Document:

Exhibit 10.4

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of April 30, 2015, by and among Net Element Inc., a Delaware corporation,
with headquarters located at 3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160 (the "Company"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively, the
"Buyers").

 

WHEREAS:

 

A.           The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), and Rule 506(b) of Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange Commission (the "SEC")
under the 1933 Act.

 

B.           The
Company has authorized a new series of senior convertible notes of the Company, in substantially the form attached hereto as Exhibit
A (the "Notes"), which Notes shall be convertible into the Company's common stock, par value $0.0001 per share
(the "Common Stock") (the shares of Common Stock issuable pursuant to the terms of the Notes, including,
without limitation, upon conversion, as payment of Interest and as part of the Make-Whole Amount (each, as defined in the Notes)
or otherwise, collectively, the "Conversion Shares"), in accordance with the terms of the Notes.

 

C.           Each
Buyer wishes to purchase, and the Company wishes to sell at the Initial Closing (as defined below), upon the terms and conditions
stated in this Agreement, (i) that aggregate principal amount of Notes set forth opposite such Buyer's name in column (3)(a) on
the Schedule of Buyers attached hereto (which aggregate principal amount of Notes for all Buyers shall be $5,000,000) (the "Initial
Notes"), and (ii) Warrants, in substantially the form attached hereto as Exhibit B (the "Initial Warrants"),
representing the right to acquire that number of shares of Common Stock set forth opposite such Buyer's name in column (4)(a) on
the Schedule of Buyers, as appropriately adjusted for any stock dividend, stock split, stock combination or similar transaction
from and after the date hereof (as exercised, collectively, the "Initial Warrant Shares").

 

D.           Each
Buyer wishes to purchase, and the Company wishes to sell at an Additional Closing, upon the terms and conditions stated in this
Agreement, (i) that aggregate principal amount of Notes set forth opposite such Buyer's name in column (3)(b) on the Schedule of
Buyers attached hereto (which aggregate principal amount for all Buyers shall be $10,000,000) (the "Additional Notes"
and together with the Initial Notes, collectively referred to as the "Notes") and (ii) warrants, in substantially
the form attached hereto as Exhibit B (the "Additional Warrants", and together with the Initial Warrants,
the "Warrants"), to acquire up to that number of additional shares of Common Stock set forth opposite such Buyer's
name in columns (4)(b) of the Schedule of Buyers, as appropriately adjusted for any stock dividend, stock split, stock combination
or similar transaction from and after the date hereof (as exercised, collectively, the "Additional Warrant Shares",
and together with the Initial Warrant Shares, the "Warrant Shares").

 

    	 

    	 

    

 

E.           Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (the "Registration Rights Agreement"), pursuant
to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement) under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state
securities laws.

 

F.           In
connection with the transactions contemplated hereby, the Company desires each Buyer or group of affiliated Buyers (a "Buyer
Group") to enter into, at or prior to the Initial Closing (as defined below), one or more deposit agreements, each substantially
in the form attached hereto as Exhibit D or in a form acceptable to the Company and the Buyers, with The Bank of New York
Mellon (the "Depositary") with respect to the applicable Purchase Price (as defined in Section 1(b)) to be funded
by each Buyer or Buyer Group on or about (as provided herein) the date of the applicable Closing (as defined in Section 1(a)(ii))
(as amended or modified from time to time in accordance with its respective terms, each a "Deposit Agreement"
and, collectively, the "Deposit Agreements").  Each account governed by a Deposit Agreement shall be referred
to herein as an "Deposit Account" and collectively, the "Deposit Accounts".

 

G.           The
Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively are referred to herein as the "Securities".

 

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

 

1.          PURCHASE
AND SALE OF NOTES AND WARRANTS.

 

(a)          Purchase
of Notes and Warrants.

 

(i)          Initial
Closing. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Initial Closing
Date (as defined below), (x) a principal amount of Initial Notes as is set forth opposite such Buyer's name in column (3)(a) on
the Schedule of Buyers and (y) Initial Warrants to acquire up to that number of Initial Warrant Shares as is set forth opposite
such Buyer's name in column (4)(a) on the Schedule of Buyers (the "Initial Closing").

 

(ii)         Additional
Closing. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 1(d), 6(b) and 7(b) below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on such Additional
Closing Date (as defined below), (x) a principal amount of Additional Notes not to exceed the amount as is set forth opposite such
Buyer's name in column (3)(b) on the Schedule of Buyers and (y) Additional Warrants to acquire up to that number of Additional
Warrant Shares as is set forth opposite such Buyer's name in column (4)(b) on the Schedule of Buyers, as appropriately adjusted
for any stock dividend, stock split, stock combination or similar transaction from and after the date hereof (each, an "Additional
Closing" and together with the Initial Closing, each a "Closing").

 

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(b)          Purchase
Price. The aggregate purchase price for the Initial Notes and the Initial Warrants to be purchased by each Buyer at the Initial
Closing (the "Initial Purchase Price") shall be the amount set forth opposite each Buyer's name in column
(5)(a) of the Schedule of Buyers (less, in the case of [           ]. (the "Lead Investor"),
any amounts withheld pursuant to Section 4(g)). The maximum aggregate purchase price for the maximum Additional Notes and the related
Additional Warrants to be purchased by each such Buyer at all Additional Closings (the amount at each Additional Closing, an "Additional
Purchase Price", and all Additional Purchase Prices together with the Initial Purchase Price, the "Purchase Price")
shall be the amount set forth opposite such Buyer's name in column (5)(b) of the Schedule of Buyers (less, in the case of the Lead
Investor, any amounts withheld pursuant to Section 4(g)). Each Buyer shall pay $1,000 for each $1,000 of principal amount of Notes
and related Warrants to be purchased by such Buyer at any Closing. The Buyers and the Company agree that the Notes and the Warrants
constitute an "investment unit" for purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Buyers and the Company mutually agree that the allocation of the issue price of such investment unit
between the Initial Notes and the Initial Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section
1.1273-2(h) shall be an aggregate amount of $270,936 allocated to the Initial Warrants and the balance of the Initial Purchase
Price allocated to the Initial Notes. The Buyers and the Company mutually agree that the allocation of the issue price of such
investment unit between the Additional Notes and the Additional Warrants in accordance with Section 1273(c)(2) of the Code and
Treasury Regulation Section 1.1273-2(h) shall be an amount of $0.10 per Additional Warrant and the balance of the Additional Purchase
Price allocated to the Additional Notes. Neither the Buyers nor the Company shall take any position inconsistent with such allocations
in any tax return or in any judicial or administrative proceeding in respect of taxes.

 

(c)          Initial
Closing Date. The date and time of the Initial Closing (the "Initial Closing Date") shall be 10:00
a.m., New York City time, on the date hereof (or such other date and time as is mutually agreed to by the Company and each Buyer)
after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6(a) and 7(a) below, at the
offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.

 

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(d)          Additional
Closing Date. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(b) and 7(b) below, until April
30, 2018 (the "Additional Closing Deadline"), each Buyer shall have the right, at such Buyer's sole option, to
require the Company to issue and sell to such Buyer, and such Buyer shall have the right, to purchase from the Company up to an
aggregate principal amount of Additional Notes and related Additional Warrants as set forth opposite such Buyer's name in columns
(3)(b) and 4(b), respectively, on the Schedule of Buyers. To exercise such right, each Buyer may deliver a notice (a "Buyer
Additional Closing Notice") to the Company setting forth (i) the aggregate principal amount of Additional Notes and related
Additional Warrants that such Buyer wishes to purchase from the Company, which aggregate principal amount shall not exceed such
Buyer's maximum aggregate principal amount of maximum Additional Notes set forth opposite such Buyer's name in column (3)(b) on
the Schedule of Buyers and which aggregate number of Additional Warrants shall not exceed the number of Additional Warrants set
forth opposite such Buyer's name in column (4)(b) on the Schedule of Buyers and (ii) the date that the Company will be required
to sell such Additional Notes and related Additional Warrants to such Buyer (each, a "Buyer Additional Closing"),
which date shall not be less than one (1) Trading Day after delivery of such Buyer Additional Closing Notice and not later than
the Additional Closing Deadline. No Buyer shall be entitled to cause the Company to consummate more than one (1) Buyer Additional
Closing for such Buyer. Upon receipt of a Buyer Additional Closing Notice, subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6(b) and 7(b) below, the Company shall (i) be required to sell to such Buyer, and such Buyer shall be required
to purchase from the Company, the aggregate principal amount of Additional Notes and related Additional Warrants set forth in the
Buyer Additional Closing Notice on the date of the applicable Buyer Additional Closing set forth in such Buyer Additional Closing
Notice and (ii) within one (1) Business Day of receipt of a Buyer Additional Closing Notice from a Buyer, deliver written notice
thereof via facsimile or electronic mail and overnight courier to all other Buyers and the Company shall within one (1) Business
Day after any such delivery publicly disclose the delivery by a Buyer of a Buyer Additional Closing Notice on a Current Report
on Form 8-K. The date and time of each applicable Additional Closing (each, an "Additional Closing Date", and
together with all Additional Closing Dates and the Initial Closing Date, each a "Closing Date") shall be 10:00
a.m., New York City time, on the date specified in the applicable Buyer Additional Closing Notice (or such other date and time
as is mutually agreed to by the Buyers and the Company). The location of such Additional Closing shall be at the offices of Schulte
Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.

 

(e)          Form
of Payment.

 

(i)          Initial
Closing. On the Initial Closing Date, (i) each Buyer shall deliver or reserve for payment and agree to, promptly upon the opening
of such Buyer's or Buyer Group's Deposit Account, deposit its respective Initial Purchase Price (less
any amounts withheld pursuant to Section 4(g)) (the "Initial Deposit Amount") to such Deposit Account by
wire transfer of immediately available funds in accordance with the wire instructions set forth in such Buyer's or Buyer Group's
Deposit Agreement, such Initial Deposit Amount to be held and released by the Depositary in accordance with and pursuant to the
terms and conditions of such Deposit Agreement, in each case, for the Initial Notes and the Initial Warrants to be issued and sold
to such Buyer at the Initial Closing and (ii) the Company shall deliver to each Buyer the Initial Notes (allocated in the
principal amounts as such Buyer shall request) which such Buyer is then purchasing hereunder along with the Initial Warrants (allocated
in the amounts as such Buyer shall request) which such Buyer is purchasing hereunder, in each case duly executed on behalf of the
Company and registered in the name of such Buyer or its designee.

 

(ii)         Additional
Closing. On each Additional Closing Date, (i) each Buyer shall deliver or reserve for payment and agree to deposit its applicable
Additional Purchase Price (less any amounts withheld pursuant to Section 4(g)) (the
"Applicable Additional Deposit Amount") to such Buyer's or Buyer Group's Deposit Account, if any, by wire transfer
of immediately available funds in accordance with the wire instructions set forth in Buyer's or Buyer Group's Deposit Agreement,
such Applicable Additional Deposit Amount to be held and released by the Depositary in accordance with and pursuant to the terms
and conditions of such Deposit Agreement, in each case, for the Additional Notes and the Additional Warrants to be issued and sold
to such Buyer at such Additional Closing and (ii) the Company shall deliver to each Buyer such Additional Notes (allocated
in the principal amounts as such Buyer shall request) which such Buyer is then purchasing hereunder along with such Additional
Warrants (allocated in the amounts as such Buyer shall request) which such Buyer is purchasing hereunder, in each case duly executed
on behalf of the Company and registered in the name of such Buyer or its designee.

 

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2.          BUYER'S
REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants with respect to only itself
that, as of the date hereof and as of each applicable Closing Date:

 

(a)          No
Public Sale or Distribution. Such Buyer is (i) acquiring the Notes and the Warrants and (ii) upon conversion of the Notes and
exercise of the Warrants will acquire the Conversion Shares issuable pursuant to the Notes and the Warrant Shares issuable upon
exercise of the Warrants, for its own account and not with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that
by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such
Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute
any of the Securities. For purposes of this Agreement, "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency
thereof.

 

(b)          Accredited
Investor and QIB Status. Such Buyer is (i) an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D and/or (ii) a "qualified institutional buyer" ("QIB") as defined in Rule 144A under the Securities
Act, as indicated on the signature page of such Buyer.

 

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

 

(d)          Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's representations and warranties contained herein. Such Buyer understands that its investment
in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its acquisition of the Securities.

 

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

 

(f)          Transfer
or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement: (i) the Securities have not
been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance
that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as
amended, (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale of the Securities made in reliance
on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the Person) through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities
under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding
the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement
secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including,
without limitation, this Section 2(f).

 

(g)          Legends.
Such Buyer understands that the certificates or other instruments representing the Notes and the Warrants and, until such time
as the resale of the Conversion Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the stock certificates representing the Conversion Shares and the Warrant Shares, except as set forth below,
shall bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

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[NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

The legend set forth above shall be removed
and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue
to such holder by electronic delivery at the applicable balance account at The Depository Trust Company ("DTC"),
if, unless otherwise required by state securities laws, (i) such Securities are registered for resale under the 1933 Act, (ii)
in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under
the applicable requirements of the 1933 Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A. The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance.

