Document:

abwn_ex105.htm

EXHIBIT 10.5

 

	
 
	
December 29, 2017

 

Adar Bays, LLC

3411 Indian Creek Drive, Suite 403, 

Miami Beach, FL 33140

Re: Confirmation of conversion price and prepay increases

 

Ladies and Gentlemen: 

 

This letter is being written with respect to those certain 8% Convertible Promissory Notes in the aggregate amount of $555,000.00 dated September 25, 2017 (the “Notes”) issued to Adar Bays, LLC (the “Investor”) by Airborne Wireless Network., a Nevada corporation (the “Company”).

 

Please note that the Company confirms that, per the terms of the Securities Purchase Agreement entered between the Company and the Investor as of September 25, 2017 and the Notes, the Conversion Price (as that term is defined in each Note) sshall be 55% (resulting in an effective conversion discount of 45% instead of 30%). In addition, the prepayment amounts set forth section 4(c) of each Note are increased by 10% each (by way of example, 115% prepay premium becomes 125% prepay premium).

 

In addition, please note that each Note issued by us to you may be converted at any time, subject to full cash payment for that Note.

 

Please keep this letter on file

 

 

Very truly yours, 

 

AIRBORNE WIRELESS NETWORK

 

	
By:
	
/s/ J. Edward Daniels
	
 

 

PresidentExhibit 4.1

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of December 29, 2017, is by and among Net Element, Inc., a
Delaware corporation (the “Company”), and the undersigned buyer (the “Buyer”).

 

RECITALS

 

A. In connection with
the Unit Purchase Agreement by and between the parties hereto, dated as of December 29, 2017 (the “Unit Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of the Unit Purchase Agreement, to issue and sell to the Buyer
the Units (as defined in the Unit Purchase Agreement), consisting of (i) the Purchase Shares (as defined in the Unit Purchase Agreement)
and (ii) the Warrants (as defined in the Unit Purchase Agreement), which will be exercisable or exchangeable to purchase Warrant
Shares (as defined in the Unit Purchase Agreement) in accordance with the terms of the Warrants.

 

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

 

AGREEMENT

 

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

 

		1.	Definitions.

 

Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set forth in the Unit Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:

 

(a)          “Business
Day” means any day other than (i) Saturday, Sunday or any other day on which commercial banks in New York, New York are
authorized or required by law to remain closed or, (ii) with respect to dates on which filings are required to be made with the
SEC, any day on which the SEC is not open and available to accept filings.

 

(b)          “Closing
Date” shall have the meaning set forth in the Unit Purchase Agreement with respect to the Closing (as defined in the
Unit Purchase Agreement).

 

(c)          “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.

 

(d)          “Effectiveness
Deadline” means (i) with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a),
the earlier of the (A) 90th calendar day after the Closing Date and (B) 5th Business Day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject
to further review and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company
pursuant to this Agreement, the earlier of the (A) 90th calendar day following the date on which the Company was required to file
such additional Registration Statement and (B) 5th Business Day after the date the Company is notified (orally or in writing, whichever
is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review.

 

(e)          “Filing
Deadline” means (i) with respect to the Initial Registration Statement required to be filed pursuant to Section 2(a),
the 21st calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that may be required
to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional Registration
Statement pursuant to the terms of this Agreement. Notwithstanding the foregoing or anything to the contrary herein, if the Filing
Deadline falls on a weekend or Federal holiday, the Filing Deadline shall be on the next succeeding Business Day.

 

     

     

    

 

(f)          “Investor”
means the Buyer or any transferee or assignee of any Registrable Securities or Warrants, as applicable, to whom the Buyer assigns
its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities or Warrants, as applicable,
assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section
9.

 

(g)          “Initial
Required Registration Amount” means of the sum of (i) 100% of the number of Purchase Shares, and (ii) 100% of the initial
number of Warrant Shares issued and issuable pursuant to the Warrants (as adjusted from time to time pursuant to the terms therein).

 

(h)          “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, or any other entity of any kind
or nature whatsoever, a trust, an unincorporated organization or a government or any department or agency or portion thereof.

 

(i)          “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing
one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness
of such Registration Statement(s) by the SEC.

