Exhibit 10.7

CREDIT AGREEMENT

$5,500,000 Credit Facility

by and among

ELANDIA, INC.,

A Delaware corporation

“Borrower”

and

STANFORD INTERNATIONAL BANK LTD.,

an Antiguan banking corporation

“Lender”

Dated as of October 2, 2007

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (the “Agreement”), dated as of October 2, 2007 (the
“Effective Date”), is made by and between ELANDIA, INC., a Delaware corporation
(referred to herein as the “Borrower”) and STANFORD INTERNATIONAL LTD., an
Antiguan banking corporation (the “Lender”).

WITNESSETH

WHEREAS, the Borrower desires to obtain a commitment from the Lender to make a
loan to the Borrower; and

WHEREAS, the Lender is willing to extend the commitment to the Borrower on the
terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, and other good and valuable consideration exchanged
between the parties, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I - DEFINITIONS

Section 1.1 Definitions. In addition to terms defined elsewhere in this
Agreement, the following terms have the meanings indicated which meanings shall
be equally applicable to both the singular and the plural forms of such terms:

1.1.1 “Affiliate” shall mean any Person (other than a Subsidiary) which directly
or indirectly through one or more intermediaries controls, or is controlled by
or is under common control, with a Borrower, or 5% or more of the equity
interest of which is held beneficially or of record by the Borrower or a
Subsidiary. The term “control” means the possession, directly of indirectly, of
the power to cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

1.1.2 “Agreement” means this Credit Agreement, as the same may be amended from
time to time.

1.1.3 “Alvarado” means Jorge Enrique Alvarado Amado, an individual.

1.1.4 “Borrower” has the meaning assigned to that term in the introduction to
this Agreement.

1.1.5 “Business Day” shall mean a day on which commercial banks are open for
business in the State of Florida.

1.1.6 “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and published interpretations thereof.

 

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1.1.7 “Commencement Date” shall mean the date of execution by the Borrower of
this Agreement.

1.1.8 “Default” means any event which, with the lapse of time, the giving of
notice, or both, would become an Event of Default.

1.1.9 “Default Rate” shall mean 17% per annum.

1.1.10 “Deposit Account Control Agreement” shall mean a certain deposit account
control agreement or similar agreement by and among Borrower, Lender and Bank of
America, in form and content acceptable to Lender.

1.1.11 “Desca” means Desca Holding, LLC, a Delaware limited liability company.

1.1.12 “Desca Credit Agreement” means that certain Credit Agreement dated as of
the date hereof by and between Desca and Borrower.

1.1.13 “Desca Loan Documents” means those certain Loan Documents (as such term
is defined in the Desca Credit Agreement.

1.1.14 “Effective Date” means the date all parties hereto have executed this
Agreement and the Loan Documents and Borrower has complied with all conditions
precedent thereto.

1.1.15 “Event of Default” has the meaning assigned to that term in Section 7.1
hereof.

1.1.16 “FCPA Form 8-K Closing Condition” has the meaning ascribed to that term
in the Purchase Agreement.

1.1.17 “Governmental Authority” shall mean any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental unit (federal,
state, county, district, municipal, city or otherwise) whether now or hereafter
in existence.

1.1.18 “Indebtedness” of any Person shall mean (i) all indebtedness or liability
for borrowed money or for the deferred purchase price of any property (including
accounts payable to trade creditors under customary trade credit terms) or
services for which the Person is liable as principal, (ii) all indebtedness
(excluding unaccrued finance charges) secured by a Lien on property owned or
being purchased by the Person, whether or not such indebtedness shall have been
assumed by the Person, (iii) any arrangement (commonly described as a
sale-and-leaseback transaction) with any financial institution or other lender
or investor providing for the leasing to the Person of property which at the
time has been or is to be sold or transferred by the Person to the lender or
investor, or which has been or is being acquired from another Person, and
(iv) all obligations of partnerships or joint ventures in respect of which the
Person is primarily or secondarily liable as a partner or joint venturer or
otherwise (provided that in any event for purposes of determining the amount of
the Indebtedness, the full amount of such obligations, without giving effect to
the contingent liability or contributions of other participants in the
partnership or joint venture, shall be included).

 

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1.1.19 “Lender” has the meaning assigned to that term in the introduction to
this Agreement.

1.1.20 “Lien” shall mean a mortgage, pledge, lien, hypothecation, assignment,
security interest or other charge or encumbrance or any segregation of assets or
revenues or other preferential arrangement (whether or not constituting a
security interest) with respect to any present or future assets, including
fixtures, revenues or rights to the receipt of income of the Person referred to
in the context in which the term is used.