 

(h)          Validity;
Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer
in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.

 

(i)          No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the Registration Rights Agreement and
the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

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3.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

 

The Company represents and
warrants to each of the Buyers that, as of the date hereof and as of each applicable Closing Date:

 

(a)          Organization
and Qualification. Each of the Company and its "Subsidiaries" (which for purposes of this Agreement means
any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest)
are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are formed,
and have the requisite power and authorization to own their properties and to carry on their business as now being conducted. Each
of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business,
properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries,
taken as a whole, or on the transactions contemplated hereby or in the other Transaction Documents or by the agreements and instruments
to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations
under the Transaction Documents. The Company has no Subsidiaries except as set forth in Note 2 to Consolidated Financial Statements
– December 31, 2014 and 2013 in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

(b)          Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Lock-up Agreements (as defined in Section 7(x)), the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Voting Agreements (as defined in Section 4(r)), the Deposit
Agreements and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated
by this Agreement (collectively, the "Transaction Documents") and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes and the Warrants,
and the reservation for issuance and the issuance of the Conversion Shares and the reservation for issuance and issuance of Warrant
Shares issuable upon exercise of the Warrants have been duly authorized by the Company's Board of Directors and (other than the
filing with the SEC of one or more Registration Statements (as defined in the Registration Rights Agreement) in accordance with
the requirements of the Registration Rights Agreement and (other filings as may be required by state securities agencies) no further
filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the
other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

 

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(c)          Issuance
of Securities. The issuance of the Notes and the Warrants are duly authorized and, upon issuance, shall be validly issued and
free from all taxes, liens and charges with respect to the issue thereof. As of the Initial Closing, a number of shares of Common
Stock shall have been duly authorized and reserved for issuance which equals or exceeds (the "Required Reserved Amount")
the sum of (i) 25,000,000 shares of Common Stock (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction occurring after the date hereof) to effect the issuance of the Conversion Shares pursuant to the Notes (without
taking into account any limitations on the issuance thereof pursuant to the terms of the Notes) and (ii) 130% of the maximum number
of Warrant Shares issued and issuable pursuant to the Warrants, each as of the Trading Day immediately preceding the applicable
date of determination (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants).
As of the date hereof, there are 152,539,968 shares of Common Stock authorized and unissued. Upon conversion of the Notes in accordance
with the Notes or exercise of the Warrants in accordance with the Warrants, as the case may be, the Conversion Shares and the Warrant
Shares, respectively, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes,
liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common
Stock. Assuming the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer
and issuance by the Company of the Securities is exempt from registration under the 1933 Act.

 

(d)          No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and any of its Subsidiaries
parties to any of the Transaction Documents and the consummation by the Company and any of its Subsidiaries of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the Warrants and reservation for
issuance and issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation (as defined in Section (3(r)) or Bylaws (as defined in Section (3(r)), any memorandum of association, certificate
of incorporation, certificate of formation, bylaws, any certificate of designations or other constituent documents of the Company
or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association or bylaws
of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) in any respect under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities
laws and regulations and the rules and regulations of The NASDAQ Capital Market (the "Principal Market") and including
all applicable foreign, federal and state laws, rules and regulations) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its Subsidiaries is bound or affected.

 

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(e)          Consents.
Other than the Nasdaq's Listing of Additional Shares notification in connection with the transactions contemplated hereby and filing
of the Current Report on Form 8-K with the SEC with respect to the transactions contemplated hereby and the other Transaction Documents
and filing of Form D (or applicable state equivalent form), neither the Company nor any of its Subsidiaries is required to obtain
any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated
by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company or any of its Subsidiaries is required to obtain pursuant to the preceding sentence
have been obtained or effected on or prior to the Initial Closing Date, and the Company and its Subsidiaries are unaware of any
facts or circumstances that might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal
Market and has no knowledge of any facts that would reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future. The issuance by the Company of the Securities shall not have the effect of delisting or suspending the Common Stock from
the Principal Market.

 

(f)          Acknowledgment
Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an "affiliate" of the Company
or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of
more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "1934 Act")). The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary
of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer's purchase of the
Securities. The Company further represents to each Buyer that the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its representatives.

 

(g)          No
General Solicitation; Placement Agent's Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person
acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent's
fees, financial advisory fees, or brokers' commissions (other than for persons engaged by any Buyer or its investment advisor)
relating to or arising out of the transactions contemplated hereby, including, without limitation, placement agent fees payable
to Revere Securities LLC, as placement agent (the "Placement Agent") in connection with the sale of the Securities.
The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, attorney's
fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged the Placement
Agent in connection with the sale of the Securities. Other than the Placement Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with the sale of the Securities.

 

    	- 10 -

    	 

    

 

(h)          No
Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of any of the Securities under the 1933 Act, whether through integration with prior offerings or
otherwise, or cause this offering of the Securities (giving effect to the Exchange Cap (as defined in each of the Notes and the
Warrants)) to require approval of stockholders of the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any
Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration
of any of the Securities under the 1933 Act or cause the offering of the Securities (giving effect to the Exchange Cap (as defined
in each of the Notes and the Warrants)) to be integrated with other offerings for purposes of any such applicable stockholder approval
provisions. The Company acknowledges and agrees that the Exchange Cap (as defined in each of the Notes and the Warrants) will be
removed when the Stockholder Approval (as defined in Section 4(p)) is obtained.

 

(i)           Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares issuable pursuant to terms of the Notes
and the number of Warrant Shares issuable pursuant to the terms of the Warrants will increase in certain circumstances. The Company
further acknowledges that its obligation to issue Conversion Shares and Warrant Shares pursuant to the terms of the Notes and Warrants
in accordance with this Agreement, the Notes and the Warrants is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the Company.

 

(j)           Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the jurisdiction
of its formation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and any Buyer's ownership of the Securities. The Company
has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock
or a change in control of the Company.

 

    	- 11 -

    	 

    

 

(k)          SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely (other than certain
Current Reports on Form 8-K)) filed all reports, schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof, and all exhibits
included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). The Company has delivered to the Buyers or their respective representatives
true, correct and complete copies of the SEC Documents not available on the EDGAR system. As of their respective filing dates,
the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their
respective filing dates, the financial statements of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
No other information provided by or on behalf of the Company to the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d) of this Agreement or in the disclosure schedules to this Agreement,
contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not misleading.

 

(l)           Absence
of Certain Changes. Since December 31, 2014, there has been no material adverse change and no material adverse development
in the business, assets, properties, operations, condition (financial or otherwise), results of operations or prospects of the
Company or its Subsidiaries. Since December 31, 2014, neither the Company nor any of its Subsidiaries has (i) declared or paid
any dividends, (ii) sold any assets, in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii)
had capital expenditures, in the aggregate, in excess of $100,000. Neither the Company nor any of its Subsidiaries has taken any
steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor
to do so. The Company, individually, and the Company and its Subsidiaries, on a consolidated basis, are not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at any Closing, will not be Insolvent (as defined below).
For purposes of this Section 3(l), "Insolvent" means, with respect to any Person, (i) the present fair saleable
value of such Person's assets is less than the amount required to pay such Person's total Indebtedness (as defined in the Notes),
(ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability
to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.

 

    	- 12 -

    	 

    

 

(m)         No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced.

 

(n)          Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under any certificate of designations of any outstanding series of preferred stock of the Company (if any), its Certificate of
Incorporation or Bylaws or their organizational charter or memorandum of association or certificate of incorporation or articles
of association or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which
could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing,
the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of
any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future. During the two (2) years prior to the date hereof, the Common Stock has been designated for quotation on
the Principal Market. During the two (2) years prior to the date hereof, (i) trading in the Common Stock has not been suspended
by the SEC or the Principal Market and (ii) the Company has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would
not have, in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

 

(o)          Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee
from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended ("FCPA"); or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

 

(p)          Sarbanes-Oxley
Act. The principal executive officer and principal financial officer of the Company have made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act") and the rules and
regulations promulgated in connection therewith with respect to all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC, and the statements contained in any such certification are complete and correct. The Company and
all of the Company's directors and officers are in compliance in all respects with all applicable effective provisions of the Sarbanes-Oxley
Act.

 

    	- 13 -

    	 

    

 

(q)         
Transactions With Affiliates. Except as set forth in Item 13 of the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014 and on Schedule 3(q), none of the officers, directors or employees of the Company or
any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary
course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any corporation,
partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.

 

(r)           Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 200,000,000 shares of Common
Stock, of which as of the date hereof, 46,911,282 shares are issued and outstanding, 9,121,422 shares are reserved for issuance
pursuant to the Company's stock option and purchase plans and 9,058,094 shares are reserved for issuance pursuant to securities
(other than the aforementioned options, the Notes and the Warrants) exercisable or exchangeable for, or convertible into, Common
Stock, and (ii) 1,000,000 shares of preferred stock, par value $0.01 per share, 4,500 of which shares of preferred stock designated
as Series A Convertible Preferred Stock are issued and outstanding as of the date hereof. All of such outstanding shares have been,
or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in: (i) none of the Company's
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock
of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any
of its Subsidiaries is or may become bound to issue additional shares or capital stock of the Company or any of its Subsidiaries
or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries;
(iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) other than the financing statements perfecting the lien on the Company's Subsidiaries processing portfolios
income stream in connection with the credit facility from RBL Capital Group, LLC, there are no financing statements securing obligations
in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries; (v)
there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of
any of their securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries
have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company's or any of its Subsidiary's' respective businesses and which, in the
aggregate, do not or would not have a Material Adverse Effect. The Company has furnished or made available to the Buyers true,
correct and complete copies of the Company's Amended and Restated Certificate of Incorporation, as amended and as in effect on
the date hereof (the "Certificate of Incorporation"), and the Company's Bylaws, as amended and as in effect on
the date hereof (the "Bylaws"), and the terms of all securities convertible into, or exercisable or exchangeable
for shares of Common Stock and the material rights of the holders thereof in respect thereto.

 

    	- 14 -

    	 

    

 

(s)          Indebtedness
and Other Contracts. Except as disclosed in Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness, (ii) is a party to any contract, agreement or instrument, the violation of which, or default under which,
by the other party(ies) to such contract, agreement or instrument could reasonably be expected to result in a Material Adverse
Effect, (iii) is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, in the aggregate, in a Material Adverse Effect, or (iv) is a party
to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's
officers, has or is expected to have a Material Adverse Effect. Schedule 3(s) provides a detailed description of the material
terms of any such outstanding Indebtedness. The Company hereby represents that loans of up to an aggregate principal amount of
$6,035,000 remain available to the Company pursuant that certain Loan and Security Agreement, dated June 30, 2014, among RBL Capital
Group, LLC, as lender, and TOT Group, Inc., TOT Payments, LLC, TOT BPS, LLC, TOT FBS, LLC, Process Pink, LLC, TOT HPS, LLC and
TOT New Edge, LLC, as co-borrowers subject only to the satisfaction or waiver of the conditions precedents to each subsequent funding
specified in Section 5.01(e) thereof.

 

(t)           Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or any of the Company's
or its Subsidiaries' officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, except
as set forth in Schedule 3(t). The matters set forth in Schedule 3(t) would not reasonably be expected to have a
Material Adverse Effect.

 

(u)          Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

 

    	- 15 -

    	 

    

 

(v)         Employee
Relations.

 

(i)           Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The
Company and its Subsidiaries believe that their relations with their employees are good. No executive officer of the Company or
any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any of its Subsidiaries,
is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect
to any of the foregoing matters.

 

(ii)          The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(w)         Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except for Permitted Liens (as defined in the Notes). Any real property and facilities
held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings
by the Company and its Subsidiaries.

 

(x)          Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor ("Intellectual Property Rights") necessary to conduct their respective businesses as now
conducted. Neither the Company nor any of its Subsidiaries owns any patents. None of the Company's Intellectual Property Rights
have expired or terminated or have been abandoned or are expected to expire or terminate or are expected to be abandoned, within
three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding
its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

 

    	- 16 -

    	 

    

 

(y)          Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, in the aggregate,
a Material Adverse Effect. The term "Environmental Laws" means all federal, state, local or foreign laws relating
to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.

 

(z)          Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

 

(aa)         Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities, and for so long any Buyer holds any
Securities, will not be, an "investment company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.

 

(bb)         Tax
Status. The Company and each of its Subsidiaries (i) has made or filed all U.S. federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.

 

    	- 17 -

    	 

    

 

(cc)         Internal
Accounting and Disclosure Controls. Except as described in Item 9A of the Company's Form 10-K for the period ended December
31, 2014, the Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance
with management's general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared
with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference.
Except as described in Item 9A of the Company's Form 10-K for the period ended December 31, 2014, the Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company's management, including its principal executive officer or officers
and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. During
the twelve (12) months prior to the date hereof neither the Company nor any of its Subsidiaries has received any notice or correspondence
from any accountant relating to any material weakness in any part of the system of internal accounting controls of the Company
or any of its Subsidiaries.