 

(j)          “Registrable
Securities” means (i) the Purchase Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued
or issuable with respect to the Purchase Shares, the Warrants or the Warrant Shares, including, without limitation, (1) as a result
of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of
the Company into which the shares of Common Stock are converted or exchanged and shares of capital stock of a successor to the
Company into which the shares of Common Stock are converted or exchanged, in each case, without regard to any limitations on exercise
or exchange of the Warrants.

 

(k)          “Registration
Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering
Registrable Securities (and the term “Initial Registration Statement” shall mean the first Registration Statement
filed pursuant to this Agreement).

 

(l)          “Required
Holders” means the Buyer.

 

(m)          “Required
Registration Amount” means the sum of the number of Purchase Shares issued and issuable pursuant to the Unit Purchase
Agreement and the maximum number of Warrant Shares issued and issuable pursuant to the Warrants, in each case, as of the Trading
Day (as defined in the Warrants) immediately preceding the applicable date of determination.

 

(n)          “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration.

 

(o)          “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any
other similar or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.

 

(p)          “SEC”
means the United States Securities and Exchange Commission or any successor thereto.

 

    	 	- 2 -	 

     

    

 

		2.	Registration.

 

(a)          Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with
the SEC an initial Registration Statement on Form S-1 or S-3 (in the Company’s sole discretion) covering the resale of all
of the Registrable Securities, provided that such Initial Registration Statement shall register for resale at least the number
of shares of Common Stock equal to the Initial Required Registration Amount as of the date such Registration Statement is initially
filed with the SEC (together with such other number of shares of Common Stock constituting Registrable Securities as may be registered
thereunder pursuant to Rule 416 or otherwise), provided further that if Form S-3 is unavailable for such a registration, the Company
shall use such other form as is required by Section 2(c). Such Initial Registration Statement, and each other Registration Statement
required to be filed pursuant to the terms of this Agreement, shall contain (except if otherwise directed by the Required Holders)
the “Selling Stockholder” and “Plan of Distribution” sections in substantially the form attached
hereto as Exhibit B. The Company shall use its commercially reasonable efforts to have such Initial Registration
Statement, and each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective
by the SEC as soon as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.

 

(b)          Legal
Counsel. Subject to Section 5 hereof, Esousa Holdings LLC (“Esousa”) shall have the right to select one
(1) legal counsel to review and oversee, solely on its behalf and at its cost and expense, any registration pursuant to this Section
2 (“Legal Counsel”), which shall be McDermott Will & Emery LLP or such other counsel as thereafter designated
by Esousa.

 

(c)          Ineligibility
to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder,
the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the
Required Holders and (ii) undertake to register the resale of the Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of all Registration Statements then in effect and the availability for
use of each prospectus contained therein until such time as a Registration Statement on Form S-3 covering the resale of all the
Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available for use or, if
sooner, the expiration of the Registration Period.

 

(d)          Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to
cover from time to time the Required Registration Amount, the Company shall amend such Registration Statement (if permissible),
or file with the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover
at least the Required Registration Amount as of the Trading Day immediately preceding the date of the filing of such amendment
or new Registration Statement, in each case, as soon as practicable, but in any event not later than fifteen (15) days after the
necessity therefor arises (but taking account of the position of the staff of the SEC (the “Staff”) with respect
to the date on which the Staff will permit such amendment to the Registration Statement and/or such new Registration Statement
(as the case may be) to be filed with the SEC). The Company shall use its commercially reasonable efforts to cause such amendment
to such Registration Statement and/or such new Registration Statement (as the case may be) to become effective as soon as practicable
following the filing thereof with the SEC, but in no event later than the applicable Effectiveness Deadline for such Registration
Statement. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed
“insufficient to cover all of the Registrable Securities” if at any time the number of shares of Common Stock available
for resale under the applicable Registration Statement is less than the Required Registration Amount as of such time.

