0001144204-12-006140.txt : 20120206 0001144204-12-006140.hdr.sgml : 20120206 20120206171919 ACCESSION NUMBER: 0001144204-12-006140 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20120202 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120206 DATE AS OF CHANGE: 20120206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Net Element, Inc. CENTRAL INDEX KEY: 0001293330 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 200715816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51108 FILM NUMBER: 12574526 BUSINESS ADDRESS: STREET 1: 1450 S. MIAMI AVE CITY: MIAMI STATE: FL ZIP: 33130 BUSINESS PHONE: 305-507-8808 MAIL ADDRESS: STREET 1: 1450 S. MIAMI AVE CITY: MIAMI STATE: FL ZIP: 33130 FORMER COMPANY: FORMER CONFORMED NAME: TOT Energy DATE OF NAME CHANGE: 20080514 FORMER COMPANY: FORMER CONFORMED NAME: Splinex Technology Inc. DATE OF NAME CHANGE: 20040609 8-K 1 v301453_8k.htm CURRENT REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

February 2, 2012

Net Element, Inc.

(Exact name of registrant as specified in its charter)

Delaware

000-51108

20-0715816

(State or other jurisdiction

of incorporation)

(Commission

(File Number)

(I.R.S. Employer

Identification No.)

1450 S. Miami Avenue, Miami, FL		33130
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:

(305) 507-8808

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On February 2, 2012, Net Element, Inc. (the "Company") entered into a Subscription Agreement with one of its directors, Felix Vulis, pursuant to which Mr. Vulis purchased from the Company for $100,000: (i) 666,667 shares of common stock of the Company; (ii) a three-year warrant to purchase up to an additional 666,667 shares of common stock of the Company with an exercise price of $0.25 per share; (iii) a three-year warrant to purchase up to an additional 666,667 shares of common stock of the Company with an exercise price of $0.50 per share; and (iv) a three-year warrant to purchase up to an additional 666,666 shares of common stock of the Company with an exercise price of $1.00 per share.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
10.1		Subscription Agreement dated February 2, 2012 between Net Element, Inc. and Felix Vulis
10.2		Form of Warrant, dated February 2, 2012, with an exercise price of $0.25 per share, issued to Felix Vulis
10.3		Form of Warrant, dated February 2, 2012, with an exercise price of $0.50 per share, issued to Felix Vulis
10.4		Form of Warrant, dated February 2, 2012, with an exercise price of $1.00 per share, issued to Felix Vulis

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		NET ELEMENT, INC.


Date: February 6, 2012		By: /s/ Jonathan New
		Name: Jonathan New
		Title: Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
10.1		Subscription Agreement dated February 2, 2012 between Net Element, Inc. and Felix Vulis
10.2		Form of Warrant, dated February 2, 2012, with an exercise price of $0.25 per share, issued to Felix Vulis
10.3		Form of Warrant, dated February 2, 2012, with an exercise price of $0.50 per share, issued to Felix Vulis
10.4		Form of Warrant, dated February 2, 2012, with an exercise price of $1.00 per share, issued to Felix Vulis

EX-10.1 2 v301453_ex10-1.htm EXHIBIT 10.1

SUBSCRIPTION AGREEMENT

BETWEEN

NET ELEMENT, INC.

AND

FELIX VULIS

February 2, 2012

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (the “Agreement”) is made and entered into as of this __ day of December 2011 (the “Effective Date”), by and between NET ELEMENT, INC., a corporation organized and existing under the laws of the State of Delaware (the “Company”), and FELIX VULIS, an individual residing in the United Kingdom (the “Investor” each, a “Party” and together, the “Parties”).

Recitals

A. The Company desires to issue, and the Investor desires to acquire 666,667 shares of the Common Stock of the Company (the “Stock”) at a purchase price of $0.15 per share and three year warrants to purchase (i) an additional 666,667 shares of the Common Stock of the Company at a purchase price of $0.25 per share; (ii) an additional 666,667 shares of the Common Stock of the Company at a purchase price of $0.50 per share; and (iii) an additional 666,667 shares of the Common Stock of the Company at a purchase price of $1.00 per share (collectively, the “Warrants”) as consideration for the Investor’s investment of $100,000 in the Company.