1.1.21 “Loan” shall mean the aggregate principal amount advanced by the Lender
as a loan to the Borrower under Article 2 and Article 6 hereof, or, where the
context so requires.

1.1.22 “Loan Documents” shall mean those documents executed or submitted in
connection with the Loan, including, without limitation, (i) the Note; (ii) this
Credit Agreement; (iii) the Borrower Pledge and Security Agreement; (iv) the
Collateral Assignment Agreement; (v) the Deposit Account Control Agreement; and
(vi) all other documents and instruments executed by Borrower in connection with
the Loan and/or as may be reasonably required by Lender or Lender’s counsel,
including those referred to in Section 6 hereof.

1.1.23 “Maturity Date” shall mean the earlier of: (a) the date of the closing of
the Purchase Agreement; (b) if the closing of the Purchase Agreement has not
occurred by December 15, 2007, Seller and Alvarado were ready, willing and able
to close, and the closing did not occur because SIBL did not provide the Lender
with the financing required to consummate the transactions contemplated by the
Purchase Agreement, June 30, 2008; or (c) if the closing of the Purchase
Agreement has not occurred by December 15, 2007 for any reason other than as set
forth in 1.1.21(b) above, April 15, 2008.

1.1.24 “Note” shall mean the Promissory Note described in Section 2.2 hereof, in
the principal amount of $5,500,000 dated the date hereof and payable to the
order of the Lender, substantially in the form of Exhibit “A” attached hereto
and made a part hereof, and any modifications, renewals, replacements or
substitutions therefor made from time to time hereafter, and to the extent
applicable.

1.1.25 “Obligations” shall mean the any and all liabilities, obligations,
covenants, duties and debts, owing by the Borrower to the Lender, arising under
this Agreement or any other Loan Document, including without limitation, all
interest, charges, indemnities, expenses, fees, attorneys’ fees, filing fees and
any other sums chargeable to the Borrower hereunder or under any other Loan
Document.

1.1.26 “Permitted Liens” shall mean a mortgage, pledge, lien security interest
or other charge or encumbrance or any segregation of assets or revenues or other
preferential arrangement (whether or not constituting a security interest) with
respect to any present or future assets, including fixtures, revenues or rights
to the receipt of income of the Person referred to in the context in which the
term is used which are permitted to exist under this Agreement.

 

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1.1.27 “Person” shall mean any natural person, corporation, unincorporated
organization, trust, joint-stock company, joint venture, association, company,
partnership or government, or any agency or political subdivision of any
government, or other entity of whatever nature.

1.1.28 “Purchase Agreement” shall mean that certain Preferred Unit Purchase
Agreement, dated of even date herewith, by and among, Borrower, Seller, Desca,
and Alvarado.

1.1.29 “Seller” shall mean Bella Durmiente, LLC, a Delaware limited liability
company.

1.1.30 “Stanford Financing” means a transaction or transactions pursuant to
which Lender or its Affiliates would make an investment of approximately
$29,000,000 in the Borrower.

1.1.31 “Subsidiary” shall mean any Person in which Borrower or a Wholly-Owned
Subsidiary may own, directly or indirectly, an equity interest of more than 50%,
or which may effectively be controlled by Borrower or a Wholly-Owned Subsidiary,
during the term of this Agreement, as well as all Subsidiaries and other Persons
from time to time included in the consolidated financial statements of the
Borrower.

1.1.32 “Wholly-Owned Subsidiary” shall mean any Subsidiary, 100% of the
outstanding capital stock of all classes of which is owned by the Borrower
and/or one or more Wholly-Owned Subsidiaries.

Section 1.2 Accounting Terms. Accounting terms not specifically defined in this
Agreement shall have the meaning given to them under accounting principles and
practices generally accepted in the United States, applied on a consistent basis
with the financial statements referred to in Section 3.3 hereof, and shall be
determined both as to classification of items and amounts in accordance
therewith. All Subsidiaries shall be consolidated to the fullest extent
permitted by such principles and practices, and any accounting terms, financial
covenants and financial statements referred to herein shall be determined and
prepared on the basis of such consolidation.

Section 1.3 Other Definitional Provisions. The words “hereof,” “herein,” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Subsection and Exhibit references are to this Agreement
unless otherwise specified.

ARTICLE II - LOAN

Section 2.1 Loan. Lender shall loan to Borrower the original principal amount of
$5,500,000 in accordance with and subject to the terms and conditions set forth
herein.