 

    	 	- 3 -	 

     

    

 

(e)          Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering
the resale of all of the Registrable Securities required to be covered thereby and required to be filed by the Company pursuant
to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for such Registration Statement (a “Filing
Failure”) (it being understood that if the Company files a Registration Statement without affording each Investor the
opportunity to review and comment on the same as required by Section 3(c) hereof, the Company shall be deemed to not have satisfied
this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B) not declared effective by the SEC on or before
the Effectiveness Deadline for such Registration Statement (an “Effectiveness Failure”), (ii) on any day after
the Effective Date of a Registration Statement sales of all of the Registrable Securities required to be included on such Registration
Statement cannot be made pursuant to such Registration Statement (including, without limitation, because of a failure to keep such
Registration Statement effective, a failure to disclose such information as is necessary for sales to be made pursuant to such
Registration Statement, a suspension or delisting of (or a failure to timely list) the shares of Common Stock on the Principal
Market (as defined in the Unit Purchase Agreement) for three (3) consecutive trading days, or a failure to register a sufficient
number of shares of Common Stock or by reason of a stop order) or the prospectus contained therein is not properly available for
use for any reason (a “Maintenance Failure”), or (iii) a Registration Statement is not effective for any reason
or the prospectus contained therein is not properly available for use for any reason, the Company fails to file with the SEC any
required reports under Section 13 or 15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) (a “Current Public Information Failure”) as a result of which any of the Investors are unable
to sell Registrable Securities without restriction under Rule 144 (including, without limitation, volume restrictions), then, as
liquidated relief for the damages to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying
shares of Common Stock (which remedy, other than the right to require specific performance, shall be exclusive of any other remedies
available at law or in equity), the Company shall pay to each holder of Registrable Securities relating to such Registration Statement
an amount in cash or Common Stock (calculated using the consolidated closing bid price of the applicable payment date) equal to
one percent (1.0%) of such Investor’s total paid purchase price for the Units pursuant to the Unit Purchase Agreement (i.e.,
1.0% of $7,550,585, or $75,505.85) (1) within three (3) Business Days after the date of such Filing Failure, Effectiveness Failure,
Maintenance Failure or Current Public Information Failure, as applicable, and (2) on every thirty (30) day anniversary of (I) a
Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured; (III)
a Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current Public Information Failure until the earlier
of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is no longer required
pursuant to Rule 144 (in each case, pro-rated for periods totaling less than thirty (30) days); provided that the maximum number
of monthly payments pursuant to a Filing Failure, an Effectiveness Failure or a Maintenance Failure made by the Company pursuant
to this sentence shall be six (6) payments (each in an amount equal to one percent (1.0%) of such Investor’s total actually
paid purchase price for the Units pursuant to the Unit Purchase Agreement). The payments to which a holder of Registrable Securities
shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.” Following
the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or failure,
as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is cured
prior to any thirty (30) day anniversary of such event or failure, then no further Registration Delay Payment(s) shall be due after
such cure. In the event the Company fails to make Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of one percent (1%) per month (prorated for partial months) until
paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be owed to an Investor: (i) with respect to a
Filing Failure, an Effectiveness Failure, a Maintenance Failure or a Current Public Information Failure, for any period after the
earlier of (x) the date on which Buyer may conduct a resale of all of its Registrable Securities in reliance on a valid exemption
from registration in accordance with Rule 144 or (y) the date on which Buyer sold, transferred or otherwise disposed of all of
its Registrable Securities and (ii) with respect to any Registrable Securities excluded from a Registration Statement by election
of an Investor.

 

(f)          Offering.
Notwithstanding anything to the contrary contained in this Agreement, the Company agrees with Buyer that each Registration Statement
required to become effective hereunder shall become effective and be used for resales by the Investors such that it does not constitute
and is not deemed to constitute an offering of securities by, or on behalf of, the Company, and that permits the continuous resale
at the market by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein
as an “underwriter” (except to the extent provided in a “Plan of Distribution” section of a Registration
Statement in substantially the form attached hereto as Exhibit B).