B. The Company and the Investor believe that it is in their respective best interests to have the Company issue the Stock and have Investor acquire the issued Stock and Warrants in accordance with the terms of this Agreement.

C. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Schedule I to this Agreement.

Agreement

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement, and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:

1. Authorization and Subscription for Units.

1.1 Authorization. The Company has duly authorized the sale and issuance of the Stock and the Warrants, pursuant to the terms and conditions contained in this Agreement.

1.2 Issuance of Stock; Consideration. Subject to the terms and conditions of this Agreement, upon the execution of this Agreement and receipt of a wire transfer in the amount of $100,000 (the “Purchase Price”) and other good and valuable consideration to the Company by Investor, the Company will transfer and issue to the Investor and the Investor shall acquire the Stock. In addition, upon receipt of the Purchase Price, the Company will issue the Warrants in the name of the Investor.

1.3 Use of Proceeds. The Company shall use the proceeds received from the issuance of the Stock and the Warrants, if exercised, as operating funds for the Company’s business.

2. The Closing.

The closing (the “Closing”) of the sale and purchase of the Stock under this Agreement shall take place as of the Effective Date (the “Closing Date”). At the Closing:

(a) Execution of Agreements. The Company and the Investor shall execute and deliver this Agreement.

(b) Conditions to Closing by the Company. The obligations of the Company under this Agreement are subject to satisfaction of the following conditions at or prior to each Closing Date, any of which may be waived by the Company in writing:

(i) All documents reasonably requested from the Investor by the Company pursuant to this Agreement shall have been previously delivered to the Company by the Investor.

(ii) All the representations and warranties of the Investor contained in this Agreement shall be true and complete in all material respects and the Investor shall have performed all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required by it to be performed at or prior to each Closing.

(c) Conditions to Closing by the Investor. The obligations of the Investor under this Agreement are subject to satisfaction of the following conditions at or prior to each Closing Date, any of which may be waived by the Investor in writing:

(i) All documents reasonably requested from the Company by the Investor pursuant to this Agreement shall have been previously delivered to the Investor by the Company.

(ii) The Investor shall have received a resolution of the Board of Directors of the Company authorizing the execution of this Agreement and issuance of the Stock and the Warrant.

(iii) All the representations and warranties of the Company contained in this Agreement shall be true and complete in all material respects and the Company shall have performed all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required by it to be performed at or prior to each Closing.

3. Representations and Warranties of the Company. The Company hereby represents and warrants as follows:

(a) Authorization of Transaction. The Company has full power and authority to execute, deliver and perform this Agreement to which it is, or is specified to be, a party. The Board of Directors of the Company have duly authorized and approved this Agreement and the transactions contemplated hereby. This Agreement has been, or when executed, will be, duly executed and delivered by the Company and constitutes legal, valid and binding obligations of the Company enforceable in accordance with their respective terms.

(b) No Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby or thereby, shall (with or without notice or lapse of time or both) (i) violate any Law or Order to which the Company or its assets are subject, (ii) violate or conflict with the provisions of the charter or bylaws of the Company, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration or material modification of, create for any party the right to accelerate, terminate, materially modify or cancel, or require any notice under any material Contract or material License to which the Company is a party or by which the Company is bound or to which its assets are subject, or (iv) result in the imposition of any material Lien, other than a Permitted Lien, upon any of the material properties or assets of the Company. No material consent, approval or authorization of, or registration or filing with, any Governmental or Regulatory Body or other Person is required in connection with the execution or delivery by the Company of this Agreement.

