Exhibit 10.1

ELANDIA INTERNATIONAL INC.

a Delaware corporation

PREFERRED STOCK PURCHASE AGREEMENT

THIS PREFERRED STOCK PURCHASE AGREEMENT, dated as of the 20th day of February,
2008 (the “Agreement”), is entered into by and between eLandia International
Inc., a Delaware corporation (the “Company”), and Stanford International Bank
Ltd., an Antiguan banking corporation (“SIBL” or the “Purchaser”).

W I T N E S S E T H:

WHEREAS, the Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemptions from registration provided by
Regulation D (“Regulation D”) promulgated by the Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the
“Securities Act”), and/or Section 4(2) of the Securities Act; and

WHEREAS, upon the terms and conditions of this Agreement, the Purchaser has
agreed to purchase, and the Company wishes to issue and sell, for an aggregate
purchase price of $40,000,000 (i) 5,925,926 shares of the Company’s Series B
Convertible Preferred Stock, $0.00001 par value per share (the “Series B
Preferred Stock”) and (ii) warrants (the “Warrants”) to purchase an aggregate of
4,158,000 shares of common stock, $0.00001 par value per share, of the Company
(the “Common Stock”), subject to adjustment as provided in the Warrants, which
Warrants will be in the form attached hereto as Exhibit A; and

WHEREAS, the Series B Preferred Stock shall be convertible into shares of Common
Stock pursuant to the terms set forth in that certain Certificate of
Designations, Rights and Preferences of Series B Convertible Preferred Stock, as
filed with the Delaware Secretary of State on November 21, 2007 (the “Series B
Certificate of Designation”), and the Warrants may be exercised for the purchase
of Common Stock, pursuant to the terms set forth therein; and

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

1. AGREEMENT TO PURCHASE; PURCHASE PRICE

(a) Initial Series B Funding. Subject to the terms and conditions in this
Agreement, the Purchaser hereby agrees to purchase from the Company, and the
Company hereby agrees to issue and sell to the Purchaser and its assignees
(i) 5,925,926 shares of Series B Preferred Stock and (ii) Warrants to purchase
4,158,000 shares of Common Stock, subject to adjustment as provided in the
Warrants, for an aggregate purchase price of $40,000,000 ($6.75 per share of
Series B Preferred Stock), which shall be payable in immediately available funds
on the applicable closing dates as determined pursuant to Section 1(b) below.

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(b) Closings. The Series B Preferred Stock and the Warrants to be purchased by
the Purchaser and its assignees under Section 1(a), in such denominations and
such names as are set forth on Schedule A attached hereto or as the Purchaser
may request from the Company upon at least three business days prior notice of
any closing (any name other than the Purchaser shall be an affiliate of
Purchaser or an assignee of Purchaser), shall be delivered by or on behalf of
the Company for the account of the Purchaser, against payment by the Purchaser
of the purchase price required by this Section 1. Such payment of purchase price
shall be in cash and made by wire transfer to an account designated by the
Company by 5:00 PM, Eastern Standard Time, in the amounts and on the applicable
closing dates set forth below. Subject to the terms and conditions of this
Agreement, (i) the Company and Purchaser shall close on the first purchase of
shares of Series B Preferred Stock and the Warrants as set forth below (the
“First Closing”) within seven (7) days following the appointment of Mr. Pedro
(Pete) Pizarro (“Pizarro”) as Chief Executive Officer of the Company in
accordance with the terms of the employment agreement attached hereto as Exhibit
B (the “Pizarro Employment Agreement”) (the date of such First Closing, the
“First Closing Date”), and (ii) the Company and Purchaser shall close on each
subsequent purchase of shares of Series B Preferred Stock in accordance with the
funding schedule set forth below (the date of each closing hereunder, a “Closing
Date”).

 

CLOSING DATE

   PURCHASE
PRICE    NUMBER OF SHARES
OF SERIES B
PREFERRED STOCK    NUMBER
OF WARRANTS

First Closing Date

   $ 2,000,000    296,297    4,158,000

First Closing Date + 7 days

   $ 2,000,000    296,297    —  

First Closing Date + 14 days

   $ 2,000,000    296,297    —  

First Closing Date + 21 days

   $ 2,000,000    296,297    —  

First Closing Date + 28 days

   $ 2,000,000    296,297    —  

First Closing Date + 35 days

   $ 2,000,000    296,297    —  

First Closing Date + 42 days

   $ 2,000,000    296,296    —  

First Closing Date + 49 days

   $ 2,000,000    296,296    —  

First Closing Date + 56 days

   $ 2,000,000    296,296    —  

First Closing Date + 63 days

   $ 2,000,000    296,296    —  

First Closing Date + 70 days

   $ 2,000,000    296,296    —  

First Closing Date + 77 days

   $ 2,000,000    296,296    —  

First Closing Date + 84 days

   $ 2,000,000    296,296    —  

First Closing Date + 91 days

   $ 2,000,000    296,296    —  

First Closing Date + 98 days

   $ 2,000,000    296,296    —  

First Closing Date + 105 days

   $ 2,000,000    296,296    —  

First Closing Date + 112 days

   $ 2,000,000    296,296    —  

First Closing Date + 119 days

   $ 2,000,000    296,296    —  

First Closing Date + 126 days

   $ 2,000,000    296,296    —  

First Closing Date + 133 days

   $ 2,000,000    296,296    —                 

TOTAL:

   $ 40,000,000    5,925,926    4,158,000                 

 

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To the extent any Closing Date falls on a day other than a Business Day, such
Closing Date shall be the next Business Day. “Business Day” means any day except
a Saturday, Sunday or other day in which federal banking institutions in the
United States or banking institutions in Miami, Florida are authorized by law or
regulation to close.

(c) Bridge Loan. Contemporaneously with the appointment of Pizarro as Chief
Executive Officer of the Company in accordance with the terms of the Pizarro
Employment Agreement (and provided that the Company has obtained all required
consents from the Company’s existing lenders), the Company and the Purchaser
shall execute and deliver the Loan Agreement (the “Bridge Loan Agreement”)
attached hereto as Exhibit C. In the event of Purchaser’s conversion of all
principal and interest then outstanding under the Bridge Loan Agreement (the
“Outstanding Amount”) into the right to receive in satisfaction thereof shares
of Series B Preferred Stock, SIBL shall, as of such conversion date, subscribe
for, and the Company shall issue to Purchaser, that number of shares of Series B
Preferred Stock equal to the Outstanding Amount divided by the then current
Conversion Price (as defined in the Series B Certificate of Designation)
applicable to the Series B Preferred Stock. In the event that all of the South
Pacific Assets (as defined in Section 5(h) below) are sold prior to December 31,
2008, the Purchaser, on December 31, 2008, shall subscribe for, and the Company
shall issue to Purchaser, that number of shares of Series B Preferred Stock
equal to the (i) amount by which the Net Cash Proceeds (defined in the Bridge
Loan Agreement) are less than $40,000,000 divided by (ii) the then current
Conversion Price (as defined in the Series B Certificate of Designation)
applicable to the Series B Preferred Stock. With respect to each share of Series
B Preferred Stock issued pursuant to this Section 1(c), the Company shall issue
to Purchaser simultaneously with such issuance .7017 Warrants to purchase shares
of Common Stock.