 

(g)          Piggyback
Registrations. Without limiting any obligation of the Company hereunder (including its obligations under Section 2(h)) or under
the Unit Purchase Agreement, if there is not an effective Registration Statement covering all of the Registrable Securities or
the prospectus contained therein is not available for use and the Company shall determine to prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities
(other than on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities
to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with
the Company’s stock option or other employee benefit plans), then the Company shall deliver to each Investor a written notice
of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such Investor shall so
request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such
Investor requests to be registered; provided, however, the Company shall not be required to register any Registrable Securities
pursuant to this Section 2(g) that are eligible for resale pursuant to Rule 144 without restriction (including, without limitation,
volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable)
or that are the subject of a then-effective Registration Statement.

 

    	 	- 4 -	 

     

    

 

(h)          No
Inclusion of Other Securities. In no event shall the Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Required Holders. Other than registration of the Company’s
securities in connection with its existing equity line of credit with Cobblestone Capital Partners LLC, until thirty (30) days
after the declaration of effectiveness of the Initial Registration Statement by the SEC, the Company shall not enter into any agreement
providing any registration right to any of its security holders and the Company shall not file any other registration statement
until such time, in either case without the prior written consent of the Required Holders.

 

		3.	Related Obligations.

 

The Company shall use
its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method
of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:

 

(a)          The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but
in no event later than the applicable Filing Deadline) and use its commercially reasonable efforts to cause such Registration Statement
to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). The Company
shall keep each Registration Statement effective at all times until the earlier of (i) the date as of which all of the Investors
may sell all of the Registrable Securities required to be covered by such Registration Statement without restriction pursuant to
Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule
144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities
covered by such Registration Statement (the “Registration Period”). Notwithstanding anything to the contrary
contained in this Agreement, the Company shall ensure that, when filed and at all times while effective, each Registration Statement
(including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation, all
amendments and supplements thereto) used in connection with such Registration Statement (1) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they were made) not misleading and (2) will disclose (whether
directly or through incorporation by reference to other SEC filings to the extent permitted) all material information regarding
the Company and its securities. The Company shall submit to the SEC, within one (1) Business Day after the later of the date that
(i) the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no
further comments on a particular Registration Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained
pursuant to Section 3(c) (which consent shall be promptly sought), a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than forty-eight (48) hours after the submission of such request.

 

(b)          The
Company shall prepare and file with the SEC such amendments (including, without limitation, post-effective amendments) and supplements
to each Registration Statement and the prospectus used in connection with each such Registration Statement, as may be necessary
to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement,
and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities
of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall
have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to any Registration Statement which are required to be filed
pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report
on Form 10-K or any similar or successor report under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

 

    	 	- 5 -	 

     

    

 

(c)          The
Company shall (A) permit Legal Counsel to review and comment upon (i) each Registration Statement within a reasonable number of
days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (including, without
limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Report on Form 8-K, and any similar or successor
reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or
amendment or supplement thereto in a form to which Legal Counsel reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto or to any prospectus contained
therein without the prior consent of Legal Counsel, which consent shall not be unreasonably withheld. The Company shall promptly
furnish to Legal Counsel without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives
relating to each Registration Statement, provided that such correspondence shall not contain any material, non-public information
regarding the Company or any of its Subsidiaries (as defined in the Unit Purchase Agreement), (ii) after the same is prepared and
filed with the SEC, one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the
Company’s obligations pursuant to this Section 3.

 

(d)          The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without
charge and if requested by an Investor, (i) after the same is prepared and filed with the SEC, one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each
Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request from time to time) and (iii) such other documents,
including, without limitation, copies of any preliminary or final prospectus, as such Investor may reasonably request from time
to time in order to facilitate the disposition of the Registrable Securities owned by such Investor; provided, that the Company
shall have no obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system.

 

(e)          The
Company shall use its commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities
or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions,
such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, the Company shall not be required in connection therewith or as a condition thereto to (y) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e) or (z) subject itself to general
taxation in any such jurisdiction. The Company shall promptly notify Legal Counsel and each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(f)          The
Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after
becoming aware of such event, as a result of which the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event
shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and promptly
prepare a supplement or amendment to such Registration Statement and such prospectus contained therein to correct such untrue statement
or omission and deliver such number of copies of such supplement or amendment to Legal Counsel and each Investor as Legal Counsel,
legal counsel for each other Investor or such Investor may reasonably request. The Company shall also promptly notify Legal Counsel
and each Investor in writing (i) when a prospectus or any post-effective amendment has been filed, when a Registration Statement
or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and
each Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives
written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of
any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information,
(iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate;
and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information
relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond
as promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto
(it being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than
seven (7) Business Days after the receipt thereof).