(c) Organization. The Company is duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company has all requisite corporate power and authority to own, operate or lease its assets and to conduct its business as presently conducted and, as applicable, to enter into this Agreement and to consummate the transactions contemplated herein and therein. The Company is duly authorized to conduct business and is in good standing in each jurisdiction where such authorization is required to conduct its business as currently conducted by it. The Company has previously made available to Investor copies of the organizational documents of the Company, as currently in effect, and the Company is not in default in the performance, observation or fulfillment of its obligations under such organizational documents.

(d) The Stock and the Warrants. The Stock will be legally issued, fully paid, and non-assessable and Investor will receive good and marketable title to the Stock free and clear of all Liens, except as prohibited by the securites’ laws of the United States. The Warrants will constitute legal, valid and binding obligations of the Company enforceable in accordance with their respective terms.

(e) Litigation. The Company knows of no outstanding Order applicable to the Company or its assets; (ii) is not a party to any Action or Proceeding; or (iii) has been threatened in writing to be made a party to any Action or Proceeding with respect to any threat by a Person.

(f) Books and Records. The minute books of the Company, as previously made available to the Investor and its representatives, contain in all material respects accurate records of all meetings of and all corporate actions or written consents by the Board of Directors of the Company.

(g) Disclosure. No representation or warranty contained in this Section 3 contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in the light of the circumstances under which they were made, not misleading.

(h) Brokers’ Fees. The Company has no Liability to pay any fees or commissions to any broker, investment banker, finder or agent with respect to the transactions contemplated by this Agreement for which Investor could become liable or obligated.

4. Representations and Warranties of the Investor. The Investor hereby represents, warrants and agrees as follows:

(a) Due Execution. This Agreement has been duly executed and delivered by the Investor and constitutes valid and binding obligations of the Investor which shall be enforceable in accordance with its terms, subject as to enforceability to any applicable bankruptcy, insolvency, debtors’ relief, receivership, reorganization, or other similar statutes and equitable principles that may govern the enforcement of creditors’ rights generally.

(b) Authorization of Transaction. The Investor has full legal right and power and all authority and approval required (i) to execute and deliver, or authorize execution and delivery of, this Agreement and all other instruments executed and delivered by the Investor in connection with the purchase of the Stock and Warrants, and (ii) to purchase and hold such Stock and Warrants.

(c) No Contravention. The execution of and performance of the transactions contemplated by this Agreement and compliance with their respective provisions by the Investor will not (i) require on the part of the Investor any filing with, or any permit, authorization, consent or approval of, governmental entity, or (ii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Investor or any of its properties or assets.

(d) Restrictions on Transfer. The Investor is aware that it cannot sell or otherwise transfer the Stock in the United States without registration under applicable federal or state securities laws or without an exemption therefrom, and is aware that the Investor will be required to bear the financial risks of the Investor’s purchase for an indefinite period of time because, among other reasons, the Stock have not been and are not anticipated to be registered with the SEC or any regulatory authority of any state and, therefore, cannot be transferred or resold unless they are subsequently registered under applicable federal and state securities laws or an exemption from such registration is available.

(e) Accredited Investor. The Investor is an “Accredited Investor” within the meaning of the definition set forth in Regulation D of the Securities Act.

(f) Disclosure. No representation or warranty contained in this Section 4 contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in the light of the circumstances under which they were made, not misleading.

(g) Brokers’ Fees. The Investor has no Liability to pay any fees or commissions to any broker, investment banker, finder or agent with respect to the transactions contemplated by this Agreement for which Company could become liable or obligated.

(h) Risk. The purchase of the Stock and the Warrants involves a high degree of risk and the Investor acknowledges that the Investor can bear the complete economic risk of the purchase of the Stock and the Warrants, including the total loss of the investment represented hereby. The Investor represents and warrants that the Investor is able to bear the economic risk of losing all or a portion of the Investor’s investment in the Company, which is not disproportionate to the Investor’s net worth, and that the Investor has adequate means of providing for the Investor’s current needs and contingencies without regard to the investment in the Company.

5. Binding Agreement. This Agreement and the representations and warranties contained herein shall be binding upon and inure to the benefit of any heirs, executors, administrators, successors and assigns of each party hereto, and shall survive the purchase and issuance of the Stock.