Section 2.2 Note. In consideration of the Loan, the Borrower shall execute and
deliver in favor of Lender a promissory note in the form attached hereto as
Exhibit “A” (the “Note”), fully due and payable on or prior to the Maturity
Date, and bearing interest on the principal amount outstanding from time to time
at an annual rate of 10.00%, payable in accordance with the terms of such
promissory note.

 

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Section 2.3 Use of Proceeds. The Borrower will use the proceeds of the Loan
solely for the following purposes: (i) $5,000,000 of such net proceeds shall be
used by the Borrower to make a simultaneous loan to Desca in accordance with the
terms of the Desca Loan Documents; and (ii) the balance of $500,000 of such
proceeds shall be used by the Borrower to pay certain legal expenses of the
Borrower and SIBL.

Section 2.4 [Reserved].

Section 2.5 [Reserved].

Section 2.6 Principal and Interest Due. No interest or principal on the Loan
shall be due and payable until the Maturity Date.

Section 2.7 Credit Toward Payment of the Stanford Purchase Price. If the closing
of the Stanford Financing occurs, all principal and interest owing in respect of
the Loan shall be credited towards the amount required by Lender to fund the
Stanford Financing, which credit shall be deemed a full repayment and
satisfaction of the Loan.

ARTICLE III - REPRESENTATIONS AND WARRANTIES

In order to induce the Lender to enter into this Agreement and to make the Loan
provided for herein, the Borrower makes the following representations and
warranties to the Lender, all of which are true and correct as of the date
hereof, and all of which shall survive the execution and delivery of this
Agreement, the Note and the other Loan Documents; provided, however, that the
following representations and warranties are subject to, and modified by, the
disclosures set forth in the Purchase Agreement:

Section 3.1 Corporate Existence and Power. The Borrower is duly organized,
validly existing and in good standing under the laws of Delaware and is duly
qualified or licensed to transact business in all places where such
qualification or license is necessary. The Borrower has the power to enter into
and perform this Agreement and the other Loan Documents to which it is a party,
and this Agreement does, and the other Loan Documents to which it is a party
when duly executed and delivered for value will, constitute the legal, valid and
binding obligations of the Borrower enforceable in accordance with their
respective terms.

Section 3.2 Authority. The making and performance by the Borrower of this
Agreement, the Note, the other Loan Documents to which it is a party, and any
additional documents pursuant hereto, has been duly authorized by all necessary
legal action of the Borrower, and does not and will not violate any provision of
law or regulation, or any writ, order or decree of any court, governmental,
regulatory authority or agency, and does not and will not, with the passage of
time or the giving of notice, result in a breach of, or constitute a default or
require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of the Borrower, pursuant to any
instrument or agreement to which Borrower is a party or by which Borrower or its
properties may be bound or affected.

 

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Section 3.3 Financial Condition. The financial statements of Borrower as
provided to the Lender were prepared in accordance with generally accepted
accounting principles consistently applied, are complete and correct and fairly
present the consolidated financial condition of the Borrower as of the dates
thereof. Other than as disclosed by those financial statements, Borrower has no
direct or contingent obligations or liabilities which would be material to the
financial position of Borrower. Since the date of such financial statements,
there has been no material adverse change in the business or financial condition
of Borrower.

Section 3.4 Full Disclosure. The financial statements referred to in Section 3.3
do not, nor does this Agreement, nor any written statement furnished by Borrower
to the Lender in connection with the negotiation of this Agreement or the Loan,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact which Borrower has not disclosed to the Lender in writing which
materially and adversely affects nor, so far as Borrower can now foresee, is
reasonably likely to materially and adversely affect the business or financial
condition of Borrower or the ability of Borrower to perform this Agreement, the
Note, or any other Loan Document.

Section 3.5 Litigation. There are no suits, actions or proceedings pending, or
to the knowledge of the Borrower, threatened before any court or by or before
any governmental or regulatory authority, commission, bureau or agency or public
regulatory body against or affecting Borrower which, if adversely determined,
would have a material adverse effect on the business or financial condition of
Borrower.

Section 3.6 Payment of Taxes. As of the date of execution of this Agreement,
federal income tax returns of Borrower have been filed with Internal Revenue
Service and no deficiencies have been assessed. Borrower has filed or caused to
be filed, or has obtained extensions to file all federal, state, foreign and
local tax returns which are required to be filed, and have paid or caused to be
paid, or have reserved on its books amounts sufficient for the payment of, all
taxes as shown on said returns or on any assessment received by it, to the
extent that the taxes have become due, except as otherwise permitted by the
provisions hereof.