 

    	 	- 6 -	 

     

    

 

(g)          The
Company shall (i) use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness
of each Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss
of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal
Counsel and each Investor who holds Registrable Securities of the issuance of such order and the resolution thereof or its receipt
of actual notice of the initiation or threat of any proceeding for such purpose.

 

(h)          The
Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws or delivered to the Company for
the purpose of inclusion in a Registration Statement, (ii) the disclosure of such information is necessary to avoid or correct
a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such Registration Statement
pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to
the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such
Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

(i)          Without
limiting any obligation of the Company under the Unit Purchase Agreement, the Company shall use its commercially reasonable efforts
either to cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange
on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) if, despite the Company’s commercially reasonable
efforts to satisfy the preceding clause (i) the Company is unsuccessful in satisfying the preceding clause (i), without limiting
the generality of the foregoing, to use its commercially reasonable efforts to arrange for at least two market makers to register
with the Financial Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable Securities.

 

(j)          The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the
case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.

 

(k)          If
requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and, (i) incorporate
in a post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) make all required filings of such post-effective amendment after being notified of the matters
to be incorporated in such post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or prospectus
contained therein if reasonably requested by an Investor holding any Registrable Securities.

 

(l)          The
Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to
be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition
of such Registrable Securities.

 

    	 	- 7 -	 

     

    

 

(m)          Unless
available vis EDGAR, the Company shall make generally available to its security holders as soon as practical, but not later than
ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner
provided by, the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day
of the Company’s fiscal quarter next following the applicable Effective Date of each Registration Statement.

 

(n)          The
Company shall otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC
in connection with any registration hereunder.

 

(o)          Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.

 

(p)          The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investor of its Registrable
Securities pursuant to each Registration Statement.

 

		4.	Obligations of the Investors.

 

(a)          At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify
each Investor in writing of the information the Company seeks from each such Investor with respect to such Registration Statement.
It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor (including any determination of the occurrence of a Filing Failure,
Effectiveness Failure or Maintenance Failure) that such Investor shall furnish to the Company such information regarding itself,
the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall
be reasonably required, in the good faith judgment of such Investor, to effect and maintain the effectiveness of the registration
of such Registrable Securities

 

(b)          Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to
any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement
or amendment is required. Notwithstanding anything to the contrary in this Section 4(b), the Company shall cause its transfer agent
to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Unit Purchase Agreement
in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale
prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of Section 3(f) and for which such Investor has not yet settled.

 

(c)          Each
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

		5.	Expenses of Registration.

 

All reasonable expenses,
other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting
fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company.

 

    	 	- 8 -	 

     

    

 

		6.	Indemnification.

 

(a)          To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each
of its directors, officers, managers, shareholders, members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other
title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors,
officers, managers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’
fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from
the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending
or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus
(as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”) unless such Violations are based primarily upon
a breach of Investor’s representations, warranties, or covenants under the Transaction Documents or any violations by Investor
of state or federal securities laws or any conduct by Investor which constitutes fraud, gross negligence or willful misconduct.
To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any
such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person
expressly for use in connection with the preparation of such Registration Statement or any such amendment thereof or supplement
thereto and (ii) shall not be available to a particular Investor to the extent such Claim is based on a failure of such Investor
to deliver or to cause to be delivered the prospectus made available by the Company (to the extent applicable), including, without
limitation, a corrected prospectus, if such prospectus or corrected prospectus was timely made available by the Company pursuant
to Section 3(d) and then only if, and to the extent that, following the receipt of the corrected prospectus no grounds for such
Claim would have existed; and (iii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer
of any of the Registrable Securities by any of the Investors pursuant to Section 9.

 

    	 	- 9 -	 

     

    

 

(b)          In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c) and the below provisos in this Section 6(b), such
Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such Claim; provided, however, the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or
delayed, provided further that such Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the applicable sale of Registrable Securities pursuant
to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities by any of the Investors
pursuant to Section 9.