6. Amendment and Modification. Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing executed by the parties hereto.

7. Counterparts. This Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all the parties, notwithstanding that all parties are not signatories to the same counterpart.

8. Entire Agreement. This Agreement contains the entire agreement of the parties, and there are no representations, covenants or other agreements except as stated or referred to herein.

9. Assignment. This Agreement is not transferable or assignable by either party without the express written consent of the other party.

10. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Florida.

11. Section Headings. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

12. Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified by hand or professional courier service or two (2) business days after deposit with the United States Post office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) calendar days’ advance written notice to the other parties.

13. Survival of Representations. All of the representations and warranties of the parties contained in this Agreement shall survive the Closing and continue in full force and effect until the expiration of any applicable statutes of limitations.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the Effective Date.

NET ELEMENT, INC.

By:	/s/ Jonathan New
Name: Jonathan New
Title: CFO

INVESTOR

/s/ Felix Vulis
Name: Felix Vulis

Schedule I

Definitions

“Action” or “Proceeding” means any action, hearing, proceeding (public or private), arbitration or suit (whether civil, criminal, administrative or investigative) commenced, brought or conducted by any Person, or any investigation or audit by any Governmental or Regulatory Body.

“Agreement” has the meaning set forth in the preface, and shall include all Disclosure Schedules and Exhibits which are incorporated in this Agreement by this reference.

“Company” means the Company and its Subsidiaries.

“Contract” means any contract, agreement, subcontract, indenture, note, bonds (including surety bond), loan, instrument, lease, mortgage, franchise, license, assignment, purchase order, sale order, proposal, bid, understanding, commitment, whether written or oral, that is legally binding.

“Governmental Authorization” or “License” means any consent, license, registration, authorization or permit issued, granted, given or otherwise made available by or under the authority of any Governmental or Regulatory Body or pursuant to any Law.

“Governmental or Regulatory Body” means, collectively, any (i) nation, state, county, city, town, village, district or other jurisdiction of any nature, (ii) federal, state, local, municipal or other governmental organization or body, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal), or (iv) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, regulatory or Taxing Authority of any nature.

“Knowledge” means, with respect to the Company, the actual knowledge of an executive officer of the Company, and in each such case, the knowledge that a reasonably prudent person would be expected to have acting in such person’s capacity in the conduct of the Business.

“Law” means any law, statute, rule, regulation, ordinance and other pronouncement having the effect of law of the United States of America, the State of Florida, any foreign country or any domestic or foreign state, county, city or other political subdivision of any Governmental or Regulatory Body.

“Liability” means any direct or indirect liability, indebtedness, claim, loss, damage, deficiency, obligation, penalty, responsibility, cost or expense, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, known or unknown, contingent or otherwise.

“Lien” means any mortgage, lien, pledge, charge, security interest, claim, contractual restriction, easement, right-of-way, option, conditional sale or installment contract or encumbrance of any kind.

“Order” means any decision, award, writ, judgment, decree, ruling, verdict, injunction, assessment, penalty, or similar order made, issued or entered by, or settlement with, any Governmental or Regulatory Body or arbitrator.

“Party” and “Parties” have the meanings set forth in the preface.

“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations issued pursuant thereto.

“Subsidiary” means, with respect to any Person, any corporation, association or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred), are held by such Person or one or more of its Subsidiaries.

EX-10.2 3 v301453_ex10-2.htm EXHIBIT 10.2

THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON FEBRUARY 2, 2015 (the “EXPIRATION DATE”).

NET ELEMENT, INC.

WARRANT TO PURCHASE 666,667 SHARES OF

COMMON STOCK, $.001 PAR VALUE PER SHARE

For VALUE RECEIVED, Felix Vulis (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Net Element, Inc., a Delaware corporation (the “Company”), at any time not later than 5:00 P.M., Eastern Time, on the Expiration Date (as defined above), at an exercise price per share equal to $0.25 (the exercise price in effect being herein called the “Warrant Price”), 666,667 shares (“Warrant Shares”) of the Company’s Common Stock, $.001 par value per share (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

Section 1. Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder.