Section 3.7 No Adverse Restrictions or Defaults. Borrower is not a party to any
agreement or instrument or subject to any court order or judgment, governmental
decree, charter or other restriction adversely and materially affecting its
business, properties or assets, operations or condition (financial or
otherwise). Borrower is not in material default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any material agreement or instrument to which it is a party or by which Borrower
and its properties, may be bound or affected, or under any material law,
regulation, decree, order or the like, which default would have a material
adverse effect on Borrower.

Section 3.8 Authorizations. All material authorizations, consents, approvals and
licenses required under applicable law or regulation for the ownership or
operation of the property owned or operated by Borrower or for the conduct of
business in which Borrower is engaged, have been duly issued and are in full
force and effect, and to the best of Borrower’s actual knowledge, Borrower is
not in default under any material order, decree, ruling, regulation, closing
agreement or other decision or instrument of any government commission, bureau
or other administrative agency or public regulatory body having jurisdiction
over the Borrower,

 

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which default would have a material adverse effect on the Borrower. No approval,
consent or authorization of or filing or registration with any governmental
commission, bureau or other regulatory authority or agency is required with
respect to the execution, delivery or performance of this Agreement, the Note or
any of the Loan Documents executed in connection with the making of the Loan.

Section 3.9 Title to Assets. Borrower owns its respective assets and properties
free and clear of all Liens, except as disclosed on Schedule 3.9 hereto.
Borrower and each of its Subsidiaries have, respectively, good and marketable
title to all property and assets, reflected in the latest financial statements
referred to in Section 3.3 or purported to have been acquired by any of them
subsequent to such date, except property and assets sold or otherwise disposed
of subsequent to such date in the ordinary course of business. All property and
assets of any kind of Borrower and its subsidiaries are free from any liens
except as disclosed on the financial statements provided to the Lender and
referred to in Section 3.3 hereof and other matters such as easements,
covenants, and restrictions that do not materially adversely affect their use or
enjoyment of such property.

Section 3.10 Indemnification by Borrower. All of the representations and
warranties of Borrower, as set forth in this Agreement shall survive the making
of this Agreement until the full repayment of the Loan.

Section 3.11 Compliance with Laws. Except where the failure to do so would not
materially adversely affect Borrower’s operations, properties, financial
condition or its ability to fulfill its obligations under the Loan Documents,
Borrower shall maintain its business operations and property owned or used in
connection therewith in compliance with all applicable federal, state and local
laws, regulations and ordinances governing such business operations and the use
and ownership of such property.

ARTICLE IV - AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that from and after the Effective Date and
until payment in full of the principal of and interest on the Note, unless the
Lender shall otherwise consent in writing, Borrower will:

Section 4.1 Loan Proceeds. Use the proceeds of the Loans only for the purposes
set forth in Section 2.3 and furnish the Lender with all evidence that it may
reasonably require with respect to such use.

Section 4.2 Existence. Do or cause to be done all things necessary to preserve
and keep in full force and effect its legal existence, rights, franchises and
privileges in Delaware, and qualify and remain qualified in each jurisdiction
where qualification is necessary or desirable in view of its business operations
or the ownership of its properties.

Section 4.3 Maintenance of Business and Property. Continue to conduct and
operate its business substantially as conducted and operated during the present
and preceding calendar year; at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and keep the same in good repair,
working order and condition, and from time to time make, or cause to be made,
all needful and proper repairs, replacements, betterments and improvements
thereto so that the business carried on in connection therewith may be conducted
properly and advantageously at all times.

 

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Section 4.4 Insurance. Insure and keep insured in good and financially sound and
responsible insurance companies reasonably satisfactory to the Lender, all
insurable property owned by it which is of a character usually insured by
companies similarly situated and operating like properties, against loss or
damage from such hazards or risks, including fire, flood and windstorm as are
insured by companies similarly situated and operating like properties, insure
and keep insured employers’ and public liability risks in responsible insurance
companies to the extent usually insured by companies similarly situated;
(Borrower shall use commercially reasonable efforts to obtain liability
insurance, either from its Subsidiaries’ existing insurers or from other
insurers reasonably acceptable to Lender, in an amount and covering such risks
commensurate with the insurance policies carried by its Subsidiaries, within 15
business days from the date hereof) and maintain such other insurance as may be
required by law or as may reasonably be required in writing by the Lender.

Section 4.5 Payment of Indebtedness, Taxes, Etc.