 

(dd)         Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated
or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed
or that otherwise would be reasonably likely to have a Material Adverse Effect.

 

(ee)         Ranking
of Notes. Except as set forth in Schedule 3(ee), no Indebtedness of the Company or any of its Subsidiaries is senior
to or ranks pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages
or upon liquidation or dissolution or otherwise.

 

(ff)         Eligibility
for Registration. The Company is eligible to register the Conversion Shares and the Warrant Shares for resale by the Buyers
using Form S-3 promulgated under the 1933 Act.

 

(gg)         Transfer
Taxes. On each Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

(hh)         Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Placement
Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than
the Placement Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities
of the Company.

 

    	- 18 -

    	 

    

 

(ii)  [Intentionally
omitted]

 

(jj)          U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Code and the Company shall so certify
upon any Buyer's request.

 

(kk)         Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the "BHCA") and to regulation by the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%)
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(ll)          No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

 

(mm)       Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The
Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Buyers regarding the Company, or any of its Subsidiaries, their business
and the transactions contemplated hereby, including the disclosure schedules to this Agreement, furnished by or on behalf of the
Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each
press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries
or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company
acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

 

    	- 19 -

    	 

    

 

(nn)         Shell
Company Status. The Company is not, and has not been since October 5, 2012, an issuer identified in Rule 144(i)(1) of the 1933
Act. On of October 5, 2012, the Company filed a Current Report on Form 8-K (as amendment by a Current Report on Form 8-K/A filed
by the Company with the SEC on November 19, 2012) containing current "Form 10 information" (as defined in Rule 144 (i)(3))
with the SEC reflecting its status as an entity that was no longer an issuer described in Rule 144(i)(1)(i).

 

(oo)         Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company's stock
option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the
Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release
or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

 

(pp)         No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company's
ability to perform any of its obligations under any of the Transaction Documents. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.

 

(qq)         No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933
Act ("Regulation D Securities"), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of
the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an "Issuer
Covered Person" and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a "Disqualification Event"), except
for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether
any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its
disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.

 

(rr)         Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly
or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D
Securities.

 

(ss)      
  Office of Foreign Assets Control.  Neither the Company nor any director, officer, agent, employee or affiliate
of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC").  Neither the Company nor any subsidiary or affiliate (a) will directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity currently subject to any U.S. sanctions administered by OFAC; (b) is knowingly engaged in, or
will knowingly engage in, any dealings or transactions or be otherwise associated with such persons or entities described in clause
(a) above.

 

(tt)     
     Money Laundering Laws. The operations of the Company and the Subsidiaries are and have been conducted at all times
in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the
"Money Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any or its Subsidiaries with respect to the Money Laundering Laws is pending
or, to the Company's knowledge, threatened.

 

 

    	- 20 -

    	 

    

 

4.          COVENANTS.

 

(a)          Best
Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement.

 

(b)          Form
D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Initial Closing Date, take such action
as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale
to the Buyers at each Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Initial Closing Date. The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following
each Closing Date.

 

(c)          Reporting
Status. Until the date on which the Investors (as defined in the Registration Rights Agreement) shall have sold all of the
Conversion Shares and Warrant Shares and none of the Notes or Warrants are outstanding (the "Reporting Period"),
the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination, and the Company shall take all actions necessary to maintain
its eligibility to register the Conversion Shares and Warrant Shares for resale by the Investors on Form S-3.

 

(d)          Use
of Proceeds. The Company will use the proceeds from the sale of the Securities solely for general corporate purposes and for
working capital purposes but not for (i) the repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries
or (ii) the redemption or repurchase of any of its or its Subsidiaries' equity securities.

 

(e)          Financial
Information. The Company agrees to send the following to each Buyer during the Reporting Period unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR system, (i) within one (1) Business Day after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, any Quarterly Reports on Form 10-Q, any Current Reports
on Form 8-K (or any analogous reports under the 1934 Act) and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases
issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given
to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
As used herein, "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks
in The City of New York are authorized or required by law to remain closed.

 

    	- 21 -

    	 

    

 

(f)           Listing.
The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any, upon which the Common Stock then listed (subject
to official notice of issuance) and shall maintain such listing of all Registrable Securities from time to time issuable under
the terms of the Transaction Documents. The Company shall maintain the authorization for quotation of the Common Stock on the Principal
Market or any other Eligible Market (as defined in the Warrants). Neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market.
The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).

 

(g)          Fees.
The Company shall reimburse the Lead Investor (a Buyer) or its designee(s) (in addition to any other expense amounts paid to any
Buyer or its counsel prior to the date of this Agreement) for all costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including, without limitation, all legal fees and disbursements in connection therewith,
documentation and implementation of the transactions contemplated by the Transaction Documents and due diligence in connection
therewith), which amount may be withheld by such Buyer from its Purchase Price for any Notes and Warrants purchased at the Initial
Closing and/or any Additional Closing to the extent not previously reimbursed by the Company. Notwithstanding the foregoing, in
no event will the fees of counsel to the Lead Investor reimbursed by the Company pursuant to this Section 4(g) exceed $27,500 without
the prior approval of the Company (the "Legal Fee Cap"). The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's commissions or fees payable to the Depositary in connection with the
Deposit Agreements (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby,
including, without limitation, any fees or commissions payable to the Placement Agent. The Company agrees and acknowledges that
each Buyer may withhold the fees and expenses of the Depositary or related to such Buyer's or Buyer Group's Deposit Account from
its Purchase Price for any Notes and Warrants purchased at the Initial Closing and/or any Additional Closing amount or deduct such
amounts or direct (or permit such amounts to be deducted by the Depositary) from any amounts held in such Buyer's or Buyer Group's
Deposit Account. The Company shall pay and indemnify each Buyer for, and hold each Buyer harmless against, any liability, loss
or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection with any
claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall
bear its own expenses in connection with the sale of the Securities to the Buyers.

 

(h)          Pledge
of Securities. The Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona
fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall
not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this
Agreement or any other Transaction Document, including, without limitation, Section 2(f) hereof; provided that an Investor
and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment
of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

 

    	- 22 -

    	 

    

 

(i)           Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day after
this Agreement has been executed (the "8-K Deadline"), the Company shall issue a press release reasonably acceptable
to the Buyers and file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents
in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement
(and all schedules and exhibits to this Agreement), the form of Notes, the form of the Warrant, the form of Lock-Up Agreement,
the Registration Rights Agreement, the form of Voting Agreement and, if applicable, the Deposit Agreements (to the extent such
Deposit Agreements are duly executed and delivered by all parties thereto on or prior to the 8-K Deadline) as exhibits to such
filing (including all attachments), the "8-K Filing"). From and after the filing of the 8-K Filing with the SEC,
no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any
of their respective officers, directors, affiliates, employees or agents, that is not disclosed in the 8-K Filing. In addition,
effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers,
directors, affiliates, employees and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Buyer. If a Buyer has,
or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries from the
Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, it may provide
the Company with written notice thereof. The Company shall, within two (2) Trading Days of receipt of such notice, make public
disclosure of such material, nonpublic information. In the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees, affiliates and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the right to make a public disclosure, in the form of
a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company,
its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer shall have any liability
to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for
any such disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer's
consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any
of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty
to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents not to
trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor
any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted
by the Company in connection with any such press release or other public disclosure prior to its release). Except for the Registration
Statement required to be filed pursuant to the Registration Rights Agreement, without the prior written consent of any applicable
Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement,
release or otherwise.

 

    	- 23 -

    	 

    

 

(j)           Additional
Notes; Variable Securities. So long as any Buyer beneficially owns any Securities, the Company will not issue any Notes other
than to the Buyers as contemplated hereby and the Company shall not issue any other securities that would cause a breach or default
under the Notes. Other than in connection with the acquisition of the PayOnline group of companies and except for any issuances
of securities to any of the Buyers, for so long as any Notes remain outstanding, the Company shall not, in any manner, issue or
sell any rights, warrants or options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable
or exercisable for Common Stock at a price which varies or may vary with the market price of the Common Stock, including by way
of one or more reset(s) to any fixed price unless the conversion, exchange or exercise price of any such security cannot be less
than the then applicable Fixed Conversion Price (as defined in the Notes) with respect to the Common Stock into which any Note
is convertible or the then applicable Exercise Price (as defined in the Warrants) with respect to the Common Stock into which any
Warrant is exercisable.

 

(k)          Corporate
Existence. So long as any Buyer beneficially owns any Securities, the Company shall (i) maintain its corporate existence and
(ii) not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the Warrants.

 

(l)           Reservation
of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than the Required Reserved Amount. If at any time the number of shares of Common
Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet the Company's obligations under Section 3(c), in the case
of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that
the number of authorized shares is sufficient to meet the Required Reserved Amount. The initial number of shares of Common Stock
reserved for conversions of the Notes and exercises of the Warrants and each increase in the number of shares so reserved shall
be allocated pro rata among the Buyers based on the aggregate principal amount of Initial Notes held by each Buyer at the time
of issuance of the Initial Notes or increase in the number of reserved shares, as the case may be. In the event a Buyer shall sell
or otherwise transfer any of such Buyer's Notes or Warrants, each transferee shall be allocated a pro rata portion of the number
of reserved shares of Common Stock reserved for such transferor. Any shares of Common Stock reserved and allocated to any Person
which ceases to hold any Notes and/or Warrants (other than pursuant to a transfer of Notes or Warrants in accordance with the immediately
preceding sentence) shall be allocated to the remaining Investors, pro rata based on the number of Notes and/or Warrants then held
by such Investors.

 

    	- 24 -

    	 

    

 

(m)        
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of
any law, ordinance or regulation of any governmental entity, including, without limitation, FCPA, OFAC regulations and Money Laundering
Laws, except where such violations would not result, in the aggregate, in a Material Adverse Effect. 

 

(n)          Additional
Issuances of Securities.

 

(i)          For
purposes of this Section 4(n), the following definitions shall apply.

 

(1)         "Convertible
Securities" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares
of Common Stock.

 

(2)         "Options"
means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

 

(3)         "Common
Stock Equivalents" means, collectively, Options and Convertible Securities.

 

(ii)         From
the date hereof until the date no Notes are outstanding (the "Trigger Date"), the Company shall not, (x) (i) directly
or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option
to purchase or other disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances,
convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "Subsequent Placement"), or (ii) be party to any solicitations,
negotiations or discussions with regard to the foregoing or (y) directly or indirectly, (i) file any registration statement with
the SEC or file any amendment or supplement thereto, (ii) cause any registration statement to be declared effective by the SEC
or (iii) grant any registration rights to any Person that can be exercised prior to such date as set forth above.

 

(iii)        From
the Trigger Date until the one (1) year anniversary of the Trigger Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this Section 4(n)(iii).

 

    	- 25 -

    	 

    

 

(1)         The
Company shall deliver to each Buyer an irrevocable written notice (the "Offer Notice") of any proposed or intended
issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered Securities")
in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price
and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued,
sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Buyers at least fifty percent (50%)
of the Offered Securities, allocated among such Buyers (a) based on such Buyer's pro rata portion of the aggregate principal amount
of Notes purchased hereunder on the Initial Closing Date (the "Basic Amount"), and (b) with respect to each Buyer
that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of
other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), which process shall be repeated until the Buyers shall have an opportunity
to subscribe for any remaining Undersubscription Amount.

 

(2)         To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (the "Offer Period"), setting forth the portion of
such Buyer's Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the "Notice of Acceptance").
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available Undersubscription Amount"), each Buyer who has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the
total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the
extent its deems reasonably necessary. Notwithstanding anything to the contrary contained herein, if the Company desires to modify
or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to the Buyers
a new Offer Notice and the Offer Period shall expire on the tenth (10th) Business Day after such Buyer's receipt of such new Offer
Notice.

 

(3)         The
Company shall have five (5) Business Days from the expiration of the Offer Period above to offer, issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Buyers (the "Refused Securities")
pursuant to a definitive agreement (the "Subsequent Placement Agreement") but only to the offerees described in
the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in
the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any documents contemplated therein filed as exhibits thereto.

 

    	- 26 -

    	 

    

 

(4)         In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(n)(iii)(3) above), then each Buyer may, at its sole option and in its sole discretion, reduce the
number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(n)(iii)(2) above multiplied by a
fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to Section 4(n)(iii)(3) above prior to such
reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer
so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(n)(iii)(1) above.

 

(5)         Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Buyers shall acquire from
the Company, and the Company shall issue to the Buyers, the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(n)(iii)(3) above if the Buyers have so elected, upon the terms and conditions specified
in the Offer. The purchase by the Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Buyers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance
to the Buyers and their respective counsel.