Section 2. Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.

Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time prior to its expiration upon surrender of the Warrant, together with delivery of the duly executed Warrant exercise form attached hereto as Appendix A (the “Exercise Agreement”) and payment by cash, certified check or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company), the Warrant Price shall have been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the Warrantholder within a reasonable time, not exceeding five (5) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, “business day” means a day, other than a Saturday or Sunday, on which banks in Miami, Florida are open for the general transaction of business. Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties contained in Section 4 of the Subscription Agreement (the “Subscription Agreement”) dated December __, 2011 between the Company and the Warrantholder are true and correct in all material respects with respect to the Warrantholder as of the time of such exercise.

Section 4. Compliance with the Securities Act of 1933. Except as provided in the Subscription Agreement, the Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.

Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such tax is due.

Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.

- 2 -

Section 7. Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.

Section 8. Adjustments. Subject and pursuant to the provisions of this Section 8, unless waived in a particular case by the Warrantholder, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter.

(a) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event upon payment of a Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to the Warrantholder. Such adjustments shall be made successively whenever any event listed above shall occur.

- 3 -

(b) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby the Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.

(c) In case the Company shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Market Price (as defined below) per share of Common Stock immediately prior to such payment date, less the fair market value (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the following: (a) if the Common Stock is then listed on a national securities exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted on an over-the-counter market or other exchange or association, the closing sale price of one share of Common Stock on such market or such other exchange or association on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted thereon on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national securities exchange or quoted on an over-the-counter market or other exchange or association, the fair market value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of Directors of the Company and the Warrantholder. If the Common Stock is not then listed on a national securities exchange, an over-the-counter market or other exchange or association, the Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise hereunder as to the fair market value of a share of Common Stock as determined by the Board of Directors of the Company. In the event that the Board of Directors of the Company and the Warrantholder are unable to agree upon the fair market value in respect of subpart (c) hereof, the Company and the Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed.

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(d) An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.

(e) In the event that, as a result of an adjustment made pursuant to this Section 8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.

Section 9. Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder an amount in cash equal to the Market Price of such fractional share of Common Stock on the date of exercise.

Section 10. Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.

Section 11. Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment.

Section 12. Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b) if given by facsimile or other means of electronic transmission, then such notice shall be deemed given upon receipt of an automated confirmation of complete transmittal, (c) if given by mail, then such notice shall be deemed given upon the earlier of (i) receipt of such notice by the recipient or (ii) three days after such notice is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days’ advance written notice to the other:

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If to the Company:

Net Element, Inc.

1450 S. Miami Avenue

Miami, Florida 33130

Attn: Chief Financial Officer

Facsimile: 305) 358-7876

Section 13. Intentionally Omitted.

Section 14. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.

Section 15. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of Florida located in Miami-Dade County and federal courts located in Miami-Dade County, Florida for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

Section 16. No Rights as Stockholder. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of his ownership of this Warrant.

Section 17. Amendment; Waiver. Any term of this Warrant may be amended or waived upon the written consent of the Company and the holder of this Warrant.

Section 18. Section Headings. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 2nd day of February, 2012.

	NET ELEMENT, INC.

	By:
	Name: Jonathan New
	Title: Chief Financial Officer

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APPENDIX A

NET ELEMENT, INC.

WARRANT EXERCISE FORM

To Net Element, Inc.:

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as follows:


	Name


	Address

	Federal Tax ID or Social Security No.

and delivered by (certified mail to the above address, or (electronically, if available (provide DWAC Instructions: ___________________), or (other (specify): ____________________________________________________________________________), and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.

By signing below, the undersigned hereby re-affirms that the representations and warranties contained in Section 4 of the Subscription Agreement (the “Subscription Agreement”) dated December __, 2011 between the Company and the Warrantholder are true and correct in all material respects with respect to the Warrantholder as of the time this exercise.