4.5.1 Pay all of its Indebtedness and Obligations promptly and in accordance
with normal terms; and

4.5.2 Pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
property or upon any part thereof, before the same shall become in default, as
well as all lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon such properties or any part
thereof; provided however, that the Borrower shall not be required to pay and
discharge or to cause to be paid and discharged any tax, assessment, charge,
levy or claim so long as the validity thereof shall be contested in good faith
by appropriate proceedings and the Borrower shall have set aside on its books
adequate reserves with respect to any tax, assessment, charge, levy or claim, so
contested.

Section 4.6 Compliance with Laws. Duly observe, conform and comply with all
laws, decisions, judgments, rules, regulations and orders of all governmental
authorities relative to the conduct of its business, its properties, and assets,
except those being contested in good faith by appropriate proceedings diligently
pursued; and maintain and keep in full force and effect all licenses and permits
necessary to the proper conduct of its business.

Section 4.7 Notice of Default. Upon the occurrence of any Default or Event of
Default, promptly furnish written notice thereof to the Lender.

Section 4.8 Inspection. At reasonable times and after reasonable prior written
notice, Borrower shall permit any representatives of Lender to visit and inspect
any of the properties of Borrower, to examine and copy all books of account,
records, reports and other papers, and to discuss the affairs, finances and
accounts with Borrower’s employees and independent accountants at all such
reasonable times and as often as may be reasonably requested.

 

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Section 4.9 Notice of Litigation and Other Proceedings. Give prompt notice in
writing to the Lender of the commencement of (a) all material litigation which,
if adversely determined, might adversely affect the business or financial
condition of the Borrower; and (b) all other litigation involving a claim
against the Borrower for $25,000 or more in excess of applicable insurance
coverage.

Section 4.10 Bank Accounts. All of Borrower’s deposit, operating, disbursement,
investment, payroll and other accounts are described on Schedule 4.10 attached
hereto. Borrower shall not open any other deposit, operating, disbursement,
investment, payroll, or other account without the prior written consent of the
Lender, which consent shall not be unreasonably withheld provided that Borrower
shall have executed such instruments and agreements confirming Lender’s security
interest in such account and such control agreements over such accounts in form
and substance acceptable to Lender. Borrower covenants and agrees that all
payments from or on behalf of Desca under the Desca Loan Documents to Borrower
or to any of Borrower’s Affiliates shall be made directly to, or immediately
upon receipt, deposited into an account subject to the Deposit Account Control
Agreement. Promptly after the date hereof, Borrower agrees to notify Desca,
pursuant to irrevocable written instructions in form and substance acceptable to
Lender, to make all payments under the Desca Loan Documents to such
accounts designated by Lender. Borrower shall diligently pursue the execution
and delivery of the Deposit Account Control Agreements to be delivered by all
parties thereto, and work in good faith to obtain same within 14 days from the
date hereof or as promptly as commercially practicable thereafter.

Section 4.11 Desca Loan Documents. Borrower shall deliver to Lender (i) an
original of the Secured Promissory Note executed as of the date hereof by Desca
in favor of Borrower, (ii) an allonge with respect to such Secured Promissory
Note executed by Borrower and in a form reasonably acceptable to Lender and
(iii) originals of all other Desca Loan Documents other than the documents
listed in clause (vii) of the definition of Loan Documents set forth in the
Desca Credit Agreement.

Section 4.12 ANZ Partial Release. Borrower shall use commercially reasonable
efforts to obtain authority from ANZ Finance American Samoa, Inc. (“ANZ”) to
file an amendment to UCC # 63860087 filed by ANZ with the Delaware Department of
State to release from ANZ’s security interest Borrower’s rights, title and
interest in, to and under (including but not limited to all amounts payable
thereunder): (i) the Desca Credit Agreement, (ii) that certain Secured
Promissory Note executed as of the date hereof by Desca in favor of Borrower and
delivered pursuant to the Desca Credit Agreement; and (iii) all of the other
documents executed and delivered to the Borrower pursuant to the Desca Credit
Agreement; and any and all proceeds thereof.