 

(c)          Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified
Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid
by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying
party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Indemnified
Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without
limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the case may be) and the indemnifying
party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Person or such Indemnified Party and the
indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party
shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party, provided
further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as the case may be). The Indemnified
Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all times
as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent
of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement
or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party or Indemnified Person (as the case may be) of a release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided
for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the
case may be) with respect to all third parties, firms or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party (as the case may
be) under this Section 6, except to the extent that the indemnifying party is materially and adversely prejudiced in its ability
to defend such action.

 

    	 	- 10 -	 

     

    

 

(d)          No
Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale
of Registrable Securities who is not guilty of fraudulent misrepresentation.

 

(e)          The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

(f)          The
indemnity and contribution agreements contained herein shall be the sole and exclusive remedy of the Indemnified Party or Indemnified
Person against the indemnifying party or others.

 

		7.	Contribution.

 

To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however:
(i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the
fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person
is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall
be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation;
and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received
by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding
the provisions of this Section 7, (a) no Investor shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the net proceeds actually received by such Investor from the applicable sale of the Registrable Securities subject
to the Claim exceeds the amount of any damages that such Investor has otherwise been required to pay, or would otherwise be required
to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission; and (b) the Company
shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the total paid purchase price
(pursuant to the Unit Purchase Agreement) for the Units subject to the Claim exceeds the amount of any damages that the Company
has otherwise been required to pay, or would otherwise be required to pay under Section 6(a).

 

		8.	Reports Under the 1934 Act.

 

With a view to making
available to the Investors the benefits of Rule 144, the Company agrees to:

 

(a)          make
and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)          file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations
of the Company under the Unit Purchase Agreement) and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and

 

(c)          furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the 1934 Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with
the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without registration.

 

    	 	- 11 -	 

     

    

 

		9.	Assignment of Registration Rights.

 

All or any portion
of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case
may be) of all or any portion of such Investor’s Registrable Securities or Warrants if: (i) such Investor agrees in writing
with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is,
within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name
and address of such transferee or assignee (as the case may be), and (b) the securities with respect to which such registration
rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or assignment (as the
case may be) the further disposition of such securities by such transferee or assignee (as the case may be) is restricted under
the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing with the Company
to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have been made
in accordance with the applicable requirements of the Unit Purchase Agreement and the Warrants (as the case may be); and (vi) such
transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state securities
laws.

 

		10.	Amendment of Registration Rights.

 

Provisions of this
Agreement may be amended only with the written consent of the Company and the Required Holders. No waiver shall be effective unless
it is in writing and signed by an authorized representative of the waiving party. No consideration shall be offered or paid to
any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also
is offered to all of the parties to this Agreement.

 

		11.	Miscellaneous.

 

(a)          Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed
to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two
or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or
election received from such record owner of such Registrable Securities.

 

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

 

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 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

 

    	 	- 12 -	 

     

    

 

If to Buyer, to its
address, facsimile number or e-mail address set forth below:

 

Esousa Holdings
LLC

211 East 43rd Street

Suite 402

New York, NY 10017

Telephone: (646) 278-6785

Email: rachel@esousallc.com

Attention: Rachel
Glicksman

 

If to Legal Counsel:

McDermott Will & Emery LLP

340 Madison Avenue

New York, NY 10017

Telephone: (212) 547-5885

Facsimile: (212)
547-5444

Attention: Robert
Cohen, Esq.

 

If to a Buyer, to its address, facsimile
number or e-mail address (as the case may be) set forth on the Buyer Schedule attached to the Unit Purchase Agreement, with copies
to such Buyer’s representatives as set forth on the Buyer Schedule, or to 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 five (5)
days prior to the effectiveness of such change, provided that Legal Counsel shall only be provided notices sent to Buyer. Written
confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail transmission containing the time, date and recipient
facsimile number or e-mail address or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

(c)          Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms and provisions
hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition
to any other remedy to which any party may be entitled by law or equity.

 

(d)          All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, 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.