Dated: ___________________, ____

Note: The signature must correspond with the name of the Warrantholder as written on the first page of the Warrant in every particular, without alteration or enlargement or any change whatever, unless the Warrant has been assigned.

	Warrant Signature:

	Name (please print):



		Address

		Federal Identification or
		Social Security No.

ASSIGNMENT FORM

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

		Dated: ______________, _______

	Holder's Signature:	_____________________________

	Holder's Address:	_____________________________

		_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-10.3 4 v301453_ex10-3.htm EXHIBIT 10.3

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON FEBRUARY 2, 2015 (the “EXPIRATION DATE”).

NET ELEMENT, INC.

WARRANT TO PURCHASE 666,667 SHARES OF

COMMON STOCK, $.001 PAR VALUE PER SHARE

For VALUE RECEIVED, Felix Vulis (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Net Element, Inc., a Delaware corporation (the “Company”), at any time not later than 5:00 P.M., Eastern Time, on the Expiration Date (as defined above), at an exercise price per share equal to $0.50 (the exercise price in effect being herein called the “Warrant Price”), 666,667 shares (“Warrant Shares”) of the Company’s Common Stock, $.001 par value per share (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

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- 4 -

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If to the Company:

Net Element, Inc.

1450 S. Miami Avenue

Miami, Florida 33130

Attn: Chief Financial Officer

Facsimile: 305) 358-7876

Section 13. Intentionally Omitted.

Section 14. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.

Section 17. Amendment; Waiver. Any term of this Warrant may be amended or waived upon the written consent of the Company and the holder of this Warrant.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 2nd day of February, 2012.

	NET ELEMENT, INC.

	By:
	Name: Jonathan New
	Title: Chief Financial Officer

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APPENDIX A

NET ELEMENT, INC.

WARRANT EXERCISE FORM

To Net Element, Inc.:


	Name


	Address

	Federal Tax ID or Social Security No.

Dated: ___________________, ____

	Warrant Signature:

	Name (please print):



		Address

		Federal Identification or
		Social Security No.

ASSIGNMENT FORM

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

	Dated: ______________, _______

	Holder's Signature:	_____________________________

	Holder's Address:	_____________________________

		_____________________________

Signature Guaranteed: ___________________________________________

EX-10.4 5 v301453_ex10-4.htm EXHIBIT 10.4

THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON FEBRUARY 2, 2015 (the “EXPIRATION DATE”).

NET ELEMENT, INC.

WARRANT TO PURCHASE 666,666 SHARES OF

COMMON STOCK, $.001 PAR VALUE PER SHARE

For VALUE RECEIVED, Felix Vulis (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Net Element, Inc., a Delaware corporation (the “Company”), at any time not later than 5:00 P.M., Eastern Time, on the Expiration Date (as defined above), at an exercise price per share equal to $1.00 (the exercise price in effect being herein called the “Warrant Price”), 666,666 shares (“Warrant Shares”) of the Company’s Common Stock, $.001 par value per share (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

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-3-

-4-

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:	If to the Company

	Net Element, Inc.
	1450 S. Miami Avenue
	Miami, Florida 33130
	Attn: Chief Financial Officer
	Facsimile: 305) 358-7876

Section 13. Intentionally Omitted.

Section 14. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.

Section 17. Amendment; Waiver. Any term of this Warrant may be amended or waived upon the written consent of the Company and the holder of this Warrant.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 2nd day of February, 2012.

	NET ELEMENT, INC.

	By:
	Name: Jonathan New
	Title: Chief Financial Officer

-7-

APPENDIX A

NET ELEMENT, INC.

WARRANT EXERCISE FORM

To Net Element, Inc.:


	Name


	Address

	Federal Tax ID or Social Security No.

Dated: ___________________, ____

	Warrant Signature:

	Name (please print):

		Address

		Federal Identification or
		Social Security No.

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

	Holder's Signature:

	Holder's Address:

Signature Guaranteed: ___________________________________________