 

(6)         Any
Offered Securities not acquired by the Buyers or other persons in accordance with Section 4(n)(iii)(3) above may not be issued,
sold or exchanged until they are again offered to the Buyers under the procedures specified in this Agreement.

 

(7)         The
Company and the Buyers agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the "Subsequent Placement
Documents") shall include any term or provisions whereby any Buyer shall be required to agree to any restrictions in trading
as to any securities of the Company owned by such Buyer prior to such Subsequent Placement, and (y) any registration rights set
forth in such Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in
the Registration Rights Agreement.

 

    	- 27 -

    	 

    

 

(8)         Notwithstanding
anything to the contrary in this Section 4(n) and unless otherwise agreed to by the Buyers, the Company shall either confirm in
writing to the Buyers that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case in such a manner such that the Buyers will not be in possession of
material non-public information, by the fifteenth (15th) Business Day following delivery of the Offer Notice. If by
the fifteenth (15th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction
with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received
by the Buyers, such transaction shall be deemed to have been abandoned and the Buyers shall not be deemed to be in possession of
any material, non-public information with respect to the Company. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide each Buyer with another Offer Notice and each Buyer will again have the right
of participation set forth in this Section 4(n)(iii). The Company shall not be permitted to deliver more than one such Offer Notice
to the Buyers in any 60 day period.

 

(iv)        The
restrictions contained in subsection (iii) of this Section 4(n) shall not apply in connection with the issuance of any Excluded
Securities (as defined in the Notes).

 

(o)          Public
Information. At any time during the period commencing from the six (6) month anniversary of the Initial Closing Date and ending
at such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities,
may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a "Public Information Failure") then, as partial relief for the damages to any Buyer
by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each such Buyer an amount in cash equal to one and one-half percent
(1.5%) of the aggregate purchase price of such Buyer's Securities on the day of a Public Information Failure and on every thirtieth
day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information
Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which
a holder shall be entitled pursuant to this Section 4(o) are referred to herein as "Public Information Failure Payments."
Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which
such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments when due in a timely manner, such unpaid portion of the Public Information Failure Payments shall bear interest
at the rate of 1.5% per month (prorated for partial months) until paid in full.

 

    	- 28 -

    	 

    

 

(p)          Stockholder
Approval. The Company shall file with the SEC and provide each stockholder of the Company with an information statement complying
with the requirements of the 1934 Act and substantially in the form that has been previously reviewed and approved by the Buyers
and Schulte Roth & Zabel LLP informing such stockholders of the actions taken in accordance with the Resolutions and of the
Stockholder Approval (each, as defined below). In addition to the foregoing, if required by any governmental or regulatory agency,
the Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the Company (the
"Stockholder Meeting"), which shall be called at or prior to the Company's next annual meeting of stockholders,
but in no event later than the Stockholder Meeting Deadline (as defined below), a proxy statement (the "Proxy Statement"),
in a form reasonably acceptable to the Buyers after review by Schulte Roth & Zabel LLP, soliciting each such stockholder's
affirmative vote at the Stockholder Meeting for approval of resolutions (the "Resolutions") providing for the
issuance of all of the Securities as described in the Transaction Documents in accordance with applicable law, the provisions of
the Certificate of Incorporation and the rules and regulations of the Principal Market (such affirmative approval being referred
to herein as the "Stockholder Approval"), and the Company shall use its reasonable best efforts to solicit its
stockholders' approval of such Resolutions and to cause the Board of Directors of the Company to recommend to the stockholders
that they approve the Resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
Meeting Deadline. If, despite the Company's reasonable best efforts, the Stockholder Approval is not obtained at the Stockholder
Meeting, the Company shall cause an additional Stockholder Meeting to be held each calendar quarter thereafter until Stockholder
Approval is obtained. In connection with the stockholders' meeting contemplated by this Section 4(p), the Company shall (i) use
its best efforts to solicit its stockholders' approval of the Resolutions and (ii) cause at least a majority of the Board of Directors
of the Company to recommend to the stockholders that they approve the Resolutions. As used herein, "Stockholder Meeting
Deadline" means (i) the date that is sixty (60) days after the Closing Date in the event the Proxy Statement is subject
to review by the SEC and (ii) the date that is thirty (30) days after the Closing Date in the event the Proxy Statement is not
subject to review by the SEC.

 

(q)          Notice
of Disqualification Events. The Company will notify the Buyers in writing, prior to any Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.

 

(r)           Voting
Agreement. The Company shall use its reasonable best efforts to effectuate the transactions contemplated by the Voting Agreement
substantially in the form attached hereto as Exhibit E (the "Voting Agreement"), executed on or prior to
the Closing by the Company and the stockholders set forth on Schedule 4(r) (collectively, the "Principal Stockholders").
The Company shall not amend, except as contemplated in the immediately preceding sentence, or waive any provision of the Voting
Agreements and shall enforce the provisions of the Voting Agreements in accordance with its terms. If any of the Principal Stockholders
breach any provisions of either of the Voting Agreements, the Company shall promptly use its best efforts to seek specific performance
of the terms of such Voting Agreement in accordance with Section 4.02 thereof. In addition, if the Company receives any notice
from any of the Principal Stockholders pursuant to the Voting Agreement, the Company shall promptly, but in no event later than
two (2) Business Days, deliver a copy of such notice to each Buyer.

 

    	- 29 -

    	 

    

 

(s)           Lock-Up.
The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term
of the lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any officer or
director that is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its
reasonable best efforts to seek specific performance of the terms of such Lock-Up Agreement.

 

(t)           Deposit
Account.

 

(i)         On each thirty (30) day anniversary of the Monthly Deposit Release Date (as defined below) (or if any such date falls on
a day other than a Business Day (a "Holiday"), the next day that is not a Holiday) (I) if on such date there
is (A) no Equity Conditions Failure (as defined in the Notes) as, and (B) either an Effective Registration (as defined below),
which registration remains in effect and is available for resale of all of the Registrable Securities, or, after the Effective
144 Date (as defined below), the Company is in compliance with Rule 144(c)(1) and (II) if the Initial Deposit Amount held in such
Buyer's or Buyer Group's Deposit Account exceeds the Conversion Amount (as defined in the Notes) of Notes then outstanding and
held by the applicable Buyer or Buyer Group (such excess amount, an "Deposit Excess Amount"), each such
Buyer or Buyer Group to whom such Deposit Excess Amount is attributable shall issue a written instruction to the Depositary (with
a copy to the Company) to deliver to the Company by wire transfer of immediately available funds from such Buyer's or Buyer Group's
Deposit Account an amount equal to such Deposit Excess Amount pursuant to wire instructions provided by the Company to the Depositary
(with a copy to such Buyer or Buyer Group) in writing.  For purposes hereof, "Monthly Deposit Release Date"
means the earlier of (x) the time of the effective registration of all of the Registrable Securities pursuant to and in accordance
with the Registration Rights Agreement (an "Effective Registration"), or (y) if there is no Effective Registration,
the time all of the Registrable Securities may be sold pursuant to Rule 144 without restriction or limitation ("Effective
144 Date"). 

 

(ii)         In
addition, on each Monthly Deposit Release Date, each Buyer or Buyer Group shall issue a written instruction to the Depositary (with
a copy to the Company) to deliver to the Company by wire transfer of immediately available funds from such Buyer's or Buyer Group's
Deposit Account an amount equal to the lesser of (x) (A) the sum of (I) with respect to the Initial Deposit Amount deposited in
such Buyer's or Buyer Group's Deposit Account, such Buyer's or Buyer Group's pro rata share of the Monthly Deposit Release Amount
(as defined below) (for purposes hereof, pro rata share shall be determined based on the aggregate principal amount of Initial
Notes purchased by such Buyer or Buyer Group on the Initial Closing Date in relation to the aggregate principal amount of Initial
Notes issued by the Company on the Initial Closing Date), and, (II) with respect to any Applicable Additional Deposit Amount deposited
in such Buyer's or Buyer Group's Deposit Account on the applicable Additional Closing Date, an amount equal to the Monthly Deposit
Release Percentage (as defined below) of such Buyer's or Buyer Group's Applicable Additional Deposit Amount, less, (B) in each
case, any Deposit Excess Amount and any other amounts of such Buyer or Buyer Group released or withdrawn since the immediately
preceding Monthly Deposit Release Date and (y) such lesser amount that then remains available in such Buyer's Buyer Group's Deposit
Account, pursuant to wire instructions provided by the Company to the Depositary (with a copy to such Buyer or Buyer Group) in
writing; provided, however, that a Buyer or Buyer Group shall only be required to issue such a written instruction
to the Depositary if (I) there is no Equity Conditions Failure (as defined in the Notes) as of such Monthly Deposit Release Date
and (II) the Stockholder Approval has been obtained. As used herein, (x) "Monthly Deposit Release Amount"
means, with respect to (I) the first (1st) Monthly Deposit Release Date hereunder, $2,500,000, (II) the second (2nd)
Monthly Deposit Release Date hereunder, $1,500,000 and (III) the third (3rd) Monthly Deposit Release Date hereunder,
the remainder of cash then remaining in such Buyer's or Buyer Group's Deposit Account and (y) "Monthly Deposit Release
Percentage" means, with respect to (I) the first (1st) Monthly Deposit Release Date following the applicable
Additional Closing Date , 50% of the Applicable Additional Deposit Amount deposited in such Buyer's or Buyer Group's Deposit Account,
(II) the second (2nd) Monthly Deposit Release Date following the applicable Additional Closing Date, 30% of the Applicable
Additional Deposit Amount deposited in such Buyer's or Buyer Group's Deposit Account, and (III) the third (3rd) Monthly
Deposit Release Date following the applicable Additional Closing Date, 20% of the Applicable Additional Deposit Amount deposited
in such Buyer's or Buyer Group's Deposit Account.

 

    	- 30 -

    	 

    

 

(iii)        On
the Business Day immediately preceding each Monthly Deposit Release Date, the Company shall send a written notice to each Buyer
with any money still held in a Deposit Account certifying whether there is an equity Conditions Failure as of such date.

 

(iv)        Notwithstanding
anything herein to the contrary, any Buyer or Buyer Group may, in its sole and absolute discretion, elect to release cash exceeding
the amounts set forth in Sections 4(t)(i) and 4(t)(ii) from such Buyer's or Buyer Group's Deposit Account to the Company pursuant
to wire instructions provided in writing by the Company to the Depositary (with a copy to such Buyer or Buyer Group).

 

(v)         The
Company hereby acknowledges and agrees that in the event that the Company is required to make any payment to any Buyer pursuant
to the terms of any of the Transaction Documents, such Buyer shall, in its sole discretion, be entitled to draw cash for the account
of such Buyer or direct disbursement or withdrawal of cash to such other applicable account from such Buyer's or Buyer Group's
Deposit Account in satisfaction, in whole or in part, of any such amount due to such Buyer pursuant to any of the Transaction Documents
by issuing a written instruction to the Depositary (with a copy to the Company) to request the wire transfer of immediately available
funds pursuant to wire instructions provided by such Buyer to the Depositary (with a copy to the Company). The withdrawal of such
funds shall not reduce in any respect the overall obligations of the Company under any Transaction Document other than, with respect
to such payments satisfied by such withdrawals, to the extent of the amount withdrawn. The Company hereby acknowledges that the
Depositary may maintain a lien on the funds held in any Deposit Account pursuant to the terms of the Deposit Agreement.

 

(vi)        Promptly
after payment in full by the Company on the Maturity Date of the Conversion Amount of any outstanding Notes, each Buyer shall issue
a written instruction to the Depositary (with a copy to the Company) to deliver to the Company by wire transfer of immediately
available funds from such Buyer's or Buyer Group's Deposit Account an amount equal to any cash then remaining in such Buyer's or
Buyer Group's Deposit Account pursuant to wire instructions provided by the Company to the Depositary (with a copy to such Buyer
or Buyer Group) in writing.

 

    	- 31 -

    	 

    

 

(vii)       The
Company and each Buyer or Buyer Group shall use its best efforts to open such Buyer's or Buyer Group's Deposit Account as soon
as reasonably practicable. In the event such Buyer or Buyer Group is unable to open a Deposit Account on or prior to the date that
is two (2) weeks after the date hereof, the Company acknowledges and agrees that the portion of the applicable Purchase Price otherwise
required to be wired to such Buyer's or Buyer Group's Deposit Account on the applicable Closing Date shall remain with such Buyer
and the provisions of this Section 4(t) shall apply, mutatis mutandis, to releases of cash from such Buyer's own account.

 

(u)          Post-Closing
Covenants. On the first Business Day after each Deposit Agreement has been executed, the Company shall file or disclose in,
as applicable, a Current Report on Form 8-K describing the terms of the transactions contemplated by such Deposit Agreement in
the form required by the 1934 Act and attaching the Deposit Agreement (and all schedules and exhibits to thereto) as exhibits to
such filing (including all attachments, the "8-K Deposit Filing"). From and after the filing of the 8-K Deposit
Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received from the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, that is not disclosed in the 8-K
Deposit Filing.

