THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144
UNDER THE ACT, OR THE BORROWER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
BORROWER STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.


 


SECURED CONVERTIBLE SENIOR PROMISSORY
NOTE


 


$11,200,000.00


 


FOR VALUE RECEIVED, Net Element, Inc.,
a Delaware corporation (the “Borrower”), promises to pay to Cayman Invest S.A. or its permitted assigns (the
“Lender”), at the Lender’s address at 3A Little Denmark Complex 147 Main Street P.O. Box 4473, Road Town,
Tortola, British Virgin Islands or such other place as the holder of this Secured Convertible Promissory Note (this “Note”)
may designate from time to time, the principal sum of Eleven Million Two Hundred Thousand Dollars ($11,200,000.00) (the “Original
Principal Sum”) together with interest only to the extent that same may be due on the unpaid principal balance (as set
forth in Section 1.2 below), upon the terms and conditions specified below. Borrower acknowledges that Lender and its affiliated
companies have already advanced to the Borrower the total amount of USD 6,180,000 (six million one hundred eighty thousand US Dollars)
and that the balance shall be provided by the Lender or its affiliated persons to the Borrower according to the following schedule:
USD2,700,000 (two million seven hundred thousand US Dollars) till 30 April 2014 and USD2,320,000 (two million three hundred twenty
thousand US Dollars) till 24 December 2014.


 


1. Payment


 


1.1 
Maturity. Subject to the provisions of Section 2 hereof relating to the conversion of this Note, the outstanding
Original Principal Sum shall be due and payable on such date (the “Payment Date”) that is the earlier of (a) March
31, 2015 ( the “Maturity Date”); and (b) that time that is immediately prior to the closing of an Acquisition
Event.


 


1.2 
Interest. No interest shall accrue on any unpaid balance of the Original Principal Sum from the date hereof
until such principal is paid or converted as provided in Section 2. Upon an Event of Default pursuant to Section 4 hereof, this
Note shall accrue simple interest, from the date of Default at the rate of twelve percent (12%) per annum. Interest shall be calculated
on the basis of actual number of days elapsed based on a year of 360 days. Under no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable law.


 


1.3 
Payments, Allocation of Payments. Except if such obligations are satisfied through a conversion pursuant to
Section 2, principal and any interest if due, are payable in lawful money of the United States of America. All payments shall be
credited first to interest if due, fees, costs and expenses then due and the remainder to the principal amount of the obligations.


 






    	 



    	 



    

 


1.4 
Prepayment of the Note. Prior to the Maturity Date, Borrower may at its sole discretion, repay this Note in
whole and not in part (a “Permitted Repayment Event”).


 


2. Conversion.


 


2.1 Automatic Conversion
upon a Qualified Financing.  Effective upon a Qualified Financing as defined in Section 5.2, prior to the Maturity Date,
the entire outstanding Original Principal Sum of the Note shall be automatically converted, in whole and not in part without any
further action on the part of any Lender, into common shares of Net Element, Inc. (“Shares”) issuable upon such conversion
of this Note determined in accordance with Section 2.4 below).


 


2.2 Optional Conversion
upon a Non-Qualified Financing.  Effective upon a Non-Qualified Financing as defined in Section 5.3, at the option of
the Lender in its sole discretion, the entire outstanding Original Principal Sum of the Note, shall be converted, in whole and
not in part without any further action on the part of any Lender, into Shares with the number of Shares issuable upon such conversion
of this Note determined in accordance with Section 2.4 below.


 


2.3 Optional Conversion
before or after the Maturity Date. At any time before or after the Maturity Date, at the option of the Lender, in its sole
discretion, the entire outstanding Original Principal Sum of the Note shall be automatically converted, in whole and not in part
without any further action on the part of any Lender, into Shares with the number of Shares issuable upon such conversion of this
Note determined in accordance with Section 2.4 below.


 


2.4 Number of Shares.
The number of Shares to be issued to Lender upon conversion under this Section 2 shall equal to a total of Fifteen Percent (15%)
of the then outstanding stock of Net Element, Inc. on a fully diluted basis.


 


2.6 Delivery of Note and Share Certificates.
Upon conversion under this Section 2, this Note will, for all purposes, be deemed to be converted into Shares, at which time this
Note shall for all purposes be deemed cancelled be deemed paid in full except for the interest (if any) accrued as a result of
Event of Default . Upon conversion of this Note pursuant to Section 2.1 or 2.2, Lender hereby agrees to execute and deliver to
the Borrower all transaction documents entered into by other purchasers participating in the Qualified Financing or Non-Qualified
Financing, as applicable, including any purchase agreement, any investor rights agreement, any stockholder or voting agreement
and other ancillary agreements, with customary representations and warranties and transfer restrictions.  Upon the conversion
of this Note pursuant to this Section 2, Borrower shall issue and deliver to Lender a certificate or certificates for the number
of full shares of Shares to which Lender is entitled. Borrower covenants that all Shares issued upon conversion will, upon issuance,
be fully paid and non-assessable and free from all taxes, liens and charges caused or created by Borrower with respect to the issue
thereof. Lender agrees to deliver the original of this Note for cancellation (or a notice to the effect that the original Note
has been lost, stolen or destroyed and an agreement acceptable to Borrower whereby Lender agrees to indemnify Borrower from any
loss incurred by it in connection with this Note).