(d) Additional Funding. Subject to the terms and conditions in this Agreement,
the Purchaser agrees to purchase from the Company, and the Company agrees to
issue and sell to the Purchaser, on or after December 31, 2008 and pursuant to a
funding Schedule mutually agreeable to the Company and Purchaser (provided such
funding schedule contemplates completion of funding within 90 days following
December 31, 2008), an additional $20,000,000 (the “Additional Funding”) worth
of Series B Preferred Stock at a purchase price of $6.75 per share. Unless the
Company and Purchaser agree otherwise, the Company shall submit each request for
Additional Funding (a “Request”) to the Purchaser at least two weeks before the
desired funding date. In connection with each Request, the Company shall state
the number of shares of Series B Preferred Stock to be sold, in increments of
50,000 shares at a purchase price of $6.75 per share, and shall provide to
Purchaser the proposed use of proceeds, together with such information

 

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relating thereto as Purchaser shall reasonably request. With respect to each
share of Series B Preferred Stock issued pursuant to this Section 1(d), the
Company shall issue to Purchaser simultaneously with such issuance .7017
Warrants to purchase shares of Common Stock. Notwithstanding the foregoing,
(i) the Company will undertake its best efforts to solicit and receive
commitments, prior to December 31, 2008, for supplemental equity investments
from parties other than SIBL and its affiliates for up to $20,000,000, and
(ii) Purchaser’s purchase obligation in respect of such Additional Funding shall
be reduced on a dollar-for-dollar basis by any such investments or bona fide
commitments received by Company before December 31, 2008.

2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION

The Purchaser represents and warrants to, and covenants and agrees with, the
Company as follows:

(a) Qualified Investor. The Purchaser is (i) experienced in making investments
of the kind described in this Agreement and the related documents, (ii) able to
afford the entire loss of its investment in the Series B Preferred Stock and the
Warrants, and (iii) an “Accredited Investor” as defined in Rule 501(a) of
Regulation D and knows of no reason to anticipate any material change in its
financial condition for the foreseeable future.

(b) Speculative Nature of Investment. The Purchaser understands and acknowledges
that the Company has a limited financial and operating history and that an
investment in the Company is highly speculative and involves substantial risks.
The Purchaser can bear the economic risk of the Purchaser’s investment and is
able, without impairing the Purchaser’s financial condition, to hold the Series
B Preferred Stock, the Warrants and the Conversion Shares (as defined below) for
an indefinite period of time and to suffer a complete loss of such Purchaser’s
investment.

(c) Restricted Securities. The securities are “restricted securities” as defined
in Rule 144 promulgated under the Securities Act. All subsequent offers and
sales by the Purchaser of the Series B Preferred Stock and the Warrants and the
Common Stock issuable upon conversion of the Series B Preferred Stock or
exercise of the Warrants shall be made pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption from
such registration.

(d) Reliance on Representations. The Purchaser understands that the Series B
Preferred Stock and the Warrants are being offered and sold to it and its
assignees in reliance upon exemptions from the registration requirements of the
United States federal securities laws, and that the Company is relying upon the
truthfulness and accuracy of the Purchaser’s representations and warranties, and
the Purchaser’s compliance with its covenants and agreements, each as set forth
herein, in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Series B Preferred Stock and the
Warrants.

(e) Access to Information. The Purchaser (i) has been provided with sufficient
information with respect to the business of the Company for the Purchaser to
determine the suitability of making an investment in the Company and such
documents relating to

 

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the Company as the Purchaser has requested and the Purchaser has carefully
reviewed the same, (ii) has been provided with such additional information with
respect to the Company and its business and financial condition as the
Purchaser, or the Purchaser’s agent or attorney, has requested, and (iii) has
had access to management of the Company and the opportunity to discuss the
information provided by management of the Company and any questions that the
Purchaser had with respect thereto have been answered to the full satisfaction
of the Purchaser.

(f) Legality. The Purchaser has the requisite corporate power and authority to
enter into this Agreement.

(g) Residency. The residency of the Purchaser (or, in the case of a partnership
or corporation, such entity’s principal place of business) is No. 11 Pavilion
Drive, St. John’s, Antigua, West Indies.

(h) Authorization.

(i) The Purchaser has all requisite power and authority to execute and deliver
the Agreement and any related agreements, to purchase the Series B Preferred
Stock and the Warrants hereunder and to carry out and perform its obligations
under the terms of the Agreement and any related agreements. All action on the
part of the Purchaser necessary for the authorization, execution, delivery and
performance of the Agreement and any related agreements, and the performance of
all of the Purchaser’s obligations under the Agreement and any related
agreements, has been taken or will be taken prior to the First Closing Date.

(ii) This Agreement and any related agreements, and the transactions
contemplated hereby and thereby, have been duly and validly authorized by the
Purchaser, and such agreements, when executed and delivered by each of the
Purchaser and the Company will each be a valid and binding agreement of the
Purchaser, enforceable in accordance with their respective terms, except (A) as
limited by laws of general application relating to bankruptcy, insolvency and
the relief of debtors, (B) as limited by rules of law governing specific
performance, injunctive relief or other equitable remedies and by general
principles of equity and (C) to the extent the indemnification provisions
contained in the Registration Rights Agreement (as defined below) may further be
limited by applicable laws and principles of public policy.

(iii) No consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person is
required to be obtained by the Purchaser in connection with the execution and
delivery of the Agreement or any related agreements by the Purchaser or the
performance of the Purchaser’s obligations hereunder or thereunder.

(i) Adequate Resources. The Purchaser, or an affiliate of the Purchaser, has
sufficient liquid assets to deliver the aggregate purchase price during the term
of the Agreement.

(j) Investment. The Purchaser is acquiring the Series B Preferred Stock and the
Warrants for investment for the Purchaser’s own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution

 

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thereof, nor with any present intention of distributing or selling such Series B
Preferred Stock or Warrants. The Purchaser is aware of the limits on resale
imposed by virtue of the transaction contemplated by this Agreement and is aware
that the Series B Preferred Stock and the Warrants will bear restrictive
legends.

