Krutoy Subscription Agreement

As contemplated by the Joint Venture Agreement entered into on April 6, 2012 between Net Element, Inc. (the "Company") and Igor Yakovlevich Krutoy, on June 6, 2012, the Company entered into a Subscription Agreement with Mr. Krutoy, pursuant to which Mr. Krutoy purchased 13,333,333 shares of common stock of the Company for an aggregate purchase price of $2 million, or approximately $0.15 per share.

Lappenbusch Employment Agreement

On June 6, 2012, the Company entered into a letter agreement (the "Agreement") with its President and Chief Operating Officer, Richard Lappenbusch, which amends and restates that certain Offer Letter dated February 13, 2011 entered into between the Company and Mr. Lappenbusch. Pursuant to the Agreement, Mr. Lappenbusch's position with the Company changed to Executive Vice President and Chief Strategy Officer. Mr. Lappenbusch's annual base salary under the Agreement is $200,000, with a guaranteed bonus of $50,000 contingent upon him not voluntarily resigning (other than due to an involuntary termination as set forth in the Agreement), and he is eligible for a performance-based bonus at the sole discretion of the Company's board of directors. Mr. Lappenbusch agreed to cancel all incentive stock options previously awarded to him by the Company, as well as all unvested shares of restricted stock previously awarded to him in excess of 2,067,166 shares, in each case effective immediately. Mr. Lappenbusch's remaining 2,067,166 unvested shares of restricted stock will vest in full upon the termination of the Agreement on December 28, 2012 or his dismissal with or without cause, whichever happens first. The employment term under the Agreement expires December 28, 2012, after which Mr. Lappenbusch's employment will be at will. If Mr. Lappenbusch is terminated prior to December 28, 2012 without cause or due to death or disability or due to an involuntary termination, then he will be entitled to his remaining base salary through December 28, 2012, his guaranteed bonus and his remaining 2,067,166 unvested shares of restricted stock will vest immediately upon termination.

The disclosures contained under Item 1.01 under the heading "Lappenbusch Employment Agreement" are incorporated herein by this reference.

(d) Exhibits.

Exhibit No.      Description
10.1             Subscription Agreement dated June 6, 2012 between Net Element,
                 Inc. and Igor Yakovlevich Krutoy

10.2             Letter Agreement dated June 6, 2012 between Net Element, Inc.
                 and Richard Lappenbusch, amending and restating the Offer Letter
                 dated February 13, 2011 between Net Element, Inc. and Richard
                 Lappenbusch