 

    	 	- 13 -	 

     

    

 

(e)          This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and
the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely
with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction
Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with, or any instrument
that any Investor received from, the Company prior to the date hereof with respect to any prior investment made by such Investor
in the Company, (ii) waive, alter, modify or amend in any respect any obligations of the Company or any rights of or benefits to
any Investor or any other Person in any agreement entered into prior to the date hereof between or among the Company and any Investor
or any instrument that any Investor received prior to the date hereof from the Company and all such agreements and instruments
shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.

 

(f)          Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by,
any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections
6 and 7 hereof.

 

(g)          The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless
the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular
and plural forms thereof. The terms “including,” “includes,” “include” and words of like import
shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

(h)          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. In the event that any
signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page were an original thereof.

 

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

 

(j)          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. Notwithstanding anything to the contrary set forth in Section 10, terms
used in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing
Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.

 

(k)          All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders.

 

    	 	- 14 -	 

     

    

 

(l)          The
obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor
under this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges
that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are
not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions
contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such
purpose. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control
of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not between the Company and
the Investors collectively and not between and among Investors.

 

[signature pages follow]

 

    	 	- 15 -	 

     

    

 

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

 

	 	COMPANY
	 	 
	 	NET ELEMENT, INC.

 

	 	By:	/s/ Oleg Firer
	 	 	Name:	Oleg Firer
	 	 	Title:	Chief Executive Officer

 

[Signature
page to Registration Rights Agreement]

 

     

     

    

 

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

 

	 	BUYER:
	 	 
	 	ESOUSA HOLDINGS LLC

 

	 	By:	/s/ Rachel Glicksman
	 	 	Name:	Rachel Glicksman
	 	 	Title:	Managing Member

 

[Signature
page to Registration Rights Agreement]

 

     

     

    

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

_______________________

 

_______________________

 

_______________________

 

Attention: _____________

 

		Re:	Net Element, Inc.

 

Ladies and Gentlemen:

 

[We are][I am] counsel
to Net Element, Inc., a company organized under the laws of the State of Delaware (the “Company”), and have
represented the Company in connection with that certain Unit Purchase Agreement (the “Unit Purchase Agreement”)
entered into by and among the Company and Esousa Holdings LLC (the “Holder”) pursuant to which the Company issued
to the Holder (i) shares of common stock of the Company (the “Common Stock”) and (ii) warrants exercisable or
exchangeable for shares of Common Stock (the “Warrants”). Pursuant to the Unit Purchase Agreement, the Company
also has entered into a Registration Rights Agreement with the Holder (the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), including the shares of Common Stock issuable upon exercise or exchange of the Warrants, under the Securities
Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration
Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-1]/[S-3] (File No. 333-_____________)
(the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating
to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.

 

In connection with
the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that the SEC has entered
an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]
and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the Registration Statement.

 

This letter shall serve
as our standing opinion to you that the shares of Common Stock underlying the Warrants are freely transferable by the Holders pursuant
to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance
of such shares of Common Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
_________ __, 20__.

 

	 	Very truly yours,
	 	 
	 	[ISSUER’S COUNSEL]
	 	 
	 	By:	 

 

		CC:	[LIST NAMES OF HOLDERS]

 

     

     

    

 

EXHIBIT B

 

SELLING STOCKHOLDER

 

The shares of common
stock being offered by the selling stockholder are the Purchase Shares (as defined in the Unit Purchase Agreement) and those issuable
to the selling stockholder upon exercise or exchange of the warrants. For additional information regarding the issuance of the
common stock and the warrants, see “Private Placement of Common Stock and Warrants” above. We are registering the shares
of common stock in order to permit the selling stockholder to offer the shares for resale from time to time. Except for the ownership
of the Purchase Shares and the warrants issued pursuant to the Unit Purchase Agreement, the selling stockholder has not had any
material relationship with us within the past three years.

 

The table below lists
the selling stockholder and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling
stockholder. The second column lists the number of shares of common stock beneficially owned by the selling stockholder, based
on its respective ownership of the shares of common stock and warrants, as of ________, 201[7], assuming exercise or exchange of
the warrants held by such selling stockholder on that date but taking account of any limitations on conversion and exercise or
exchange set forth therein.