(k) Litigation. There is no action, suit, proceeding or investigation pending
or, to the Knowledge of the Purchaser (as defined herein), currently threatened
against the Purchaser that questions the validity of the Primary Documents (as
defined below) or the right of Purchaser to enter into any such agreements or to
consummate the transactions contemplated hereby and thereby, nor, to the
Knowledge of Purchaser, is there any basis for the foregoing. All references to
the “Knowledge” means the actual knowledge of the person in question or the
knowledge such person could reasonably be expected to have each after reasonable
investigation and due diligence.

(l) Broker’s Fees and Commissions. Except for a fee payable to Stanford Group
Company (“SGC”) by Purchaser pursuant to Section 8, neither the Purchaser nor
any of its officers, partners, employees or agents has employed any investment
banker, broker, or finder in connection with the transactions contemplated by
this Agreement, the Warrants, and the Registration Rights Agreement
(collectively, the “Primary Documents”), and neither the Company nor the
Purchaser has, nor will, incur, directly or indirectly, as a result of any
action taken by the Purchaser, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with the transactions
contemplated by the Primary Documents.

(m) Tax Advisors. The Purchaser has reviewed with its own tax advisors the U.S.
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by the Primary Documents. With respect to such
matters, the Purchaser relies solely on such advisors and not on any statements
or representations of the Company or any of its agents, written or oral. The
Purchaser understands that it (and not the Company) shall be responsible for its
own tax liability that may arise as a result of this investment or the
transactions contemplated by the Primary Documents.

3. REPRESENTATIONS OF THE COMPANY

The Company represents and warrants to, and covenants and agrees with, the
Purchaser that:

(a) Organization. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business as now
conducted. The Company owns directly or indirectly each of the entities set
forth on Schedule 3(a) attached hereto (the “Subsidiaries”) in the manner
described on such Schedule. Except as set forth on Schedule 3(a), the Company
owns, directly or indirectly, 100% of the legal and beneficial interest in each
such Subsidiary, and no Subsidiary has any legal or equitable obligation to
issue any equity or other securities to any person. The Company has no interest
in any other entities except for its Subsidiaries. Each of the Subsidiaries is
duly organized, validly existing and in good standing under the laws of its
state of organization and has all requisite power and authority to carry on its
business as now conducted. Each of the Company and the Subsidiaries is duly
qualified as a foreign corporation or limited liability

 

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company and in good standing in all jurisdictions in which either the ownership
or use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except as would not have a
material adverse effect on the business or financial condition of the Company
and the Subsidiaries, taken as a whole (a “Material Adverse Effect”). The minute
books and stock record and membership books and other similar records of the
Company or equivalent documents have been provided to the Purchaser and its
counsel prior to the execution of this Agreement, are complete and correct in
all material respects and have been maintained in accordance with sound business
practices. Such minute books contain true and complete records of all actions
taken at all meetings and by all written consents in lieu of meetings of the
directors, stockholders, members, managers and committees of the board of
directors of the subject entities from the date of organization through the date
hereof. The Company has, prior to the execution of this Agreement, delivered to
the Purchaser true and complete copies of the Certificate of Incorporation,
Bylaws, and equivalent documents of the Company and the Subsidiaries, each as
amended through the date hereof. Neither the Company nor any Subsidiary is in
violation of any provisions of its Certificate of Incorporation, Bylaws or
equivalent documents.

(b) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Primary Documents and otherwise to carry out its obligations
hereunder or thereunder. The execution and delivery of each of the Primary
Documents by the Company and the consummation by it of the transactions
contemplated hereby or thereby have been duly authorized by all necessary action
on the part of the Company and no further consent or action is required by the
Company or any Subsidiary. Each of the Primary Documents has been (or upon
delivery will be) duly executed by the Company and, when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except
(i) as limited by laws of general application relating to bankruptcy, insolvency
and the relief of debtors, (ii) as limited by rules of law governing specific
performance, injunctive relief or other equitable remedies and by general
principles of equity and (iii) to the extent the indemnification provisions
contained in the Registration Rights Agreement may further be limited by
applicable laws and principles of public policy.

(c) Capitalization. On the date hereof (exclusive of any Series B Preferred
Stock or Warrants to be issued hereunder), the authorized capital of the Company
consists of: (i) 50,000,000 shares of Common Stock, par value $0.00001 per
share, of which 17,029,313 shares are issued and outstanding; (ii) 35,000,000
shares of preferred stock, par value $0.00001 per share, of which – 0 – shares
of Series A Convertible Preferred Stock are issued and outstanding and 4,740,741
shares of Series B Preferred Stock are outstanding; (iii) 2,606,700 shares of
Common Stock reserved for issuance upon exercise of granted (and to be granted)
options under the Company’s 2007 Stock Option and Incentive Plan, of which
912,867 shares of Common Stock are issuable upon exercise of outstanding stock
options granted pursuant to the Company’s 2007 Stock Option and Incentive Plan;
and (iv) 414,259 shares of Common Stock underlying currently exercisable
warrants. In addition, the Company is the maker of convertible promissory notes
which may be converted at any time, at the option of Purchaser into 6,060,000
shares of Series A Preferred Stock which are ultimately convertible into that
same amount of shares of Common Stock, subject to adjustment as provided in the
Certificate of Designations, Rights and Preferences of the Series A Convertible
Preferred Stock, as filed with the Delaware Secretary of State on

 

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October 1, 2007. Also, Latin Node, Inc., a Subsidiary of the Company, is the
maker of a convertible promissory note in favor of Laurus Master Fund, Ltd.,
which note may be converted into 956,522 shares of Common Stock. Except as set
forth in this Section 3(c) or as disclosed on Schedule 3(c) attached hereto,
there are no (A) options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Subsidiary, (B) voting securities of the Company or securities
convertible, exchangeable or exercisable for shares of capital stock or voting
securities of the Company, or (C) equity equivalents, interests in the ownership
or earnings of the Company or any Subsidiary or similar rights. All shares of
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non assessable and free
of preemptive (or similar) rights. Other than the Company’s 2007 Stock Option
and Incentive Plan and the commitments of the Company under the Pizarro
Employment Agreement, there are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares
of Common Stock or any capital stock of any Subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other person. Except as disclosed on Schedule 3(c)
attached hereto, none of the Company or any Subsidiary is a party to any
stockholders’ agreement, share transfer restriction, voting trust agreement,
registration rights agreement or similar agreement relating to any equity
securities of the Company or any Subsidiary or any other Contract relating to
disposition, voting or dividends with respect to any equity securities of the
Company or of any Subsidiary. All dividends on the Common Stock that have been
declared or have accrued prior to the date of this Agreement have been paid in
full. There are no anti-dilution or price adjustment provisions regarding any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Securities (as defined in
Section 4(a) below).