 


3. Security Interest.
Borrower agrees to procure and take all actions so that payment and performance of this Note shall have seniority over all debt
of the Borrower outstanding as of the date of this Note and to use best endeavors to have the obligations hereunder positioned
as a senior security interest secured by all assets of Net Element Inc. and by those payment processing portfolios owned by the
company as of the date of this Note.


 






    	 



    	 



    

 


4. Default; Demand; Protest. Non-payment
of this Note by the Maturity Date or the non-conversion to the Shares within a reasonable period of time (not exceeding thirty
days) after qualifying events set forth in Section 2 shall constitute an Event of Default . Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, diligence in collection and
notices of intention to accelerate maturity, nonpayment at maturity, release, compromise, settlement, extension, or renewal of
accounts, documents, instruments, chattel paper, and guarantees at any time held by Lender on which Borrower may in any way be
liable.




 


5. Definitions. As used herein,
the following terms shall have the following meanings:


 


5.1.“Acquisition
Event” means the sale of a majority of the ownership of Borrower or any voluntary or involuntary liquidation, dissolution
or winding up of Borrower.


 


5.2. “Qualified
Financing” means the first financing closing after the date hereof, in which Borrower receives financing of at least Ten
Million US Dollars ($10,000,000.00) from the third party.


 


5.3. “Non-Qualified
Financing” means any equity financing closing after the date hereof in which Borrower issues capital stock, other than
a Qualified Financing.


 


6. No Right of Set-Off. The Lender
and the Borrower agree that all payments hereunder shall be made in full without right of set-off.


 


7. Amendment Provisions. This Note
and the provisions, rights and obligations hereof, may be amended, waived or modified only upon the written consent of the Borrower
and the Lender.


 


8. Transfer. This Note may be transferred
only upon its surrender to the Borrower for registration of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer.  Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new
Note for like principal amount and interest shall be issued to, and registered in the name of, the transferee.  Interest,
if any, and principal shall be paid solely to the registered holder of this Note.  Such payment shall be full discharge of
the Borrower’s obligation to pay any such interest and principal.


 


9. Severability. If any provision
of this Note is determined to be invalid, illegal or unenforceable, in whole or in part, the validity, legality and enforceability
of any of the remaining provisions or portions of this Note shall not in any way be affected or impaired thereby and this Note
shall nevertheless be binding between the Borrower and Lender.


 


10. Binding Effect. This Note shall
be binding upon, and shall inure to the benefit of, the Borrower and Lender and their respective successors and assigns.


 


11. Notices. All notices required
or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified or (b) five (5) days after having been sent by registered or certified mail, return receipt requested, postage
prepaid. All communications shall be sent to the Borrower at the address as set forth on the signature page to this Note or at
such other address as the Borrower or Lender may designate by ten (10) days advance written notice to the other party hereto.


 


12. No Rights as Stockholder. This
Note, as such, shall not entitle Lender to any rights as a stockholder of the Borrower.


 






    	 



    	 



    

 


13. Languages This Note is made
up in Russian and English languages. In case of any discrepancies between the Russian and English versions, the English version
shall prevail.


 


14. Headings and Governing
Law. The descriptive headings in this Note are inserted for convenience only and do not constitute a part of this Note.
The validity, meaning and effect of this Note shall be determined in accordance with the laws of the State of Delaware,
without regard to principles of conflicts of law. THE PARTIES TO THIS NOTE HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY WITH
RESPECT TO DISPUTES ARISING UNDER THIS NOTE AND CONSENT TO A BENCH TRIAL WITH THE APPROPRIATE JUDGE ACTING AS THE FINDER OF
FACT.


 


 


IN WITNESS WHEREOF, the parties hereto have caused
this Note to be duly executed and delivered as of the date first above written.


 


 


	THE BORROWER:	 	 	 	 
	 	 	 	 	 	 
	NET ELEMENT, INC.	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	/s/ Oleg Firer	 	 	 	 
	 	Name:  Oleg Firer	 	 	 	 
	 	Title:    CEO	 	 	 	 



 


		Address:	3363 NE 163rd Street #705



North
Miami Beach, FL 33160