
any other party under this Agreement.


 


(iv)If
by the Maturity Date for any reason or for no reason the full Available Amount under this Agreement has not been purchased as provided
for in Section 1 of this Agreement, this Agreement shall automatically terminate on the Maturity Date, without any action or notice
on the part of any party and without any liability whatsoever of any party to any other party under this Agreement.


 


(v)Except
as set forth in Sections 10(k)(iii) and 10(k)(iv), any termination of this Agreement pursuant to this Section 10(k) shall be effected
by written notice from the Company to the Buyer, or the Buyer to the Company, as the case may be, setting forth the basis for the
termination hereof.


 


(vi)No
termination of this Agreement shall affect the Company’s or the Buyer’s rights or obligations under this Agreement
with respect to pending purchases and the Company and the Buyer shall complete their respective obligations with respect to any
pending purchases under this Agreement.


 


(l)No Financial
Advisor, Placement Agent, Broker or Finder. The Company represents and warrants to the Buyer that it has not engaged any financial
advisor, placement agent, broker or finder in connection with the transactions contemplated hereby. The Buyer represents and warrants
to the Company that it has not engaged any financial advisor, placement agent, broker or finder in connection with the transactions
contemplated hereby. Each party shall be responsible for the payment of any fees or commissions, if any, of any financial advisor,
placement agent, broker or finder engaged by such party relating to or arising out of the transactions contemplated hereby. Each
party shall pay, and hold the other party harmless against, any liability, loss or expense (including, without limitation, attorneys'
fees and out of pocket expenses) arising in connection with any such claim.


 


(m)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.






    -17- 


     


    




 


(n)Failure or Indulgence Not
Waiver. 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.


 


 


 


[Signatures are on
next page.]


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




    -18- 


     


    

IN WITNESS WHEREOF, the Buyer and
the Company have caused this Common Stock Purchase Agreement to be duly executed as of the date first written above.


 


 


 





	 	 	 	 
	 	 	 	 
	 	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	 
	 	 	 	 
	 	 	 	 


 





 




    -19- 


     


    

 





EXHIBIT A-1


 


FORM OF COMPANY RESOLUTIONS


FOR SIGNING PURCHASE AGREEMENT


 


WHEREAS, management
has reviewed with the Board of Directors the background, terms and conditions of the transactions subject to the Common Stock Purchase
Agreement (the “Purchase Agreement”) by and between the Company and ESOUSA HOLDINGS, LLC (“Esousa”),
including all materials terms and conditions of the transactions subject thereto, providing for the purchase by Esousa of up to
Ten Million Dollars ($10,000,000) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”);
and


 


WHEREAS, after careful
consideration of the Purchase Agreement, the documents incident thereto and other factors deemed relevant by the Board of Directors,
the Board of Directors has determined that it is advisable and in the best interests of the Company to engage in the transactions
contemplated by the Purchase Agreement, including, but not limited to, the issuance to Esousa as a commitment fee of such number
of shares of Common Stock that would have a value equivalent to $200,000 calculated using the average of volume weighted average
price for the Common Stock traded during normal trading hours during the three (3) trading days period immediately preceding the
date of issuance of such shares (the “Commitment Shares”) and the issuance and sale of shares of Common Stock
to Esousa up to the available amount under the Purchase Agreement (the “Purchase Shares,” and together with
the Commitment Shares, the “Esousa Shares”).


 


Transaction Documents


 


NOW, THEREFORE, BE
IT RESOLVED, that the transactions described in the Purchase Agreement are hereby approved and the Chief Executive Officer, Chief
Legal Officer and Chief Financial Officer (the “Authorized Officers”) are severally authorized to execute and
deliver the Purchase Agreement, and any other agreements or documents contemplated thereby including, without limitation, a registration
rights agreement (the “Registration Rights Agreement”) providing for the registration of the shares of the Company’s
Common Stock issuable in respect of the Purchase Agreement on behalf of Esousa, with such amendments, changes, additions and deletions
as the Authorized Officers may deem to be appropriate and approve on behalf of, the Company, such approval to be conclusively evidenced
by the signature of an Authorized Officer thereon; and


 


FURTHER RESOLVED, that
the terms and provisions of the Registration Rights Agreement by and among the Company and Esousa are hereby approved and the Authorized
Officers are authorized to execute and deliver the Registration Rights Agreement (pursuant to the terms of the Purchase Agreement),
with such amendments, changes, additions and deletions as the Authorized Officer may deem appropriate and approve on behalf of,
the Company, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and