(d) Concerning the Common Stock, the Preferred Stock and the Warrants. The
Series B Preferred Stock, the Warrants and the Common Stock issuable upon
conversion of the Series B Preferred Stock and upon exercise of the Warrants
when issued and delivered and paid for in compliance with the provisions of this
Agreement, shall be duly and validly issued, fully paid and non-assessable and
will not subject the holder thereof to personal liability by reason of being
such a holder.

(e) Authorized Shares. The Company shall have available a sufficient number of
authorized and unissued shares of Common Stock as may be necessary to effect
conversion of the Series B Preferred Stock and the exercise of the Warrants. The
Company understands and acknowledges the potentially dilutive effect to the
Common Stock of the issuance of shares of Common Stock upon the conversion of
the Series B Preferred Stock and the exercise of the Warrants. The Company
further acknowledges that its obligation to issue shares of Common Stock upon
conversion of the Series B Preferred Stock and upon exercise of the Warrants is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.

 

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(f) Legality. The Company has the requisite corporate power and authority to
enter into this Agreement, and to issue and deliver the Series B Preferred
Stock, the Warrants and the Common Stock issuable upon conversion of the Series
B Preferred Stock and the exercise of the Warrants.

(g) Financial Statements. Except as set forth on Schedule 3(g) attached hereto:
(i) the financial statements and related notes thereto contained in the
Company’s filings with the Commission (the “Company Financials”) are correct and
complete in all material respects, comply in all material respects with the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations of the Commission promulgated thereunder and have been prepared
in accordance with United States generally accepted accounting principles
applied on a basis consistent throughout the periods indicated and consistent
with each other; (ii) the Company Financials present fairly and accurately the
financial condition and operating results of the Company in all material
respects as of the dates and during the periods indicated therein and are
consistent with the books and records of the Company; and (iii) except as set
forth in the Company Financials, the Company has no material liabilities,
contingent or otherwise, other than liabilities disclosed on the balance sheet
as of September 30, 2007. Since January 1, 2004, there has been no change in any
accounting policies, principles, methods or practices, including any change with
respect to reserves (whether for bad debts, contingent liabilities or
otherwise), of the Company, other than as required by United States generally
accepted accounting principles. The unaudited Company Financials do not contain
additional financial statements and footnotes required under United States
generally accepted accounting principles, and are subject to normal year-end
adjustments.

(h) Commission Filings. Except as set forth on Schedule 3(h) attached hereto:
(i) the Company has made all filings with the Commission that it has been
required to make under the Securities Act and the Exchange Act and has furnished
or made available to the Purchaser true and complete copies of all the documents
it has filed with the Commission since its inception, all in the forms so filed
(collectively, the “Commission Filings”) including, without limitation, that
certain Form 8-K filed with the Commission on February 5, 2008 (the “Most Recent
Form 8-K”); and (ii) as of their respective filing dates, the Commission Filings
already filed by the Company or to be filed by the Company after the date hereof
but before the First Closing Date complied or, if filed after the date hereof,
will comply in all material respects with the requirements of the Securities Act
and the Exchange Act, and the rules and regulations of the Commission
promulgated thereunder, as the case may be, and none of such Commission Filings
contained or will contain any untrue statement of a material fact or omitted or
will omit any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading, except to the extent such Commission Filings have been all
prior to the date of this Agreement corrected, updated or superseded by a
document subsequently filed with Commission. As of the date hereof, there are no
material unresolved comments issued by the staff of the Commission with respect
to any of the Commission Filings.

(i) Non-Contravention. The execution and delivery of this Agreement and each of
the other Primary Documents, and the consummation by the Company of the
transactions contemplated by this Agreement and each of the other Primary
Documents, do not and will not conflict with, or result in a breach by the
Company or any Subsidiary of, or give any third party any right of termination,

 

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cancellation, acceleration or modification in or with respect to, any of the
terms or provisions of, or constitute a default under, (A) its Certificate of
Incorporation, Bylaws or other equivalent documents, as amended through the date
hereof, (B) any material indenture, mortgage, deed of trust, lease or other
material agreement or instrument to which the Company or any Subsidiary is a
party or by which it or any of its properties or assets are bound, or (C) any
existing applicable law, rule, or regulation or any applicable decree, judgment
or order of any court or federal, state, securities industry or foreign
regulatory body, administrative agency, or any other governmental body having
jurisdiction over the Company or any Subsidiary or any of their properties or
assets (collectively, “Legal Requirements”), other than those which have been
waived or satisfied on or prior to the First Closing Date.

(j) Approvals and Filings. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company or any Subsidiary for the entry into or the performance of this
Agreement and the other Primary Documents.

(k) Compliance With Legal Requirements. Except as disclosed in the Commission
Filings, neither the Company nor any Subsidiary has violated in any material
respect, and is not currently in material default under, any Legal Requirement
applicable to it, or any of its assets or properties, where such violation could
reasonably be expected to have a Material Adverse Effect.

(l) Absence of Certain Changes. Since January 1, 2007, except as previously
disclosed in the Commission Filings or as set forth in Schedule 3(l), there has
been no event or condition that has had, or is reasonably likely to have, a
Material Adverse Effect.

(m) Indebtedness to Officers, Directors and Stockholders. Except as set forth on
Schedule 3(m) attached hereto, neither the Company nor any Subsidiary is
indebted to any of its stockholders, officers or directors or their Affiliates
in any amount whatsoever (including, without limitation, any deferred
compensation, salaries or rent payable).