 

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ARTICLE V- NEGATIVE COVENANTS

The Borrower covenants and agrees that from the Effective Date and until payment
in full of the principal of and interest on the Note, unless the Lender shall
otherwise consent in writing, the Borrower will not:

Section 5.1 Limitation of Liens. Except as permitted by the Loan Documents or as
disclosed pursuant to the Purchase Agreement, create, assure, incur or suffer to
exist any Lien upon, or transfer or assignment of, any of its property or
revenues or assets now owned or hereafter acquired to secure any Indebtedness or
Obligations, or enter into any arrangement for the acquisition of any property
subject to conditional sale agreements or leases or other title retention
agreements; excluding, however, from the operation of this covenant:
(i) deposits or pledges to secure payment of worker’s compensation, unemployment
insurance, old age pensions or other social security; (ii) deposits or pledges
to secure performance of bids, tenders, contracts (other than contracts for the
payment of money) or leases, public or statutory obligations, surety or appeal
bonds or other deposits or pledges for purposes of like general nature in the
ordinary course of business; (iii) Liens for property taxes not delinquent and
Liens for taxes which in good faith are being contested or litigated;
(iv) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising
in the ordinary course of business securing obligations which are not overdue
for a period of 60 days or more or which are in good faith being contested or
litigated; (v) Liens securing the unpaid purchase price of equipment purchased
by the Borrower in the ordinary course of its business and Liens existing upon
assets acquired by the Borrower not to exceed in the aggregate $100,000; and
(vi) any existing Liens reflected in the financial statements referred to in
Section 3.3 hereof.

Section 5.2 Limitation on Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except.

5.2.1 The Note and any other Indebtedness of the Borrower to the Lender;

5.2.2 Indebtedness which is subordinated to the prior payment in full of the
principal of, and interest on, the Note on terms and conditions approved in
writing by the Lender;

5.2.3 Indebtedness representing the unpaid purchase price of equipment purchased
by the Borrower in the ordinary course of its business and Indebtedness existing
upon assets acquired by the Borrower not to exceed in the aggregate $100,000; or

5.2.4 Existing Indebtedness reflected in the audited financial statements
referred to in Section 3.3 hereof.

Section 5.3 Mergers, Consolidations and Acquisition of Assets. Wind up,
liquidate, dissolve, merge or consolidate with any corporation or entity, or
acquire all or substantially all of the assets of any corporation or other
entity.

Section 5.4 Sale, Lease, Etc. Sell, lease, assign, transfer or otherwise dispose
of any of its assets or revenues (other than obsolete or worn-out personal
property or personal property not used or useful in its business) whether now
owned or hereafter acquired, other than in the ordinary course of business.

Section 5.5 Management and Ownership. Permit any material change in its
ownership or management.

 

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Section 5.6 General.

5.6.1 engage, directly or through other Persons, in any business other than the
business now carried on;

5.6.2 amend or change its certificate of formation, operating agreement or other
organizational documents except as contemplated hereby;

5.6.3 declare or pay dividends or make any other distribution or redeem any of
its equity securities; or

5.6.4 enter into or modify a material related-party transaction.

ARTICLE VI - CONDITIONS TO LENDER’S OBLIGATIONS TO MAKE THE LOAN

The conditions listed below are precedent to any obligations of the Lender and
shall be complied with in form and substance satisfactory to Lender and its
counsel prior to the Lender’s obligation to advance the Loan:

Section 6.1 Expenses. Borrower shall have paid all applicable documentary stamp
taxes, intangible taxes, recording fees and other closing costs.

Section 6.2 Pre-Funding Conditions and Requirements. Borrower shall furnish to
Lender each of the following items, satisfactory in form and content to Lender,
at Borrower’s sole expense prior to the disbursement of the Loan:

6.2.1 Certificate of Status and certified copy of Certificate of Incorporation
of Borrower, issued by the state of Delaware, together with certified copies of
Borrower’s bylaws, and a Secretary’s certificate as to incumbency and adoption
of authorizing resolutions by the Borrower.

6.2.2 Current financial statements from Borrower.

6.2.3 UCC Searches reflecting no currently effective financing statements
affecting the collateral for the Loan, except as set forth on Schedule 3.9
hereto.

6.2.4 There shall have been no material adverse change in the financial
condition of Borrower; nor any material adverse event or condition affecting
Borrower, or the validity, enforceability or priority of the Loan and lien
instruments.

6.2.5 [Reserved].

6.2.6 The Loan shall be evidenced and secured by final, definitive Loan
Documents including financing statements and similar documents all effectuating
the Loan terms and conditions set forth herein and containing such other
provisions as Lender shall require, including without limitation, all items
required to create, perfect and protect Lender’s liens on the collateral for the
Loan as contemplated hereby.

 

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6.2.7 Borrower shall provide such other documents as may be reasonably required
by Lender’s counsel, including documents which verify and confirm Borrower’s
representations, warranties and covenants to Lender.