 

The third column lists
the shares of common stock being offered by this prospectus by the selling stockholder and does not take into account any limitations
on exercise or exchange of the warrants set forth therein.

 

In accordance with
the terms of a registration rights agreement with the holders of the warrants issued pursuant to the Unit Purchase Agreement, this
prospectus generally covers the resale of the 100% of the Purchase Shares and the initial number of shares issued and issuable
pursuant to the warrants (or the number of shares so issued and issuable as of the filing of the registration statement to which
this prospectus relates, if more). This prospectus also or otherwise covers such other shares of common stock issued or issuable
pursuant to the warrants as more fully set forth in this prospectus. Because the exercise price of the warrants may be adjusted
for recapitalizations, stock splits, reverse stock splits and the like as set forth in the warrants, the number of shares that
will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes
the sale of all of the shares offered by the selling stockholder pursuant to this prospectus.

 

Under the terms of
the warrants, the selling stockholder may not exercise or exchange the warrants to the extent (but only to the extent) such selling
stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 9.99%. The
number of shares in the second column reflects these limitations. The selling stockholder may sell all, some or none of its shares
in this offering. See “Plan of Distribution.”

 

	Name of Selling Stockholder	 	Number of Shares of

Common Stock Owned

Prior to Offering	 	Maximum Number of

Shares of Common Stock to

be Sold Pursuant to this

Prospectus	 	Number of Shares of

Common Stock Owned

After Offering
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Esousa Holdings LLC(1)	 	 	 	 	 	 

 

(1) _____________ has voting and investment
control over the shares held by the selling stockholder.

 

     

     

    

 

PLAN OF DISTRIBUTION

 

We are registering
the Purchase Shares and the shares of common stock issuable to the selling stockholder upon exercise or exchange of the warrants
to permit the resale of these shares of common stock by the holders of the common stock and warrants from time to time after the
date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholder of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

 

The selling stockholder
may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one
or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers,
the selling stockholder will be responsible for underwriting discounts or commissions or agent’s commissions. The shares
of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at
varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve
crosses or block transactions, pursuant to one or more of the following methods:

 

		·	on any national securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale;

 

		·	in the over-the-counter market;

 

		·	in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

		·	through the writing or settlement of options, whether such options are listed on an options exchange
or otherwise;

 

		·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

		·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;

 

		·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

		·	an exchange distribution in accordance with the rules of the applicable exchange;

 

		·	privately negotiated transactions;

 

		·	short sales made after the date the Registration Statement is declared effective by the SEC;

 

		·	broker-dealers may agree with a selling securityholder to sell a specified number of such shares
at a stipulated price per share;

 

		·	a combination of any such methods of sale; and

 

		·	any other method permitted pursuant to applicable law.

 

The selling stockholder
may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholder may transfer the shares of common stock by other means not described
in this prospectus. If the selling stockholder effects such transactions by selling shares of common stock to or through underwriters,
broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions
or commissions from the selling stockholder or commissions from purchasers of the shares of common stock for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers
or agents may be in excess of those customary in the types of transactions involved). The selling stockholder may also loan or
pledge shares of common stock to broker-dealers that in turn may sell such shares.

 

     

     

    

 

The selling stockholder
may pledge or grant a security interest in some or all of warrants or shares of common stock owned by it and, if the selling stockholder
defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common
stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The selling stockholder also may transfer and donate
the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

 

To the extent required
by the Securities Act and the rules and regulations thereunder, the selling stockholder and any broker-dealer participating in
the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, which
will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or
names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholder
and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.

 

Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance
that the selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement,
of which this prospectus forms a part.

 

The selling stockholder
and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholder
and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged
in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock.
All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.

 

We will pay all expenses
of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[___] in total,
including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling stockholder against liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholder will be entitled to contribution. We may be indemnified by the
selling stockholder against civil liabilities, including liabilities under the Securities Act that may arise from any written information
furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration
rights agreements or we may be entitled to contribution.

 

Once sold under the
registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands
of persons other than our affiliates.

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