(n) Relationships with Related Persons. Except as disclosed in the Commission
Filings, no officer, director, or principal stockholder of the Company or any
Subsidiary nor any Related Person (as defined below) of any of the foregoing
has, or since December 31, 2005, has had, any interest in any property (whether
real, personal, or mixed and whether tangible or intangible) used in or
pertaining to the business of the Company or any Subsidiary. Except as disclosed
in the Commission Filings, no officer, director, or principal stockholder of the
Company nor any Related Person of the any of the foregoing is, or since
December 31, 2005, has owned an equity interest or any other financial or profit
interest in, a Person (as defined below) that has (i) had business dealings or a
material financial interest in any transaction with the Company or any
Subsidiary, or (ii) engaged in competition with the Company or any Subsidiary
with respect to any line of the merchandise or services of such company (a
“Competing Business”) in any market presently served by such company except for
ownership of less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except for (A) Contracts between the Company and
Purchaser and (B) employment agreements disclosed in the Commission Filings, no
director, officer, or principal

 

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stockholder of the Company or any Subsidiary nor any Related Person of any of
the foregoing is a party to any Contract with, or has claim or right against,
the Company or any Subsidiary. As used in this Agreement, “Person” means any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or any governmental
body; “Related Person” means, (X) with respect to a particular individual,
(a) each other member of such individual’s Family (as defined below); (b) any
Person that is directly or indirectly controlled by such individual or one or
more members of such individual’s Family; (c) any Person in which such
individual or members of such individual’s Family hold (individually or in the
aggregate) a Material Interest (as defined below); and (d) any Person with
respect to which such individual or one or more members of such individual’s
Family serves as a director, officer, partner, executor, or trustee (or in a
similar capacity); (Y) with respect to a specified Person other than an
individual, (a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person; (b) any Person that holds a Material Interest in such
specified Person; (c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest; (e) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and (f) any Related Person of any
individual described in clause (b) or (c). For purposes of the foregoing
definition, (a) the “Family” of an individual includes (i) the individual,
(ii) the individual’s spouse and former spouses, (iii) any other natural person
who is related to the individual or the individual’s spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) “Material Interest” means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least 1% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 1%
of the outstanding equity securities or equity securities in a Person.

(o) Title to Properties; Liens and Encumbrances. The Company and each Subsidiary
has good and marketable title to all of its material properties and assets, both
real and personal, and has good title to all its leasehold interests. Except as
disclosed in the Commission Filings, all material properties and assets
reflected in the Company Financials are free and clear of all Encumbrances (as
defined below) except for (i) liens for current taxes not yet due and payable,
(ii) liens imposed by law and incurred in the ordinary course of business for
obligations not past due, (iii) liens in respect of pledges or deposits under
workers’ compensation laws or similar legislation and (iv) liens, Encumbrances
and defects in title which do not in any case materially detract from the value
of the property subject thereto or have a Material Adverse Effect, and which
have arisen in the ordinary course of business. As used in this Agreement,
“Encumbrance” means any charge, claim, community property interest, condition,
equitable interest, lien, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.

(p) Permits. The Company and each Subsidiary has all permits, licenses and any
similar authority necessary for the conduct of its business as now conducted,
except where the failure to have such permits and licenses would not materially
and adversely affect the business or financial condition of such company.
Neither the Company nor any Subsidiary is in default in any respect under any of
such permits, licenses or similar authority.

 

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(q) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body, or arbitration
tribunal pending or, to the Knowledge of the Company, threatened, against or
affecting the Company or any Subsidiary, in which an unfavorable decision,
ruling or finding would have a Material Adverse Effect on the Company or such
Subsidiary or the transactions contemplated by the Primary Documents, or which
would adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, the Primary Documents.
All references to the “Knowledge of the Company” in this Agreement shall mean
the actual knowledge of the Company or the knowledge that the Company could
reasonably be expected to have, after reasonable investigation and due
diligence.

(r) No Default. Neither the Company nor any Subsidiary is in default in the
performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust or other instrument or
agreement (each a “Contract”) to which it is a party or by which it or its
property may be bound.

(s) Taxes.

(i) All Tax Returns (as defined below) required to have been filed by or with
respect to the Company or any Subsidiary (including any extensions) have been
filed. All such Tax Returns are true, complete and correct in all material
respects. All Taxes (as defined below) due and payable by the Company or any
Subsidiary, whether or not shown on any Tax Return, or claimed to be due by any
Taxing Authority (as defined below), have been paid or accrued on the balance
sheet included in the Company’s latest filing with the Commission.

(ii) Neither the Company nor any Subsidiary has any material liability for Taxes
outstanding other than as reflected in the balance sheet included in the
Company’s latest filing with the Commission or incurred subsequent to the date
of such filing in the ordinary course of business. The unpaid Taxes of the
Company and the Subsidiaries (i) did not, as of the most recent fiscal month
end, exceed by any material amount the reserve for liability for income tax
(other than the reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of the balance
sheet included in the Company’s latest filing with the Commission, and (ii) will
not exceed by any material amount that reserve as adjusted for operations and
transactions through the First Closing Date.

(iii) Neither the Company nor any Subsidiary is a party to any agreement
extending the time within which to file any Tax Return. No claim has ever been
made by a Taxing Authority of any jurisdiction in which the Company or any
Subsidiary does not file Tax Returns that the Company or such Subsidiary is or
may be subject to taxation by that jurisdiction.

 

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(iv) The Company and each Subsidiary has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor or independent contractor.

(v) There has been no action by any Taxing Authority in connection with
assessing additional Taxes against, or in respect of, the Company or any
Subsidiary for any past period. There is no dispute or claim concerning any Tax
liability of the Company or any Subsidiary either (i) claimed, raised or, to the
Knowledge of the Company, threatened by any Taxing Authority or (ii) of which
the Company is otherwise aware. There are no liens for Taxes upon the assets and
properties of the Company or any Subsidiary other than liens for Taxes not yet
due. None of the Tax Returns of the Company or any Subsidiary have been audited
or examined by Taxing Authorities, and none of the Tax Returns of the Company or
any Subsidiary currently are the subject of audit or examination. The Company
has made available to the Purchaser complete and correct copies of all federal,
state, local and foreign income Tax Returns filed by, and all Tax examination
reports and statements of deficiencies assessed against or agreed to by, the
Company and the Subsidiaries since the fiscal year ended December 31, 1998.

(vi) There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any Tax Returns required to be filed by, or
which include or are treated as including, the Company or any Subsidiary or with
respect to any Tax assessment or deficiency affecting the Company or any
Subsidiary.

(vii) The Company has not received any written ruling related to Taxes or
entered into any agreement with a Taxing Authority relating to Taxes.

(viii) Neither the Company nor any Subsidiary has any liability for the Taxes of
any person or entity other than the Company or such Subsidiary (i) under
Section 1.1502-6 of the Treasury regulations (or any similar provision of state,
local or foreign Legal Requirements), (ii) as a transferee or successor,
(iii) by contract or (iv) otherwise.

(ix) Neither the Company nor any Subsidiary (i) has agreed to make or is
required to make any adjustment under Section 481 of the Internal Revenue Code
by reason of a change in accounting method and (ii) is a “consenting
corporation” within the meaning of Section 341(f)(1) of the Internal Revenue
Code.

(x) Neither the Company nor any Subsidiary is a party to or bound by any
obligations under any tax sharing, tax allocation, tax indemnity or similar
agreement or arrangement.