 

(v)         Closing
Documents. On or prior to thirty (30) calendar days after each Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents, Securities
and any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.

 

5.          REGISTER;
TRANSFER AGENT INSTRUCTIONS.

 

(a)          Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and
address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms
of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep
the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

 

    	- 32 -

    	 

    

 

(b)          Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent,
in the form of Exhibit F attached hereto (the "Irrevocable Transfer Agent Instructions") to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s),
for the Conversion Shares and the Warrant Shares issued at each Closing or upon conversion of the Notes or exercise of the Warrants
in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes or exercise of the Warrants.
The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b),
and stop transfer instructions to give effect to Section 2(f) hereof, will be given by the Company to its transfer agent, and that
the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in
this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(f), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates
or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to
effect such sale, transfer or assignment. In the event that such sale, assignment or transfer involves the Conversion Shares or
the Warrant Shares sold, assigned or transferred pursuant to an effective registration statement or pursuant to Rule 144, the transfer
agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without any restrictive legend. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

6.          CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.

 

(a)          Initial
Closing. The obligation of the Company hereunder to issue and sell the Initial Notes and the related Initial Warrants to each
Buyer at the Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion
by providing each Buyer with prior written notice thereof:

 

(i)          Such
Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii)         Such
Buyer shall have delivered or reserved for payment and agree to, promptly upon the opening of such Buyer's or Buyer Group's Deposit
Account, deposit of the Initial Purchase Price (less any amounts withheld pursuant to Section
4(g)) to such Deposit Account for the Initial Notes and the related Initial Warrants being purchased by such Buyer at the
Initial Closing by wire transfer of immediately available funds pursuant to the wire instructions set forth in such Buyer's or
Buyer Group's Deposit Agreement, such Initial Purchase Price to be held and released by such Depositary in accordance with and
pursuant to the terms and conditions of such Deposit Agreement.

 

(iii)        The
representations and warranties of such Buyer shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality, which are accurate in all respects) as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall
be true and correct in all material respects (except for those representations and warranties that are qualified by materiality,
which are accurate in all respects) as of such specified date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Initial Closing Date.

 

    	- 33 -

    	 

    

 

(b)          Additional
Closing. The obligation of the Company hereunder to issue and sell the Additional Notes and the related Additional Warrants
to each Buyer at an Additional Closing is subject to the satisfaction, at or before the applicable Additional Closing Date, of
each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written notice thereof:

 

(i)          Such
Buyer shall have delivered or reserved for payment and agree to deposit the Additional Purchase Price (less
any amounts withheld pursuant to Section 4(g)) to such Buyer's or Buyer Group's Deposit Account, if any, for the Additional
Notes and the related Additional Warrants being purchased by such Buyer at the Additional Closing by wire transfer of immediately
available funds pursuant to the wire instructions set forth in such Buyer's or Buyer Group's Deposit Agreement, such Additional
Purchase Price to be held and released by the Depositary in accordance with and pursuant to the terms and conditions of such Deposit
Agreement.

 

(ii)         The
representations and warranties of such Buyer shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality, which are accurate in all respects) as of the date when made and as of such Additional
Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall
be true and correct in all material respects (except for those representations and warranties that are qualified by materiality,
which are accurate in all respects) as of such specified date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to such Additional Closing Date.

 

7.          CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.

 

(a)          Initial
Closing. The obligation of each Buyer hereunder to purchase the Initial Notes and the related Initial Warrants at the
Initial Closing is subject to the satisfaction, at or before the Initial Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing
the Company with prior written notice thereof:

 

(i)          The
Company and each of its Subsidiaries shall have duly executed and delivered to such Buyer each of the following documents to which
it is a party: (A) each of the Transaction Documents, (B) the Initial Notes (allocated in such principal amounts as such Buyer
shall request), being purchased by such Buyer at the Initial Closing pursuant to this Agreement and (C) the related Initial Warrants
(allocated in such amounts as such Buyer shall request) being purchased by such Buyer at the Initial Closing pursuant to this Agreement.

 

    	- 34 -

    	 

    

 

(ii)         The
Company shall have delivered to such Buyer the Voting Agreement duly executed and delivered by the Principal Stockholders.

 

(iii)        Such
Buyer shall have received the opinion of Snell & Wilmer L.L.P., the Company's outside counsel, dated as of the Initial Closing
Date, in substantially the form of Exhibit G attached hereto.

 

(iv)        The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit F
attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company's transfer agent.

 

(v)         The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its U.S. Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction or a bring down of such good standing from Incorporating Services, Ltd., as of a date within ten (10) days of the
Initial Closing Date.

 

(vi)        The
Company shall have delivered to such Buyer a certificate evidencing the Company's and each of its U.S. Subsidiaries' qualification
as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which
the Company and its U.S. Subsidiaries conduct business or a bring down of such good standing from Incorporating Services, Ltd.,
as of a date within ten (10) days of the Initial Closing Date.

 

(vii)       The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation of the Company and each of its
U.S. Subsidiaries (other than the Subsidiaries formed in the State of Florida) as certified by the Secretary of State (or comparable
office) of the jurisdiction of formation of the Company and each of its Subsidiaries within ten (10) Business Days of the Initial
Closing Date.

 

(viii)      The
Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Initial
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's and each of its Subsidiaries'
Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and each
of its Subsidiaries and (iii) the Bylaws of the Company and each of its Subsidiaries, each as in effect at the Initial Closing,
in the form attached hereto as Exhibit H.

 

(ix)         The
representations and warranties of the Company shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of the date
when made and as of the Initial Closing Date as though made at that time (except for representations and warranties that speak
as of a specific date which shall be true and correct in all material respects (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date) and
the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Initial Closing Date.
Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Initial Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached hereto
as Exhibit I.

 

    	- 35 -

    	 

    

 

(x)          The
Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common
Stock issued and outstanding as of a date within five (5) days of the Initial Closing Date.

 

(xi)         The
Company shall have delivered to each Buyer a lock-up agreement in the form attached hereto as Exhibit J executed and delivered
by each of the Persons listed on Schedule 7(a)(xi) (collectively, the "Lock-Up Agreements").

 

(xii)        The
Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as
of the Initial Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the
SEC or the Principal Market have been threatened, as of the Initial Closing Date, either (A) in writing by the SEC or the Principal
Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

 

(xiii)       The
Company shall have obtained all governmental, regulatory, corporate or third party consents and approvals, if any, necessary for
the sale of the Securities.

 

(xiv)      The
Company shall have submitted to the Principal Market a Listing of Additional Shares notification in connection with the transactions
contemplated hereby and the Principal Market shall have approved, orally or in writing, the transactions contemplated by this Agreement
and the other Transaction Documents and the issuance of the Securities.

 

(xv)       The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.

 

(b)          Additional
Closing Date. The obligation of each Buyer hereunder to purchase the Additional Notes and the related Additional Warrants
at an Additional Closing is subject to the satisfaction, at or before the applicable Additional Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its
sole discretion by providing the Company with prior written notice thereof:

 

(i)          The
Company and each of its Subsidiaries shall have duly executed and delivered to such Buyer each of the following documents to which
it is a party: (A) each of the Transaction Documents, (B) the Additional Notes (allocated in such principal amounts as such Buyer
shall request), being purchased by such Buyer at such Additional Closing pursuant to this Agreement and (C) the related Additional
Warrants (allocated in such amounts as such Buyer shall request) being purchased by such Buyer at such Additional Closing pursuant
to this Agreement.

 

    	- 36 -

    	 

    

 

(ii)         Such
Buyer shall have received the opinion of Snell & Wilmer L.L.P., the Company's outside counsel, dated as of such Additional
Closing Date, in substantially the form of Exhibit G attached hereto.

 

(iii)        The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit F
attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company's transfer agent.

 

(iv)        The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its U.S. Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction or a bring down of such good standing from Incorporating Services, Ltd., as of a date within ten (10) days of such
Additional Closing Date.

 

(v)         The
Company shall have delivered to such Buyer a certificate evidencing the Company's and each of its U.S. Subsidiaries' qualification
as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which
the Company and its U.S. Subsidiaries conduct business or a bring down of such good standing from Incorporating Services, Ltd.,
as of a date within ten (10) days of such Additional Closing Date.

 

(vi)        The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation of the Company and each of its
U.S. Subsidiaries (other than the Subsidiaries formed in the State of Florida) as certified by the Secretary of State (or comparable
office) of the jurisdiction of formation of the Company and each of its Subsidiaries within ten (10) Business Days of such Additional
Closing Date.

 

(vii)       The
Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of such Additional
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company's and each of its Subsidiaries'
Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and each
of its Subsidiaries and (iii) the Bylaws of the Company and each of its Subsidiaries, each as in effect at such Additional Closing,
in the form attached hereto as Exhibit H.

 

(viii)      The
representations and warranties of the Company shall be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of the date
when made and as of such Additional Closing Date as though made at that time (except for representations and warranties that speak
as of a specific date which shall be true and correct in all material respects (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date) and
the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to such Additional Closing
Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of such Additional
Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form attached
hereto as Exhibit I.

 

    	- 37 -

    	 

    

 

(ix)         The
Company shall have delivered to such Buyer a letter from the Company's transfer agent certifying the number of shares of Common
Stock issued and outstanding as of a date within five (5) days of such Additional Closing Date.

 

(x)          The
Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as
of such Additional Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by
the SEC or the Principal Market have been threatened, as of such Additional Closing Date, either (A) in writing by the SEC or the
Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

 

(xi)         The
Company shall have delivered to each Buyer the Lock-up Agreements executed and delivered by each of the Persons listed on Schedule
7(a)(xi).

 

(xii)        The
Company shall have obtained all governmental, regulatory, corporate or third party consents and approvals, if any, necessary for
the sale of the Securities.

 

(xiii)       The
Company shall have submitted to the Principal Market a Listing of Additional Shares notification in connection with the transactions
contemplated hereby and the Principal Market shall have approved, orally or in writing, the transactions contemplated by this Agreement
and the other Transaction Documents and the issuance of the Securities.

 

(xiv)      The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.

 

    	- 38 -

    	 

    

 

8.          TERMINATION.
In the event that the Initial Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from
the date hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and
the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate
this Agreement with respect to such breaching party at the close of business on such date by delivering a written notice to that
effect to each other party to this Agreement and without liability of any party to any other party; provided, however,
that if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse the Lead Investor
or its designee(s), as applicable, for the expenses described in Section 4(g) above without giving effect to the Legal Fee Cap.

 

9.          MISCELLANEOUS.

 

(a)          Governing
Law; Jurisdiction; Jury Trial. 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)          Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.

 

(c)          Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

    	- 39 -

    	 

    

 

(d)          Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(e)          Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written
agreements between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of at least sixty-five percent (65%) of the aggregate number of Registrable Securities
issued or issuable under the Notes and Warrants as of the date hereof and shall include the Lead Investor so long as the
Lead Investor or any of its affiliates holds any Registrable Securities (the "Required Holders"); provided
that any such amendment or waiver that complies with the foregoing but that disproportionately, materially and adversely
affects the rights and obligations of any Buyer relative to the comparable rights and obligations of the other Buyers shall
require the prior written consent of such adversely affected Buyer. Any amendment or waiver effected in accordance with this
Section 9(e) shall be binding upon each Buyer and holder of Securities and the Company. No such amendment shall be effective
to the extent that it applies to less than all of the Buyers or holders of Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents
unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to
the Transaction Documents, holders of Notes or holders of the Warrants, as the case may be. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by
the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company
confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation
to provide any financing to the Company or otherwise.

 

(f)          Notices.
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 facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Business Day after deposit with an overnight courier service, 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:

 

    	- 40 -

    	 

    

 

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

 

With a copy to:

 

Snell & Wilmer L.L.P.

600 Anton Boulevard, 14th Floor

Costa Mesa, CA 92626

Telephone: 714-427-7442

Facsimile: 714-427-7799

E-mail:spavluk@swlaw.com

Attention: Serge V. Pavluk

 

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

 

If to a Buyer, to its address, facsimile number
and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,

 

with a copy (for informational purposes only) to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

		Telephone:	(212) 756-2000

		Facsimile:	(212) 593-5955

		Attention:	Eleazer N. Klein, Esq.

		E-mail:	eleazer.klein@srz.com

 

    	- 41 -

    	 

    

 

or to such other address, facsimile number
and/or e-mail address 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. 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 containing the time, date, recipient facsimile number and an image of the first page of such transmission or
(C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(g)          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes or the Warrants. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants).
A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned rights.

 

(h)          No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k).

 

(i)           Survival.
Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive each Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(j)           Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as 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.

 

    	- 42 -

    	 

    

 

(k)          General
Indemnification. i)         In consideration of each Buyer's execution and delivery
of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations
under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and each other holder
of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors
and any of the foregoing Persons' agents or other representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and
all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee
as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by
the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting
from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly,
with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv)
the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by
the Transaction Documents. 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 that is permissible
under applicable law.