 


FURTHER RESOLVED, that
the Authorized Officers are authorized to execute and deliver the transfer agent instructions pursuant to the terms of the Purchase
Agreement, with such amendments, changes, additions and deletions as the Authorized Officers may deem appropriate and approve on
behalf of, the Company, such approval to be conclusively evidenced by the signature of an Authorized Officer thereon; and


 






     


     


    




 


Execution of Purchase Agreement


 


FURTHER RESOLVED, that
the Company be and it hereby is authorized to execute the Purchase Agreement providing for the purchase of common stock of the
Company having an aggregate value of up to $10,000,000; and


 


Issuance of Common Stock


 


FURTHER RESOLVED, that the Company is hereby
authorized to issue the Commitment Shares to Esousa as Commitment Shares and that upon issuance of the Commitment Shares
pursuant to the Purchase Agreement, the Commitment Shares shall be duly authorized, validly issued, fully paid and non-assessable;
and


 


FURTHER RESOLVED, that the Company is hereby
authorized to issue shares of Common Stock upon the purchase of Purchase Shares up to the available amount under the Purchase Agreement
in accordance with the terms of the Purchase Agreement and that, upon issuance of the Purchase Shares pursuant to the Purchase
Agreement, the Purchase Shares will be duly authorized, validly issued, fully paid and non-assessable; and


 


FURTHER RESOLVED, that the Corporation shall
initially reserve 10,000,000 shares of Common Stock for issuance as Purchase Shares under the Purchase Agreement; and 


 


Listing of Shares on the Nasdaq Capital
Market 


 


FURTHER RESOLVED, that
the officers of the Company be, and each of them hereby is, authorized and directed to take all necessary steps and do all other
things necessary and appropriate to effect the listing of the Esousa Shares on the Nasdaq Capital Market; and


 


Approval of Actions


 


FURTHER RESOLVED, that,
without limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed to proceed on
behalf of the Company and to take all such steps as deemed necessary or appropriate to cause the Company to consummate the agreements
referred to herein and to perform its obligations under such agreements;


 


FURTHER RESOLVED, that
the Authorized Officers be, and each of them hereby is, authorized, empowered and directed on behalf of and in the name of the
Company, to take or cause to be taken all such further actions and to execute and deliver or cause to be executed and delivered
all such further agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters and undertakings
and to incur and pay all such fees and expenses as in their judgment shall be necessary, proper or desirable to carry into effect
the purpose and intent of any and all of the foregoing resolutions, and that all actions heretofore taken by any officer or director
of the Company in connection with the transactions contemplated by the agreements described herein are hereby approved, ratified
and confirmed in all respects; and


 


FURTHER RESOLVED, that
any and all actions heretofore or hereinafter taken on behalf of the Company by any of said persons or entities within the terms
of the foregoing resolutions are hereby approved, ratified and confirmed in all respects as the acts and deeds of the Company.


 




     


     


    

 


EXHIBIT A-2


 


FORM OF COMPANY
RESOLUTIONS APPROVING REGISTRATION STATEMENT


 


WHEREAS, there has
been presented to the Board of Directors of the Company a Common Stock Purchase Agreement (the “Purchase Agreement”)
by and among the Corporation and ESOUSA HOLDINGS, LLC (“Esousa”), providing for the purchase by Esousa of up
to Ten Million Dollars ($10,000,000) of the Company’s common stock, par value $0.0001 (the “Common Stock”);
and


 


WHEREAS, after careful
consideration of the Purchase Agreement, the documents incident thereto and other factors deemed relevant by the Board of Directors,
the Board of Directors has approved the Purchase Agreement and the transactions contemplated thereby and the Company has executed
and delivered the Purchase Agreement to Esousa; and


 


WHEREAS, in connection
with the transactions contemplated pursuant to the Purchase Agreement, the Company has agreed to file a registration statement
with the Securities and Exchange Commission (the “Commission”) registering the Commitment Shares (as defined
in the Purchase Agreement) and the Purchase Shares (as defined in the Purchase Agreement) and to list the Commitment Shares and
Purchase Shares on the Nasdaq Capital Market;


 


WHEREAS, the management
of the Company has prepared an initial draft of a Registration Statement on Form S-1 (the “Registration Statement”)
in order to register the sale of the Purchase Shares and the Commitment Shares (collectively, the “Securities”)
by Esousa; and


 


WHEREAS, the Board
of Directors has determined to approve the Registration Statement and to authorize the appropriate officers of the Company to take
all such actions as they may deem appropriate to effect the offering.