(xi) Neither the Company nor any Subsidiary is involved in, subject to, or a
party to any joint venture, partnership, contract or other arrangement that is
treated as a partnership for federal, state, local or foreign Tax purposes.

(xii) The Company was not included nor is includible, in the Tax Return of any
other entity.

 

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As used in this Agreement, a “Tax Return” means any return, report, information
return, schedule, certificate, statement or other document (including any
related or supporting information) filed or required to be filed with, or, where
none is required to be filed with a Taxing Authority, the statement or other
document issued by, a Taxing Authority in connection with any Tax; “Tax” means
any and all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross, receipts, excise, real or personal property,
sales, withholding, social security, retirement, unemployment, occupation, use,
service, service use, license, net worth, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by Taxing Authority, whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
includes any interest whether paid or received, fines, penalties or additional
amounts attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments; and “Taxing Authority” means any
governmental agency, board, bureau, body, department or authority of any United
States federal, state or local jurisdiction or any foreign jurisdiction, having
or purporting to exercise jurisdiction with respect to any Tax.

(t) Certain Prohibited Activities. Neither the Company, any Subsidiary nor, to
the Knowledge of the Company, any of their respective directors, officers or
other employees has (i) used any Company or Subsidiary funds for any unlawful
contribution, endorsement, gift, entertainment or other unlawful expense
relating to any political activity, (ii) made any direct or indirect unlawful
payment of Company or Subsidiary funds to any foreign or domestic government
official or employee, (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), or (iv) made any
bribe, rebate, payoff, influence payment, kickback or other similar payment to
any person; provided, however, that the Company, in connection with its
acquisition of Latin Node, Inc., has initiated an investigation to determine if
certain payments made to consultants used by Latin Node, Inc. were made in
violation of the FCPA, and all material facts known by the Company with respect
to such investigation have been disclosed in the Commission Filings.

(u) Certain Fees. Except for a fee payable to SGC by the Company pursuant to
Section 8, no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement, and neither the Company nor any
Subsidiary has taken any action that would cause Purchaser to be liable for any
such fees or commissions. The Company agrees that Purchaser shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of any Person for fees of the type contemplated by this Section with the
transactions contemplated by this Agreement.

(v) Employee Benefits.

(i) The Company does not have, and has not at any time since December 31, 1998
had, Plans (as defined below).

As used in this Agreement, “Plan” means (i) each of the “employee benefit plans”
(as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 (“ERISA”)), of which any of the Company or any member of
the same controlled group of businesses as the Company within the meaning of
Section 4001(a)(14) of ERISA (an “ERISA Affiliate”) is or ever was a

 

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sponsor or participating employer or as to which the Company or any of its ERISA
Affiliates makes contributions or is required to make contributions, and
(ii) any similar employment, severance or other arrangement or policy of any of
the Company or any of its ERISA Affiliates (whether written or oral) providing
for health, life, vision or dental insurance coverage (including self-insured
arrangements), workers’ compensation, disability benefits, supplemental
unemployment benefits, vacation benefits or retirement benefits, fringe
benefits, or for profit sharing, deferred compensation, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits.

(w) Private Offering. Subject to the accuracy of the Purchaser’s representations
and warranties set forth in Section 2 hereof, (i) the offer, sale and issuance
of the Series B Preferred Stock and the Warrants, (ii) the issuance of Common
Stock pursuant to the conversion and/or exercise of such securities into shares
of Common Stock, each as contemplated by the Primary Documents, are exempt from
the registration requirements of the Securities Act. The Company agrees that
neither the Company nor anyone acting on its behalf will offer any of the Series
B Preferred Stock, the Warrants or any similar securities for issuance or sale,
or solicit any offer to acquire any of the same from anyone so as to render the
issuance and sale of such securities subject to the registration requirements of
the Securities Act. The Company has not offered or sold the Series B Preferred
Stock or the Warrants by any form of general solicitation or general
advertising, as such terms are used in Rule 502(c) under the Securities Act.

(x) Disclosure. The Company confirms that neither it nor any other Person acting
on its behalf has provided Purchaser or its agents or counsel with any
information that constitutes or might constitute material, nonpublic
information. The Company understands and confirms that Purchaser will rely on
the foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to Purchaser regarding the Company, its
business and the transactions contemplated hereby, including the schedules to
this Agreement, furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company acknowledges and agrees that Purchaser has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 2 hereof.

4. CERTAIN COVENANTS, ACKNOWLEDGMENTS AND RESTRICTIONS

(a) Transfer Restrictions. The Purchaser acknowledges that (i) neither the
Series B Preferred Stock, the Warrants nor the Common Stock issuable upon
conversion of the Series B Preferred Stock or upon exercise of the Warrants have
been registered under the Securities Act, and such securities may not be
transferred unless (A) subsequently registered thereunder or (B) they are
transferred pursuant to an exemption from such registration, and (ii) any sale
of the Series B Preferred Stock, the Warrants or the Common Stock issuable upon
conversion, exercise or exchange thereof (collectively, the “Securities”) made
in reliance upon Rule 144 under the Securities Act (“Rule 144”) may be made only
in accordance with the terms of said Rule 144. The Purchaser understands that,

 

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although Rule 144 is not exclusive, the Commission has expressed its opinion
that persons proposing to sell restricted securities received in a private
offering other than in a registered offering or pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales and that such persons and the brokers who
participate in the transactions do so at their own risk. The provisions of
Section 4(a) and 4(b) hereof, together with the rights of the Purchaser under
this Agreement and the other Primary Documents, shall be binding upon any
assignee of the Purchaser as well as any subsequent transferee of the Series B
Preferred Stock and the Warrants.

(b) Restrictive Legend. The Purchaser acknowledges and agrees that, until such
time as the Securities shall have been registered under the Securities Act or
the Purchaser demonstrates to the reasonable satisfaction of the Company and its
counsel that such registration shall no longer be required, such Securities may
be subject to a stop-transfer order placed against the transfer of such
Securities, and such Securities shall bear a restrictive legend in substantially
the following form:

THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION SHALL NO LONGER BE REQUIRED.