 

(i)          Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in
respect thereof is to be made against any indemnifying party under this Section 9(k), 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 Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be
selected by the Buyers holding at least a majority of the Securities issued and issuable hereunder. The Indemnitee shall cooperate
fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by
the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that
relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully 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,
that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld conditioned or delayed, consent to
entry of any judgment or enter into any settlement or other compromise which (i) does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liabilities
or litigation, (ii) requires any admission of wrongdoing by such Indemnitee, or (iii) obligates or requires an Indemnitee to take,
or refrain from taking, any action. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated
to all rights of the Indemnitee 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 Indemnitee under this Section 9(k), except to
the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

    	- 43 -

    	 

    

 

(ii)         The
indemnification required by this Section 9(k) 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 Liabilities are incurred.

 

(iii)        Except
where the following damages have been awarded to a third party and a party hereto has a duty of indemnification with respect to
such third party claim, in no event shall any claim for incidental, special, punitive or consequential damages of any nature whatsoever
be made by any party to the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby.

 

(iv)        The
indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.

 

(l)           No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

(m)         Remedies.
Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or
other security.

 

(n)          Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.

 

    	- 44 -

    	 

    

 

(o)          Payment
Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.

 

(p)          Independent
Nature of Buyers' Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Buyers are in any way 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 the Transaction Documents and the Company acknowledges that the Buyers are
not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer 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 Buyer to be joined as an additional party in any proceeding for such purpose.

 

(q)           Tax
Indemnification.

 

(i)          Any
and all payments by or on account of any obligation of the Company under the Notes shall be made without deduction or withholding
for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from
any such payment, then the Company shall be entitled to make such deduction or withholding and shall timely pay the full amount
deducted or withheld to the relevant taxing authority in accordance with applicable law and, if such Tax is an Indemnified Tax,
then the sum payable by the Company shall be increased as necessary so that after such deduction or withholding has been made (including
such deductions and withholdings applicable to additional sums payable under this Section 9(q)) each Buyer receives an amount equal
to the sum it would have received had no such deduction or withholding been made.

 

    	- 45 -

    	 

    

 

(ii)         The
Company shall timely pay to the relevant taxing authority in accordance with applicable law any Other Taxes.

 

(iii)        The
Company shall jointly and severally indemnify each Buyer, within 10 days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid
by such Buyer or required to be withheld or deducted from a payment to such Buyer and any reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant taxing
authority. A certificate as to the amount of such payment or liability delivered to the Company by a Buyer shall be conclusive
absent manifest error.

 

(iv)        As
soon as practicable after any payment of Taxes by the Company to a taxing authority pursuant to this Section 9(q), the Company
shall deliver to the relevant Buyer the original or a certified copy of a receipt issued by such taxing authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to such Buyer.

 

(v)         If
the Buyer is a U.S. Person it shall deliver to the Company on or prior to the date on which such Buyer becomes a holder of Notes
(and from time to time thereafter upon the reasonable request of the Company), executed originals of IRS Form W-9 certifying that
such Buyer is exempt from U.S. federal backup withholding tax.

 

(vi)        If
the Buyer is not a U.S. Person (a "Foreign Buyer") it shall, to the extent it is legally entitled to do so, deliver
to Company on or prior to the date on which such Foreign Buyer becomes a holder of Notes (and from time to time thereafter upon
the reasonable request of the Company), whichever of the following is applicable:

 

(1)         in
the case of a Foreign Buyer claiming the benefits of an income tax treaty to which the United States is a part, executed originals
of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax;

 

(2)         executed
originals of IRS Form W-8ECI; or

 

(3)         in
the case of a Foreign Buyer claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x)
such Buyer hereby represents the Company that such Foreign Buyer is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, a "10 percent shareholder" of the Company within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled
foreign corporation" described in Section 881(c)(3)(C) of the Code and (y) such Foreign Buyer shall deliver to the Company
executed originals of IRS Form W-8BEN or W-8BEN-E.

 

    	- 46 -

    	 

    

 

(vii)       If
a payment made to a Buyer under any Note would be subject to U.S. federal withholding Tax imposed by FATCA if such Buyer were to
fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of
the Code, as applicable), such Buyer shall deliver to Company at the time or times prescribed by law and at such time or times
reasonably requested by the Company such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i)
of the Code) and such additional documentation reasonably requested by the Company as may be necessary for the Company to comply
with its obligations under FATCA and to determine that such Buyer has complied with such Buyer's obligations under FATCA or to
determine the amount to deduct and withhold from such payment under FATCA.

 

(viii)      For
purposes of this Section 9(q):

 

(1)         "Excluded
Taxes" means any of the following Taxes imposed on or with respect to a Buyer or required to be withheld or deducted from
a payment to such Buyer, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits
Taxes, in each case, (i) imposed as a result of such Buyer being organized under the laws of, or having its principal office in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal
withholding Taxes imposed on amounts payable to or for the account of the Buyer with respect to any Note pursuant to a law in effect
on the date on which such Buyer acquires such Note, (c) Taxes attributable to such Buyer's failure to comply with Section 9(q)(v)
or (vi), as applicable, and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

(2)         "FATCA"
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof
and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

(3)         "Indemnified
Taxes" means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of
any obligation of the Company under any Note and (ii) to the extent not otherwise described in (i), Other Taxes.

 

(4)         "Other
Connection Taxes" means, with respect to any Buyer, Taxes imposed as a result of a present or former connection between
such Buyer and the jurisdiction imposing such Tax (other than connections arising from such Buyer having executed, delivered, become
a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged
in any other transaction pursuant to or enforced any Note, or sold or assigned an interest in any Note).

 

(5)         "Other
Taxes" means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise
from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection
of a security interest under, or otherwise with respect to, any Note.

 

(6)         "Tax"
means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any related penalty or interest).

 

    	- 47 -

    	 

    

 

[Signature Page Follows]

 

    	- 48 -

    	 

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase 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 Securities Purchase Agreement]

 

    	 

    	 

    

 

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

 

	 	 	 	 	 
	 	 	 	BUYERS:	 
	 	 	 	 	 
	 	 	 	[BUYER]	 
	 	 	 	 	 
	 	 	 	By:	
 
	 	 	 	 	Name:  
	 	 	 	 	Title:  
	 	 	 	 	 
	 	 	 	Check as appropriate:
	 	 	 	Accredited Investor 	 ̈
	 	 	 	QIB	 ̈
	 	 	 	 	 	 

 

    	 

    	 

    

 

SCHEDULE OF BUYERS

  

	(1)	 	(2)	 	(3)(a)	 	 	(3)(b)	 	 	(4)(a)	 	 	(4)(b)	 	(5)(a)	 	 	(5)(b)	 	 	(6)
	Buyer	 	Address
    and
 Facsimile Number	 	Aggregate

    Principal
 Amount
    of

 Initial Notes	 	 	Maximum
    

Aggregate 

Principal 

Amount of

Additional

 Notes	 	 	Number
    of 
 Initial Warrant

    Shares	 	 	Maximum
    

Number of

 Additional

 Warrant 

Shares	 	Initial

    Purchase 

Price	 	 	Maximum

    Additional

Purchase

Price	 	 	Legal
    Representative's 

Address and Facsimile

 Number
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

[Signature Page to Securities Purchase Agreement]

 

    	 

    	 

    

 

EXHIBITS

 

	Exhibit A	Form of Notes
	Exhibit B	Form of Warrants
	Exhibit C	Form of Registration Rights Agreement
	Exhibit D	Form of Deposit Agreement
	Exhibit E	Form of Voting Agreement
	Exhibit F	Form of Irrevocable Transfer Agent Instructions
	Exhibit G	Form of Opinion of Company Counsel
	Exhibit H	Form of Secretary's Certificate
	Exhibit I	Form of Officer's Certificate
	Exhibit J	Form of Lock-Up Agreement

  

SCHEDULES

 

	Schedule 3(q)	Transactions with Affiliates 
	Schedule 3(s)	Indebtedness and Other Contracts
	Schedule 3(t)	Absence of Litigation
	Schedule 3(cc)	Internal Accounting and Disclosure Controls
	Schedule 3(ee)	Ranking of Notes
	Schedule 4(r)	Principal Stockholders
	Schedule 7(a)(xi)	Lock-Up Parties

 

    	 

    	 

    

 

Schedule 3(q)

 

Transactions with Affiliates

 

Star Equities, LLC’s loan to the Company
in the amount of $125,000 to pay the invoices from Star Media, the Company's public relations consultant.

 

    	 

    	 

    

 

Schedule 3(s)

 

Indebtedness and Other
Contracts

 

1. Any Indebtedness under
the credit facility from RBL Capital Group, LLC. See Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2014.

 

2. Any draw-downs under existing factoring
facilities with Bank Otkritie Financial Corp (see Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2014) and Alfa-Bank (see Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2014).

 

    	 

    	 

    

 

Schedule 3(t)

 

Absence of Litigation

 

See Item 3 (Legal Proceedings) of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

    	 

    	 

    

 

Schedule 3(cc)

 

Internal Accounting and
Disclosure Controls

 

See disclosures set forth in Item 9A of the Company's
Form 10-K for the period ended December 31, 2014.

 

    	 

    	 

    

 

Schedule 3(ee)

 

Ranking of Notes

 

The following Indebtedness
of the Subsidiaries is senior to the Notes in right of payment, whether with respect of payment of redemptions, interest, damages
or upon liquidation or dissolution or otherwise:

 

1. Any Indebtedness under
the credit facility from RBL Capital Group, LLC

 

2. Any draw downs under existing factoring
facilities set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

    	 

    	 

    

 

Schedule 4(r)

 

Principal Stockholders

 

Kenges Rakishev Novatus Holding
PTE. Ltd., a company organized under the laws of the British Virgin Islands, Oleg Firer, Steven Wolberg, James Caan, Jonathan New,
David P. Kelley II, William Healy, Beno Distribution, Ltd., a company organized under the laws of the British Virgin Islands, Cayman
Invest S.A., a company organized under the laws of the British Virgin Islands, and Mayor Trans Ltd.

 

    	 

    	 

    

 

Schedule 7(a)(xi)

 

Lock-Up Parties

 

Oleg Firer

 

Steven Wolberg

 

Jonathan New

 

Kenges RakishevExhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT
(this "Agreement"), dated as of April 30, 2015, by and among Net Element, Inc., a Delaware corporation, with headquarters
located at 3363 NE 163rd Street, Suite 705, North Miami Beach, FL 33160 (the "Company"), and the investors listed
on the Schedule of Buyers attached hereto (each, a "Buyer" and collectively, the "Buyers").

 

WHEREAS:

 

A.           In
connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase
Agreement, to issue and sell to each Buyer (i) senior convertible notes of the Company (the "Notes"), which will,
among other things, be convertible (upon conversion, amortization, payment of Interest and as part of the Make-Whole Amount (each,
as defined in the Notes) or otherwise) into the Company's common stock, par value $0.0001 per share (the "Common Stock")
(the shares of Common Stock issuable pursuant to the terms of the Notes, collectively, the "Conversion Shares")
and (ii) warrants (the "Warrants") which will be exercisable to purchase shares of Common Stock (as exercised,
collectively, the "Warrant Shares") in accordance with the terms of the Warrants.

 

B.           In
accordance with the terms of the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the "1933 Act"), and applicable state securities laws.

 

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

 

1.           Definitions.

 

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

 

(a)          "Additional
Effective Date" means the date the Additional Registration Statement is declared effective by the SEC.

 

(b)          "Additional
Effectiveness Deadline" means the date which is the earlier of (x) sixty (60) calendar days after the earlier of the Additional
Filing Date and the Additional Filing Deadline and (y) the fifth (5th) Business Day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that such Additional Registration Statement will not be reviewed or will
not be subject to further review; provided, however, that if the Additional Effectiveness Deadline falls on a Saturday, Sunday
or other day that the SEC is closed for business, the Additional Effectiveness Deadline shall be extended to the next Business
Day on which the SEC is open for business.

 

    	 

    	 

    

 

(c)          "Additional
Filing Date" means the date on which the Additional Registration Statement is filed with the SEC.

 

(d)          "Additional
Filing Deadline" means if Cutback Shares are required to be included in any Additional Registration Statement, the later
of (i) the date sixty (60) days after the date substantially all of the Registrable Securities registered under the immediately
preceding Registration Statement are sold and (ii) the date six (6) months from the Initial Effective Date or the most recent Additional
Effective Date, as applicable.

 

(e)          "Additional
Registrable Securities" means, (i) any Cutback Shares not previously included on a Registration Statement and (ii) any
capital stock of the Company issued or issuable with respect to the Notes, the Conversion Shares, the Warrants, the Warrant Shares,
or the Cutback Shares, as applicable, as a result of any stock split, stock dividend, recapitalization, exchange or similar event
or otherwise, without regard to any limitations on conversion, amortization and/or redemption of the Notes or exercise of the Warrants.