 


NOW, THEREFORE, BE
IT RESOLVED, that the officers and directors of the Company be, and each of them hereby is, authorized and directed to prepare,
execute and file with the Commission the Registration Statement, which Registration Statement shall be filed substantially in the
form presented to the Board of Directors, with such changes therein as the Chief Executive Officer, Chief Legal Officer or Chief
Financial Officer of the Company shall deem desirable and in the best interest of the Company and its stockholders (such officer’s
execution thereof including such changes shall be deemed to evidence conclusively such determination); and


 


FURTHER RESOLVED, that
the officers of the Company be, and each of them hereby is, authorized and directed to prepare, execute and file with the Commission
all amendments, including post-effective amendments, and supplements to the Registration Statement, and all certificates, exhibits,
schedules, documents and other instruments relating to the Registration Statement, as such officers shall deem necessary or appropriate
(such officer’s execution and filing thereof shall be deemed to evidence conclusively such determination); and


 


FURTHER RESOLVED, that
the execution of the Registration Statement and of any amendments and supplements thereto by the officers of the Company be, and
the same hereby is, specifically authorized either personally or by the Chief Executive Officer, Chief Legal Officer and Chief
Financial Officer (the “Authorized Officers”) as such officer’s true and lawful attorneys-in-fact and
agents; and


 


FURTHER RESOLVED, that
the officers of the Company be, and each of them hereby is, authorized and directed to cause the Company to pay all fees, costs
and expenses that may be incurred by the Company in connection with the Registration Statement; and


 






     


     


    

 


FURTHER RESOLVED, that
it is desirable and in the best interest of the Company that the Securities be qualified or registered for sale in various states;
that the officers of the Company be, and each of them hereby is, authorized to determine the states in which appropriate action
shall be taken to qualify or register for sale all or such part of the Securities as they may deem advisable; that said officers
be, and each of them hereby is, authorized to perform on behalf of the Company any and all such acts as they may deem necessary
or advisable in order to comply with the applicable laws of any such states, and in connection therewith to execute and file all
requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents, appointments
of attorneys for service of process and resolutions; and the execution by such officers of any such paper or document or the doing
by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor from the Company
and the approval and ratification by the Company of the papers and documents so executed and the actions so taken; and


 


FURTHER RESOLVED, that
if, in any state where the securities to be registered or qualified for sale to the public, or where the Company is to be registered
in connection with the public offering of the Securities, a prescribed form of resolution or resolutions is required to be adopted
by the Board of Directors, each such resolution shall be deemed to have been and hereby is adopted, and the Secretary is hereby
authorized to certify the adoption of all such resolutions as though such resolutions were now presented to and adopted by the
Board of Directors; and


 


FURTHER RESOLVED, that
the officers of the Company be, and each of them hereby is, authorized and directed to take all necessary steps and do all other
things necessary and appropriate to effect the listing of the Securities on the Nasdaq Capital Market; and


 


Approval of Actions


 


FURTHER RESOLVED, that,
without limiting the foregoing, the Authorized Officers are, and each of them hereby is, authorized and directed to proceed on
behalf of the Company and to take all such steps as are deemed necessary or appropriate to cause the Company to take all such action
referred to herein and to perform its obligations incident to the registration, listing and sale of the Securities; and


 


FURTHER RESOLVED, that
the Authorized Officers be, and each of them hereby is, authorized, empowered and directed on behalf of and in the name of the
Company, to take or cause to be taken all such further actions and to execute and deliver or cause to be executed and delivered
all such further agreements, amendments, documents, certificates, reports, schedules, applications, notices, letters and undertakings
and to incur and pay all such fees and expenses as in their judgment shall be necessary, proper or desirable to carry into effect
the purpose and intent of any and all of the foregoing resolutions, and that all actions heretofore taken by any officer or director
of the Company in connection with the transactions contemplated by the agreements described herein are hereby approved, ratified
and confirmed in all respects.