(c) Filings. The Company undertakes and agrees that it will make all required
filings in connection with the sale of the Securities to the Purchaser as
required by federal and state laws and regulations, or by any domestic
securities exchange or trading market, and if applicable, the filing of a notice
on Form D (at such time and in such manner as required by the rules and
regulations of the Commission), and to provide copies thereof to the Purchaser
promptly after such filing or filings. With a view to making available to the
holders of the Securities the benefits of Rule 144 and any other rule or
regulation of the Commission that may at any time permit such holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3 or Form SB-2, the Company shall (a) at all times make
and keep public information available, as those terms are understood and defined
in Rule 144, (b) file on a timely basis with the Commission all information that
the Commission may require under either of Section 13 or Section 15(d) of the
Exchange Act and, so long as it is required to file such information, take all
actions that may be required as a condition to the availability of Rule 144 (or
any successor exemptive rule hereafter in effect) with respect to the Common
Stock; and (d) furnish to any holder of the Securities forthwith upon request
(i) a written statement by the Company as to its compliance with the reporting
requirements of Rule 144, (ii) a copy of the most recent annual or quarterly
report of the Company as filed with the Commission, and (iii) any other reports
and documents that a holder of the Securities may reasonably request in order to
avail itself of any rule or regulation of the Commission allowing such holder to
sell any such Securities without registration.

 

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(d) Reservation of Common Stock. The Company will at all times have authorized
and reserved for the purpose of issuance a sufficient number of shares of Common
Stock to provide for the issuance of Common Stock upon conversion of the Series
B Preferred Stock and the exercise of the Warrants (the “Conversion Shares”).

(e) Return of Certificates on Conversion and Warrants on Exercise.

(i) Upon any conversion by the Purchaser of less than all of the Series B
Preferred Stock pursuant to the terms of the Series B Certificate of
Designation, the Company shall issue and deliver to the Purchaser, within seven
business days of the date of conversion, a new certificate or certificates for,
as applicable, the total number of shares of the Series B Preferred Stock, which
the Purchaser has not yet elected to convert (with the number of and
denomination of such new certificate(s) designated by the Purchaser).

(ii) Upon any partial exercise by the Purchaser or its assignees of the
Warrants, the Company shall issue and deliver to the Purchaser or applicable
assignee, within seven business days of the date on which the Warrants is
exercised, new Warrants representing the number of adjusted shares of Common
Stock covered thereby, in accordance with the terms thereof.

(f) Replacement Certificates and Warrants.

(i) The certificate(s) representing the shares of the Series B Preferred Stock
held by the Purchaser shall be exchangeable, at the option of the Purchaser at
any time and from time to time at the office of Company, for certificates with
different denominations representing, as applicable, an equal aggregate number
of shares of the Series B Preferred Stock as requested by the Purchaser upon
surrendering the same. No service charge will be made for such registration or
transfer or exchange.

(ii) The Warrants will be exchangeable, at the option of the Purchaser or its
assignees, at any time and from time to time at the office of the Company, for
other Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Common Stock as are
purchasable under such Warrants. No service charge will be made for such
transfer or exchange.

(g) Securities Laws Disclosure; Publicity. The Company shall, by the fourth
trading day following the First Closing Date, issue a press release and file a
Current Report on Form 8-K reasonably acceptable to Purchaser disclosing all
material terms of the transactions contemplated hereby. The Company and
Purchaser shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby. Notwithstanding the foregoing,
other than in any registration statement filed pursuant to the Registration
Rights Agreement and filings related thereto, the Company shall not publicly
disclose the name of Purchaser, or include the name of Purchaser in any filing
with the Commission or any regulatory agency or principal trading market,
without the prior written consent of Purchaser, except to the extent such
disclosure is required by law or market regulations, in which case the Company
shall provide Purchaser with prior notice of such disclosure.

 

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5. ADDITIONAL AGREEMENTS

(a) Use of Proceeds. The Company shall use the proceeds from the sale of the
Series B Preferred Stock: (i) to reimburse the Purchaser its expenses as set
forth in Section 8 hereof, (ii) to develop and/or acquire data centers in Latin
America, and make other strategic acquisitions, in accordance with the Company’s
business plan approved by the Company’s Board of Directors, and (iii) for
general working capital purposes.

(b) [Intentionally Omitted].

(c) Listing of Common Stock. The Company shall use its best efforts to:
(i) file, not later than September 30, 2008, a listing application for the
American Stock Exchange (“AMEX”); and (ii) commence trading on AMEX not later
than December 31, 2008. SGC shall use commercially reasonable best efforts to
facilitate the Company’s undertakings pursuant to clauses (i) and (ii) above).

(d) Form 10-K. The Company shall use its best efforts to timely file its Form
10-K for the fiscal year ended December 31, 2007.

(e) Waiver of “Full Ratchet” Anti-Dilution Provisions. From and after the date
hereof, Purchaser agrees to waive the benefit of any “full ratchet”
anti-dilution provisions applicable to shares of Series A Preferred Stock and/or
Series B Preferred Stock held by Purchaser.

(f) Executive Incentive Plan. As soon as reasonably practicable following the
execution and delivery of this Agreement by the parties hereto, the Company
shall adopt the 2008 Executive Incentive Plan attached hereto as Exhibit D.

(g) Registration Requirement. On or before the First Closing Date, (i) Purchaser
and the Company shall execute and deliver a registration rights agreement in the
form attached hereto as Exhibit E (the “Registration Rights Agreement”) and
(ii) the Company and Purchaser shall (and Purchaser shall cause SGC to) execute
and deliver an amendment to existing registration rights agreements between
Purchaser, SGC and the Company in the form attached hereto as Exhibit F.

(h) Sale of South Pacific Assets. From and after the date of this Agreement
until the Maturity Date (as such term is defined in the Bridge Note), the
Company shall undertake its best efforts to sell its business, operations and/or
other assets in the South Pacific (the “South Pacific Assets”) in one or more
transactions on commercially reasonable terms.

(i) Termination of Brokerage Arrangements. At or prior to the execution and
delivery of this Agreement by the parties hereto, the Company and SGC shall
commit to terminate any brokerage agreements subjecting the Company to pay SGC
any brokerage or capital raising fees, including without limitation, that
certain engagement letter between SGC and the Company dated August 30, 2007;
provided, however, that such termination obligation shall not apply to (i) any
brokerage, advisory or other fees payable to SGC pursuant to Section 8 or
(ii) the existing agreement between the Company and SGC with respect to the sale
of the South Pacific Assets.

 

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(j) Notice of Appointment. The Company shall provide prompt written notice to
Purchaser of the effective appointment of Pizarro as Chief Executive Officer of
the Company.