 

(f)          "Additional
Registration Statement" means a registration statement or registration statements of the Company filed under the 1933
Act covering the resale of any Additional Registrable Securities.

 

(g)          "Additional
Required Registration Amount" means any Cutback Shares not previously included on a Registration Statement, all subject
to adjustment as provided in Section 2(f), without regard to any limitations on conversion, amortization and/or redemption of the
Notes or exercise of the Warrants.

 

(h)          "Business
Day" means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.

 

(i)          "Closing
Date" shall have the meaning set forth in the Securities Purchase Agreement.

 

(j)          "Cutback
Shares" means any of the Initial Required Registration Amount or the Additional Required Registration Amount of Registrable
Securities not included in all Registration Statements previously declared effective hereunder as a result of a limitation on the
maximum number of shares of Common Stock of the Company permitted to be registered by the staff of the SEC pursuant to Rule 415.
For the purpose of determining the Cutback Shares, in order to determine any applicable Required Registration Amount, unless an
Investor gives written notice to the Company to the contrary with respect to the allocation of its Cutback Shares, first the Conversion
Shares shall be excluded on a pro rata basis among the Investors until all of the Conversion Shares have been excluded, and second
the Warrant Shares shall be excluded on a pro rata basis among the Investors until all of the Warrant Shares have been excluded.

 

    	2

    	 

    

 

(k)          "Effective
Date" means the Initial Effective Date and the Additional Effective Date, as applicable.

 

(l)          "Effectiveness
Deadline" means the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as applicable.

 

(m)          "Eligible
Market" means the Principal Market, The New York Stock Exchange, Inc., the NYSE MKT LLC, The NASDAQ Global Select Market
or The Nasdaq Global Market.

 

(n)          "Filing
Deadline" means the Initial Filing Deadline and the Additional Filing Deadline, as applicable.

 

(o)          "Initial
Effective Date" means the date that the Initial Registration Statement has been declared effective by the SEC.

 

(p)          "Initial
Effectiveness Deadline" means the date which is the earlier of (x) ninety (90) calendar days after the Closing Date and
(y) the fifth (5th) Business Day after the date the Company is notified (orally or in writing, whichever is earlier)
by the SEC that such Initial Registration Statement will not be reviewed or will not be subject to further review; provided, however,
that if the Initial Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Initial
Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

 

(q)          "Initial
Filing Date" means the date on which the Initial Registration Statement is filed with the SEC.

 

(r)          "Initial
Filing Deadline" means the date which is thirty (30) calendar days after the Closing Date.

 

(s)          "Initial
Registrable Securities" means (i) the Conversion Shares issued or issuable pursuant to the terms of the Notes, (ii) the
Warrant Shares issued or issuable upon exercise of the Warrants and (iii) any capital stock of the Company issued or issuable with
respect to the Notes, the Conversion Shares, the Warrant Shares or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, in each case without regard to any limitations on conversion, amortization
and/or redemption of the Notes or exercise of the Warrants.

 

(t)          "Initial
Registration Statement" means a registration statement or registration statements of the Company filed under the 1933
Act covering the resale of the Initial Registrable Securities.

 

(u)          "Initial
Required Registration Amount" means of the sum of (i) 25,000,000 shares of Common Stock (as adjusted for any stock dividend,
stock split, stock combination, reclassification or similar transaction occurring after the date hereof) issued and issuable pursuant
to the Notes and (ii) 130% of the maximum number of Warrant Shares issued and issuable pursuant to the Warrants, each as of the
Trading Day immediately preceding the applicable date of determination and all subject to adjustment as provided in Section 2(f),
without regard to any limitations on conversion, amortization and/or redemption of the Notes or exercise of the Warrants.

 

    	3

    	 

    

 

(v)         "Investor"
means a Buyer or any transferee or assignee thereof to whom a 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 assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.

 

(w)          "Lead
Investor" means [            ].

 

(x)          "Person"
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.

 

(y)          "Principal
Market" means The NASDAQ Capital Market.

 

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

 

(aa)         "Registrable
Securities" means the Initial Registrable Securities and the Additional Registrable Securities.

 

(bb)         "Registration
Statement" means the Initial Registration Statement and the Additional Registration Statement, as applicable.

 

(cc)         "Required
Holders" means the holders of at least sixty-five percent (65%) of the Registrable Securities and shall include the Lead
Investor so long as the Lead Investor or any of its Affiliates holds any Registrable Securities.

 

(dd)         "Required
Registration Amount" means either the Initial Required Registration Amount or the Additional
Required Registration Amount, as applicable.

 

(ee)         "Rule
415" means Rule 415 promulgated under the 1933 Act or any successor rule providing for offering securities on a continuous
or delayed basis.

 

(ff)         "SEC"
means the United States Securities and Exchange Commission.

 

(gg)         "Trading
Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

    	4

    	 

    

 

2.           Registration.

 

(a)          Initial
Mandatory Registration. The Company shall prepare, and, as soon as practicable but in no event later than the Initial Filing
Deadline, file with the SEC the Initial Registration Statement on Form S-3 covering the resale of all of the Initial Registrable
Securities. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available
for such a registration on another appropriate form reasonably acceptable to the Required Holders, subject to the provisions of
Section 2(e). The Initial Registration Statement prepared pursuant hereto shall register for resale at least the number of shares
of Common Stock equal to the Initial Required Registration Amount determined as of the date the Initial Registration Statement
is initially filed with the SEC, subject to adjustment as provided in Section 2(f). The Initial Registration Statement shall contain
(except if otherwise directed by the Required Holders) the "Plan of Distribution" and "Selling Shareholders"
sections in substantially the form attached hereto as Exhibit B. The Company shall use its best efforts to have the Initial
Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Initial Effectiveness
Deadline. By 1:00 p.m. New York time on the Business Day following the Initial Effective Date, the Company shall file with the
SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Initial
Registration Statement.

 

(b)          Additional
Mandatory Registrations. The Company shall prepare, and, as soon as practicable but in no event later than the Additional Filing
Deadline, file with the SEC an Additional Registration Statement on Form S-3 covering the resale of all of the Additional Registrable
Securities not previously registered on an Additional Registration Statement hereunder. To the extent the staff of the SEC does
not permit the Additional Required Registration Amount to be registered on an Additional Registration Statement, the Company shall
file Additional Registration Statements successively trying to register on each such Additional Registration Statement the maximum
number of remaining Additional Registrable Securities until the Additional Required Registration Amount has been registered with
the SEC. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available
for such a registration on another appropriate form reasonably acceptable to the Required Holders, subject to the provisions of
Section 2(e). Each Additional Registration Statement prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the Additional Required Registration Amount determined as of the date such Additional Registration
Statement is initially filed with the SEC, subject to adjustment as provided in Section 2(f). Each Additional Registration
Statement shall contain (except if otherwise directed by the Required Holders) the "Plan of Distribution" and
"Selling Shareholders" sections in substantially the form attached hereto as Exhibit B. The Company shall
use its best efforts to have each Additional Registration Statement declared effective by the SEC as soon as practicable, but in
no event later than the Additional Effectiveness Deadline. By 1:00 p.m. New York time on the Business Day following the Additional
Effective Date, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used
in connection with sales pursuant to such Additional Registration Statement.

 

    	5

    	 

    

 

(c)          Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase
or decrease in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time the Registration Statement covering such initial number of Registrable
Securities or increase or decrease thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number
of Registrable Securities included in such Registration Statement for such transferor. Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then
held by such Investors which are covered by such Registration Statement. 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.

 

(d)          Legal
Counsel. Subject to Section 5 hereof, the Required Holders shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section 2 ("Legal Counsel"), which shall be Schulte Roth & Zabel LLP or
such other counsel as thereafter designated by the Required Holders. The Company and Legal Counsel shall reasonably cooperate with
each other in performing the Company's obligations under this Agreement.

 

(e)          Ineligibility
for 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 Form S-1 or another appropriate form reasonably acceptable
to the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.

 

(f)          Sufficient
Number of Shares Registered. In the event the number of shares available under a Registration Statement filed pursuant to Section
2(a) or Section 2(b) is insufficient to cover the Required Registration Amount of Registrable Securities required to be covered
by such Registration Statement or an Investor's allocated portion of the Registrable Securities pursuant to Section 2(c), the Company
shall amend the applicable Registration Statement, or file 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. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable following the filing thereof. 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 Registration
Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90.
The calculation set forth in the foregoing sentence shall be made without regard to any limitations on the conversion, amortization
and/or redemption of the Notes or exercise of the Warrants and such calculation shall assume (i) that the Notes are then convertible
in full into shares of Common Stock at the then prevailing Conversion Rate (as defined in the Notes) (ii) the initial outstanding
principal amount of the Notes remains outstanding through the Maturity Date (as defined in the Notes) and no redemptions of the
Notes occur prior to the scheduled Maturity Date and (iii) the Warrants are then exercisable in full into shares of Common Stock.

 

    	6

    	 

    

 

(g)          Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration Statement. If (i) the Initial Registration Statement
when declared effective fails to register the Initial Required Registration Amount of Initial Registrable Securities (a "Registration
Failure"), (ii) a Registration Statement covering 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 applicable Filing Deadline (a "Filing Failure") or (B) not declared effective
by the SEC on or before the applicable Effectiveness Deadline, (an "Effectiveness Failure")
or (iii) on any day after the applicable Effective Date, sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made (other than during an Allowable Grace Period (as defined
in Section 3(r)) pursuant to such Registration Statement or otherwise (including, without limitation, because of the suspension
of trading or any other limitation imposed by an Eligible Market, 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 failure to register
a sufficient number of shares of Common Stock or a failure to maintain the listing of the Common Stock) (a "Maintenance
Failure") then, as partial 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 shall not be exclusive of any other
remedies available at law or in equity, including, without limitation, specific performance or the additional obligation of the
Company to register any Cutback Shares), the Company shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one and one-half percent (1.5%) of the aggregate Purchase Price (as such term is defined in
the Securities Purchase Agreement) of such Investor's Registrable Securities, whether or not included in such Registration Statement,
on each of the following dates: (i) the day of a Registration Failure, (ii) the day of a Filing Failure; (iii) the day of an Effectiveness
Failure; (iv) the initial day of a Maintenance Failure; (v) on the thirtieth day after the date of a Registration Failure and every
thirtieth day thereafter (pro rated for periods totaling less than thirty days) until such Registration Failure is cured; (vi)
on the thirtieth day after the date of a Filing Failure and every thirtieth day thereafter (pro rated for periods totaling less
than thirty days) until such Filing Failure is cured; (vii) on the thirtieth day after the date of an Effectiveness Failure and
every thirtieth day thereafter (pro rated for periods totaling less than thirty days) until such Effectiveness Failure is cured;
and (viii) on the thirtieth day after the initial date of a Maintenance Failure and every thirtieth day thereafter (pro rated for
periods totaling less than thirty days) until such Maintenance Failure is cured. The payments to which a holder shall be entitled
pursuant to this Section 2(g) are referred to herein as "Registration Delay Payments."
Registration Delay Payments shall be paid on the earlier of (I) the dates set forth above and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is cured. In the event the Company fails to make Registration
Delay Payments when due in a timely manner, such unpaid portion of the Registration Delay Payments shall bear interest at the rate
of one and one-half percent (1.5%) per month (prorated for partial months) until paid in full. 

 

    	7

    	 

    

 

3.           Related
Obligations.

 

At such time as the Company
is obligated to file a Registration Statement with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its
best 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 the Registrable Securities and use
its best efforts to cause such Registration Statement relating to the Registrable Securities 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
pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities
covered by such Registration Statement without restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act or (ii) the date on which the Investors
shall have sold all of the Registrable Securities covered by such Registration Statement (the "Registration Period").
The Company shall ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were
made) not misleading. The term "best efforts" shall mean, among other things, that the Company shall submit to the SEC,
within two (2) Business Days 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 of the SEC or that the staff has no further comments on a particular Registration Statement,
as the case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) (which approval is immediately sought), a request
for acceleration of effectiveness of such Registration Statement to a time and date not later than two (2) Business Days after
the submission of such request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement
as soon as practicable, but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that
an amendment is required in order for a Registration Statement to be declared effective.

 

    	8

    	 

    

 

(b)          The
Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule
424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by 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 a Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-K, Form 10-Q, Form 8-K
or any analogous 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 within one (1) Business Day after the date on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

 

(c)          The
Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement at least five (5) Business Days
prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports 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 without the prior approval of Legal Counsel, which consent shall
not be unreasonably withheld. The Company shall furnish to Legal Counsel, without charge, (i) copies of any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii)
upon the effectiveness of any Registration Statement, one 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)          Upon
request from any Investor whose Registrable Securities are included in any Registration Statement, the Company shall furnish to
such Investor, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference,
if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement,
ten (10) copies 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) and (iii) such other documents, including 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.