ARTICLE VII- EVENTS OF DEFAULT

Section 7.1 Events of Default. If any one of the following “Events of Default”
shall occur and shall not have been remedied:

7.1.1 Any representation or warranty made or deemed made by Borrower herein or
by Borrower in any of the other Loan Documents, or in any certificate or report
furnished by Borrower at any time to the Lender, shall prove to have been
incorrect, incomplete or misleading in any material respect on or as of the date
made or deemed made; or

7.1.2 Borrower shall fail to pay, when due, any principal of or interest on the
Note, or to pay when due any other sum payable under this Agreement and the same
is not paid within 10 days after written notice from Lender; or

7.1.3 Any default by Borrower under any Indebtedness in connection with the Loan
made hereunder which is not cured within any applicable grace periods; or

7.1.4 Borrower shall default in any material respect in the performance of any
agreement, covenant or obligation contained herein or in any of the other Loan
Documents if the default continues for a period of 30 days after written notice
of default to the Borrower by the Lender; or

7.1.5 Final judgment for the payment of money in an amount in excess of $25,000
shall be rendered against Borrower and the same shall remain undischarged for a
period of 30 days, during which period execution shall not effectively be
stayed, provided Borrower will have the right to contest in good faith by
appropriate proceedings and provided Borrower shall have set aside on its books
adequate reserves for payment of such money; or

7.1.6 Borrower’s default in the performance of its Obligations with respect to
any Indebtedness in excess of $25,000 or as lessor or as lessee under any lease
of all or any material portion of its property, after the expiration of any
applicable cure periods; or

7.1.7 Borrower shall cease to exist or to be qualified to do or transact
business in the jurisdiction of its organization, or shall be dissolved or
terminated or shall be a party to a merger or consolidation, or shall sell all
or substantially all of its assets; or

7.1.8 If, without the prior written consent of Lender, which consent shall be in
Lender’s sole and absolute discretion, any equity interest in Borrower is
issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or otherwise
disposed of, whether voluntarily or by operation of law, and whether with or
without consideration, or any agreement for any of the foregoing is entered
into; or

 

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7.1.9 Borrower shall (i) voluntarily terminate operations or apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of Borrower or of all or of a substantial part
of the assets of Borrower, (ii) admit in writing its or his inability, or be
generally unable, to pay its or his debts as the debts become due, (iii) make a
general assignment for the benefit of its or his creditors, (iv) commence a
voluntary case under the United States Bankruptcy Code (as now or hereafter in
effect), (v) file a petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, (vi) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it or him in an
involuntary case under the Bankruptcy Code, or (vii) take any corporate action
for the purpose of effecting any of the foregoing; or

7.1.10 Borrower shall fail to furnish to the Lender notice of default in
accordance with Section 4.7 hereof, within 10 days after any such notice of
default becomes known to the President or Chief Financial Officer of Borrower,
whether or not notification to Borrower is furnished by the Lender.

Section 7.2 In the case of any such event described in Section 7.1, the Lender
may, by written notice to the Borrower, at its option: (A) immediately declare
the principal of, and interest accrued on, the Note immediately due and payable
without presentment, demand, protest or notice, whereupon the same shall become
immediately due and payable, (B) to the extent permitted by law, the rate of
interest on the unpaid principal amount of the Loan shall be increased, at the
Lender’s option, to the Default Rate, and/or (C) exercise any and all rights
available under applicable law including, without limitation, any rights
available to a secured party under the Uniform Commercial Code.

ARTICLE VIII - MISCELLANEOUS

Section 8.1 No Waiver, Remedies Cumulative. No failure on the part of the Lender
to exercise and no delay in exercising any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.

Section 8.2 Survival of Representations. All representations and warranties made
herein shall survive the making of the loans hereunder and the delivery of the
Note, and shall continue in full force and effect so long as the Note is
outstanding and unpaid and the commitment to make the Loan has not been
terminated.

Section 8.3 Notices. Any notice or other communication hereunder to any party
hereto shall be by hand delivery, facsimile, recognized overnight courier or
registered or certified mail, return receipt requested, and shall be deemed to
have been given or made when delivered to the party at its address or fax number
specified next to its signature hereto (or at any other address that the party
may hereafter specify to the other parties in writing).

 

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Section 8.4 Construction. This Agreement and the Note shall be deemed a contract
made under the law of the State of Florida and shall be governed by and
construed in accordance with the law of said state and any suit, action or
proceeding arising out of or relating to this Agreement may be commenced and
maintained in any court of competent subject matter jurisdiction in Miami-Dade
County, Florida, and any objection to such jurisdiction and venue is hereby
expressly waived.