 

    	9

    	 

    

 

(e)          The
Company shall use its best 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 post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify 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, nonpublic information), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or omission, and, if so requested by Legal Counsel or
any Investor, deliver ten (10) copies of such supplement or amendment to Legal Counsel and any such Investor (or such other number
of copies as Legal Counsel 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 prospectus supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile or email on the same day of such effectiveness and by overnight mail), (ii) of any request
by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of
the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate. By 1:00
p.m. New York City time on the date following the date any post-effective amendment has become effective, the Company shall file
with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to
such Registration Statement.

 

(g)          The
Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the 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 to notify
Legal Counsel and each Investor who holds Registrable Securities being sold 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.

 

    	10

    	 

    

 

(h)          If
any Investor is required under applicable securities laws to be described in the Registration Statement as an underwriter or an
Investor believes that it could reasonably be deemed to be an underwriter of Registrable Securities, at the reasonable request
of such Investor, the Company shall furnish to such Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given
in an underwritten public offering, addressed to the Investors.

 

(i)          If
any Investor is required under applicable securities laws to be described in the Registration Statement as an underwriter or an
Investor believes that it could reasonably be deemed to be an underwriter of Registrable Securities, the Company shall make available
for inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by the Investors
(collectively, the "Inspectors"), all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector,
and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request;
provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than by disclosure in violation of this Agreement. Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investors' ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and regulations.

 

(j)          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, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement, (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 agreement. 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 the Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

 

    	11

    	 

    

 

(k)          The
Company shall use its best efforts either to (i) cause all of the Registrable Securities covered by a 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) secure the inclusion
for quotation of all of the Registrable Securities on The NASDAQ Capital Market or (iii) if, despite the Company's best efforts,
the Company is unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the inclusion for quotation on another
Eligible Market for such Registrable Securities and, without limiting the generality of the foregoing, to use its best efforts
to arrange for at least two market makers to register with the Financial Industry Regulatory Authority, Inc. ("FINRA")
as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying
its obligation under this Section 3(k).

 

(l)          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 and registered in such names as the Investors may request.

 

(m)          If
requested by an Investor, the Company shall as soon as practicable (i) incorporate in a prospectus supplement or 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 prospectus supplement or post-effective amendment after being notified of the matters to
be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration
Statement if reasonably requested by an Investor holding any Registrable Securities.

 

(n)          The
Company shall use its best 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.

 

(o)          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 a Registration Statement.

 

    	12

    	 

    

 

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

 

(q)          Within
two (2) Business Days after a Registration Statement which covers Registrable Securities is ordered 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.

 

(r)          Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the Company may delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors
of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required
(a "Grace Period"); provided, that the Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the
content of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii)
notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed
five (5) consecutive calendar days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed
an aggregate of twenty (20) calendar days and the first day of any Grace Period must be at least five (5) calendar days after the
last day of any prior Grace Period (each, an "Allowable Grace Period"). For purposes of determining the length
of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause
(i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding anything
to the contrary, 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 Securities Purchase Agreement in connection with any sale of Registrable Securities
with respect to which an Investor has entered into a contract for sale, prior to the Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled.

 

(s)          Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing
with the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve
the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities Purchase
Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found
in the "Plan of Distribution" section attached hereto as Exhibit B in the Registration Statement.

 

(t)          Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on
or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing
the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.

 

    	13

    	 

    

 

4.           Obligations
of the Investors.

 

(a)          At
least five (5) Business Days prior to the first anticipated Filing Date of a Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations
of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of a particular
Investor 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 to effect and
maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request.

 

(b)          Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has
notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from such
Registration Statement.

 

(c)          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 copies of the supplemented
or amended prospectus as contemplated by Section 3(g) or the first sentence of 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary, 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 Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which an 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 3(f) and for which the Investor has not yet settled.

 

(d)          Each
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
or an exemption therefrom in connection with sales of Registrable Securities pursuant to the 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, and fees and disbursements of counsel for the Company shall be paid by the Company.

 

    	14

    	 

    

 

6.           Indemnification.

 

In the event any Registrable
Securities are included in a Registration Statement under this Agreement:

 

(a)          To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, members, employees, agents, representatives of, and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, 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, (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 or (iv) any violation of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations"). 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 the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d);
and (ii) 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 the Registrable
Securities by the Investors pursuant to Section 9.

 

    	15

    	 

    

 

(b)          In
connection with any Registration Statement in which an Investor is participating, each 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), such Investor shall reimburse the Indemnified Party for any legal
or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided,
however, that 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, however, that the 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 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 the Registrable Securities by the Investors pursuant to Section 9.

 

(c)          Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel
with the fees and expenses of not more than one counsel for all such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of outside counsel retained by the Indemnified Person or Indemnified Party, as
applicable, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person 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
which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully 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, that
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, consent to entry of any judgment or enter into any settlement
or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified
Party or Indemnified Person of a release from all liability in respect to such Claim or litigation 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 with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying
party is prejudiced in its ability to defend such action.

 

    	16

    	 

    

 

(d)          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.

 

(e)          The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject
to pursuant to the law.

 

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,
that: (i) 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 (ii) contribution by any seller
of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the sale of such
Registrable Securities pursuant to such Registration Statement.

 

8.           Reports
Under the 1934 Act.

 

With a view to making available
to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar 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 ("Rule 144"),
the Company agrees to:

 

    	17

    	 

    

 

(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 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 requirements of Rule 144, the 1933 Act 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, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

 

9.           Assignment
of Registration Rights.

 

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

 

10.         Amendment
of Registration Rights.

 

Provisions of this Agreement
may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver
that complies with the foregoing but that disproportionately, materially and adversely affects the rights and obligations of any
Investor relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such
adversely affected Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor
and the Company. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable
Securities. 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 (other than the reimbursement of legal fees) also is offered to all of the parties
to this Agreement.

 

    	18

    	 

    

 

11.         Miscellaneous.

 

(a)          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 facsimile or electronic mail (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses, facsimile numbers and email 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

 

With a copy (for informational
purposes only) to:

Snell & Wilmer L.L.P.

600 Anton Boulevard, 14th Floor

Costa Mesa, CA 92626

Telephone:     714-427-7442

Facsimile: 714-427-7799

Email:spavluk@swlaw.com

Attention: Serge V. Pavluk

 

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

 

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If to Legal Counsel:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:   (212) 756-2000

Facsimile:     (212) 593-5955

Email:             eleazer.klein@srz.com

Attention:     Eleazer Klein, Esq.

 

If to a Buyer, to its address, facsimile number
and/or email address set forth on the Schedule of Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address, facsimile number and/or email address 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. 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 email containing the time, date, recipient facsimile
number and an image of the first page of such transmission 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.

 

(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. 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.

 

    	20

    	 

    

 

(e)          If
any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(f)          This
Agreement, the other Transaction Documents (as defined in the Securities Purchase Agreement) and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement,
the other Transaction Documents and the instruments referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

 

(g)          Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

 

(h)          The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(i)          This
Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

(j)          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.

 

(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, determined as if all of the outstanding Notes then held by the Investors
have been converted for Registrable Securities without regard to any limitations on redemption, amortization and/or conversion
of the Notes and the outstanding Warrants then held by Investors have been exercised for Registrable Securities without regard
to any limitations on exercise of the Warrants.

 

    	21

    	 

    

 

(l)          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.

 

(m)          This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(n)          The
obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of
this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor. Nothing contained herein,
and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated herein.

 

* * * * * *

 

[Signature Page Follows]

 

    	22

    	 

    

 

IN WITNESS WHEREOF,
each 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

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
each 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.

 

	 	BUYERS:
	 	 
	 	[BUYER]
	 	 
	 	By:	       
	 	 	Name:
	 	 	Title: 

 

    	 

    	 

    

SCHEDULE OF BUYERS

 

	Buyer
    	 	Buyer Address

    and Facsimile Number	 	Buyer's Representative's Address 

    and Facsimile Number
	 	 	 	 	 

 

    	 

    	 

    

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

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

 

Re:          Net
Element, Inc.

 

Ladies and Gentlemen:

 

[We
are][I am] counsel to Net Element, Inc., a Delaware corporation (the "Company"), and have represented the Company
in connection with that certain Securities Purchase Agreement, dated as of April [●],
2015 (the "Securities Purchase Agreement"), entered into by and among the Company and the buyers named
therein (collectively, the "Holders") pursuant to which the Company issued to the Holders senior secured convertible
notes (the "Notes") pursuant to which shares of the Company's common stock, par value $0.0001 per share (the "Common
Stock") are issuable thereunder and warrants exercisable for shares of Common Stock (the "Warrants").
Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders
(the "Registration Rights Agreement") pursuant to which the Company agreed, among other things, to register the
resale of the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Notes and upon exercise 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 ____________ ___, 2015,
the Company filed a Registration Statement on Form 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 shareholder 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 instruction to you that the shares of Common Stock 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 shares of Common Stock to the Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions dated April [●],
2015. 

 

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

 

CC:        [LIST NAMES
OF HOLDERS]

 

    	A-1

    	 

    

 

EXHIBIT B

 

SELLING SHAREHOLDERS

 

The shares of common stock
being offered by the selling shareholders are those issuable to the selling shareholders pursuant to the terms of the convertible
notes and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes and warrants,
see "Private Placement of Convertible Notes and Warrants" above. We are registering the shares of common stock in order
to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of the convertible
notes and the warrants issued pursuant to the Securities Purchase Agreement, the selling shareholders have not had any material
relationship with us within the past three years.

 

The table below lists the
selling shareholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling
shareholders. The second column lists the number of shares of common stock beneficially owned by each selling shareholder, based
on its ownership of the convertible notes and warrants, as of ________, 2015, assuming conversion of all convertible notes and
exercise of all warrants held by the selling shareholders on that date, without regard to any limitations on conversion, amortization,
redemption or exercise.

 

The third column lists
the shares of common stock being offered by this prospectus by the selling shareholders.

 

In accordance with the
terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of at least
the sum of (i) 25,000,000 shares of Common Stock (as adjusted for any stock dividend, stock split, stock combination, reclassification
or similar transaction occurring after the date hereof) issued and issuable pursuant to the convertible notes as of the Trading
Day immediately preceding the date the registration statement is initially filed with the SEC, and (ii) 130% of the maximum number
of shares of common stock issued and issuable upon exercise of the related warrants as of the Trading Day immediately preceding
the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes
and the exercise price of the warrants may be adjusted, 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
shareholders pursuant to this prospectus.

 

Under the terms of the
convertible notes and the warrants, a selling shareholder may not convert the convertible notes or exercise the warrants to the
extent such conversion or exercise would cause such selling shareholder, together with its affiliates, to beneficially own a number
of shares of common stock which would exceed 4.99% of our then outstanding shares of common stock following such conversion or
exercise, excluding for purposes of such determination shares of common stock issuable upon conversion of the convertible notes
which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second
column does not reflect this limitation. The selling shareholders may sell all, some or none of their shares in this offering.
See "Plan of Distribution."

 

    	Annex I-1

    	 

    

 

	

 Name of Selling Shareholder	 	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
	 	 	 	 	 	 	 
	[BUYER]	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

    	Annex I-2

    	 

    

 

PLAN OF DISTRIBUTION

 

We are registering the
shares of common stock issuable pursuant to the terms of the convertible notes and upon exercise of the warrants to permit the
resale of these shares of common stock by the holders of the convertible notes 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 shareholders 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 shareholders
may sell all or a portion of the shares of common stock beneficially owned 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 shareholders 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,

 

		·	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 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;

 

		·	sales pursuant to Rule 144;

 

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

 

    	Annex I-3

    	 

    

 

		·	a combination of any such methods of sale; and

 

		·	any other method permitted pursuant to applicable law.

 

If the selling shareholders
effect 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 shareholders
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). In connection with sales of the shares of common stock or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of
common stock in the course of hedging in positions they assume. The selling shareholders may also sell shares of common stock short
and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection
with such short sales. The selling shareholders may also loan or pledge shares of common stock to broker-dealers that in turn may
sell such shares.

 

The selling shareholders
may pledge or grant a security interest in some or all of the convertible notes, warrants or shares of common stock owned by them
and, if they default in the performance of their 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 of 1933, as amended, amending, if necessary, the list of selling shareholders to include
the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders
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.

 

The selling shareholders
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, a prospectus supplement, if required, will be distributed 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 shareholders and any discounts, commissions
or concessions allowed or reallowed 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.

 

    	Annex I-4

    	 

    

 

There can be no assurance
that any selling shareholder 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 shareholders
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, 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 shareholders and any other
participating person. 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, that a selling shareholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in
accordance with the registration rights agreements, or the selling shareholders will be entitled to contribution. We may be indemnified
by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any
written information furnished to us by the selling shareholder specifically for use in this prospectus, in accordance with the
related registration rights agreement, 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.

 

    	Annex I-5

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