Section 8.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of Borrower and the Lender, and their respective
successors and assigns, provided, that Borrower may not assign any of its rights
hereunder without the prior written consent of the Lender, which may be
arbitrarily withheld, and any such assignment will be void.

Section 8.6 Limit on Interest. Anything herein or in the Note to the contrary
notwithstanding, the Obligations of the Borrower under this Agreement and the
Note to the Lender shall be subject to the limitation that payments of interest
to the Lender shall not be required to the extent that receipt of any such
payment by the Lender would be contrary to provisions of law applicable to the
Lender (if any) which limit the maximum rate of interest which may be charged or
collected by the Lender; provided however, that nothing herein shall be
construed to limit the Lender to presently existing maximum rates of interest,
if any increased interest rate is hereafter permitted by reason of applicable
federal or state legislation.

Section 8.7 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to an original and all of
which when taken together shall constitute but one and the same instrument.

Section 8.8 Headings. The headings are for convenience only and are not to
affect the construction of or to be taken into account in interpreting the
substance of this Agreement.

Section 8.9 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.

Section 8.10 Entire Agreement. This Agreement and the other Loan Documents are
intended by the parties as a final expression of their agreement with respect to
the subject matter hereof and is intended as a complete and exclusive statement
of the terms and conditions thereof, and this Agreement supersedes and replaces
all prior negotiations and agreements between the parties hereto, or any of
them, whether oral or written. Each of the parties hereto acknowledges that no
other party, agent or attorney of any other party, has made any promise,
representation or warranty whatsoever, expressed or implied, not contained
herein concerning the subject matter hereof to induce the other party to execute
this Agreement or any of the other documents referred to herein, and each party
hereto acknowledges that it has not executed this Agreement or such other
documents in reliance upon any such promise, representation or warranty not
contained herein.

 

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Section 8.11 Integration. This Agreement, together with the other documents and
instruments executed herewith and contemplated by this Agreement, comprises the
complete and integrated agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. The Borrower further releases and discharges Lender
from and against any and all liability with respect to all prior agreements and
preliminary commitments in connection with the Loan being made hereunder. The
Loan Documents were drafted with the joint participation of Borrower and Lender,
and their respective counsel, and shall be construed neither against nor in
favor of any of them, but rather in accordance with the fair meaning thereof.

Section 8.12 Course of Dealing; Amendment; Supplemental Agreements. No course of
dealing between the Lender and Borrower shall be effective to amend, modify or
change any provision of this Agreement. This Agreement or any document executed
in connection herewith, may not be amended, modified, or changed in any respect
except by agreement in writing signed by the Lender and the Borrower.

Section 8.13 Indemnification. Borrower shall indemnify Lender, its Affiliates
and its and their respective managers, members, officers, employees, Affiliates,
agents, representatives, successors, assigns, accountants and attorneys
(collectively, the “Indemnified Persons”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable attorneys’ fees and costs) which may be imposed
on, incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of such
Indemnified Person. Lender agrees to give Borrower reasonable notice of any
event of which Lender becomes aware for which indemnification may be required
under this Section 8.13, and Lender may elect (but is not obligated) to direct
the defense thereof, provided that the selection of counsel shall be subject to
Borrower’s consent, which consent shall not be unreasonably withheld or delayed.
Any Indemnified Person may, in its reasonable discretion, take such actions as
it deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral.
Notwithstanding the foregoing, if any insurer agrees to undertake the defense of
an event (an “Insured Event”), Lender agrees not to exercise its right to select
counsel to defend the event if that would cause Borrower’s insurer to deny
coverage; provided, however, that Lender reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at its sole
cost and expense. To the extent that Lender obtains recovery from a third party
other than an Indemnified Person of any of the amounts that any Borrower has
paid to Lender pursuant to the indemnity set forth in this Section 8.13, then
Lender shall promptly pay to Borrower the amount of such recovery.

Section 8.14 Waiver of Jury Trial. BORROWER AND LENDER KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF

 

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DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OR EITHER PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY LOAN, ADVANCE OR OTHER EXTENSION OF CREDIT TO THE BORROWER.

(Signatures on next page)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
effective on the date first written above.

 

“BORROWER” ELANDIA, INC.   /s/ Harley L. Rollins By:   Harley L. Rollins Its:  
Chief Financial Officer Address:   1500 Cordova Road, #312   Ft. Lauderdale, FL
33316 “LENDER” STANFORD INTERNATIONAL BANK LTD.   /s/ James M. Davis By:   James
M. Davis Its:   Chief Financial Officer Address:   No. 11 Pavilion Drive, St.
John’s   Antigua, West Indies

 

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