(k) Voting Rights. For as long as the Purchaser Parties collectively hold
capital stock in the Company or any successor thereto representing at least
fifty percent (50%) or more of the combined voting power of the Company’s (or
any successor’s) outstanding capital stock, the Company shall not (and shall not
cause or permit any of its material subsidiaries to), by amendment, merger,
consolidation or otherwise, without first obtaining the approval of the holders
of at least a majority of the shares of capital stock in the Company held by the
Purchaser Parties: (i) create any new class or series of capital stock (or
securities convertible into or exercisable therefor) (1) having a preference
over the Common Stock as to the payment of dividends or the distribution of
assets upon the occurrence of a Liquidation Event (as defined in the Series B
Certificate of Designation) or (2) that are otherwise superior to the Common
Stock (“Senior Securities”); (ii) alter or change the rights, preferences or
privileges of any Senior Securities so as to adversely affect the Common Stock;
(iii) enter into a contract for the sale of a material portion of its assets or
equity effected by a merger, consolidation or similar transaction; (iv) amend
its certificate of incorporation or bylaws; (v) change the nature of its
business or invest any corporate funds in a business entity or venture that is
not directly related to its principal line of business; (vi) except as noted
below, issue equity securities or securities convertible into or exercisable
therefor (collectively, “Company Securities”) other than pursuant to stock
option or other equity plans then in effect; (vii) effect dividends or
distributions on or redemptions of Company Securities; (viii); establish,
materially expand or amend any stock option or other equity plan; (ix) expand
the number of directors on the Company’s Board or Directors; (x) make capital
expenditures in excess of a $15,000,000 in any 12-month period; (xi) enter into
any credit facility or issue debt in excess of $15,000,000; and (xii) enter into
or modify any affiliated or related party transaction. Notwithstanding the
foregoing, the approval of the Purchaser Parties shall not be required for all
issuances of Company Securities for which the Company has received bona fide
commitments on or before December 31, 2008, pursuant to Section 1(d) of this
Agreement, (A) to the extent such Company Securities are issued at or above
$3.97 per share (taking into account all Company Securities issued in connection
with such issuance) and (B) provided such Company Securities are not superior in
designations, rights or preferences to the Series B Preferred Stock.

(l) Required Consents. The Company shall use its best efforts to obtain the
consents described on Schedule 5(l) (the “Required Consents”).

6. CONDITIONS TO THE COMPANY’S OBLIGATIONS

The Purchaser understands that the Company’s obligation to issue the Series B
Preferred Stock and the Warrants to the Purchaser or its assignees pursuant to
this Agreement is conditioned upon satisfaction of the following, unless waived
in writing by the Company:

(a) Conditions Applicable to the Issuance of Series B Preferred Stock and
Warrants Pursuant to Sections 1(a) and 1(b).

 

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(i) The accuracy on the date of this Agreement of the representations and
warranties of the Purchaser contained in this Agreement in all material
respects;

(ii) The performance by the Purchaser on or before the date of this Agreement of
all covenants and agreements of the Purchaser set forth in Section 5 of this
Agreement required to be performed in all material respects on or before the
date of this Agreement; and

(iii) The receipt of good funds as of each Closing Date.

(b) Conditions Applicable to the Issuance of Series B Preferred Stock Pursuant
to Section 1(d).

(i) The performance by the Purchaser on or before such Closing Date of all
covenants and agreements of the Purchaser required to be performed in all
material respects on or before such Closing Date; and

(ii) The receipt of good funds as of each Closing Date.

7. CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE THE SHARES AND THE
WARRANTS

The Company understands that the Purchaser’s obligation to purchase the Series B
Preferred Stock and the Warrants pursuant to this Agreement is conditioned upon
satisfaction of the following, unless waived in writing by the Purchaser:

(a) Conditions Applicable to the Purchase of Series B Preferred Stock and
Warrants Pursuant to Sections 1(a) and 1(b).

(i) The accuracy on the date of this Agreement of the representations and
warranties of the Company contained in this Agreement in all material respects;

(ii) The performance by the Company on or before the date of this Agreement of
all covenants and agreements of the Purchaser set forth in Section 5 of this
Agreement required to be performed in all material respects on or before the
date of this Agreement;

(iii) The Company shall have executed and delivered to the Purchaser or its
assignees (i) the shares of Series B Preferred Stock with respect to each
Closing Date and (ii) all of the Warrants on the First Closing Date;

(iv) Pizarro shall then hold the position of Chief Executive Officer of the
Company; and

(v) The consent of ANZ Finance American Samoa, Inc. and Amerika Samoa Bank Inc.,
in form and substance reasonably satisfactory to the Purchaser, shall have been
obtained.

 

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(b) Conditions Applicable to the Purchase of Series B Preferred Stock Pursuant
to Section 1(d).

(i) The performance by the Company on or before such Closing Date of all
covenants and agreements of the Company required to be performed in all material
respects on or before such Closing Date;

(ii) The Company shall have executed and delivered to the Purchaser or its
assignees (i) the shares of Series B Preferred Stock with respect to each
Closing Date; and

(iii) Pizarro shall then hold the position of Chief Executive Officer of the
Company.

8. FEES AND EXPENSES

(a) The Company shall bear its own costs, including attorney’s fees, incurred in
the negotiation of this Agreement and consummating of the transactions
contemplated herein and the corporate proceedings of the Company in
contemplation hereof and thereof. At the First Closing, the Company shall
(i) reimburse the Purchaser for all of the Purchaser’s reasonable out-of-pocket
expenses incurred in connection with the negotiation or performance of this
Agreement, including without limitation reasonable fees and disbursements of
counsel to the Purchaser and (ii) pay SGC an advisory fee of $250,000.

(b) Upon the execution and delivery of this Agreement, Purchaser shall pay SGC
an advisory fee of $1,500,000.

9. SURVIVAL

The agreements, covenants, representations and warranties of the Company and the
Purchaser shall survive the execution and delivery of this Agreement and the
delivery of the Securities hereunder for a period of two years from the date of
the Final Closing Date, except that:

(a) the Company’s representations and warranties regarding Taxes contained in
Section 3(s) of this Agreement shall survive as long as the Company remains
statutorily liable for any obligation referenced in Section 3(s), and

(b) the Company’s representations and warranties contained in Section 3(c) shall
survive until the Purchaser and any of its affiliates are no longer holders of
any of the Securities purchased hereunder.

10. INDEMNIFICATION

(a) Subject to Section 10(b), each of the Company and the Purchaser (each in
such capacity under this Section, the “Indemnifying Party”) agrees to indemnify
the other party and each officer, director, employee, agent, partner,
stockholder, member and affiliate of such other party (collectively, the
“Indemnified Parties”) for, and hold each Indemnified Party harmless from and

 

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against: (i) any and all damages, losses, claims, diminution in value and other
liabilities of any and every kind, including, without limitation, judgments and
costs of settlement, and (ii) any and all reasonable out-of-pocket costs and
expenses of any and every kind, including, without limitation, reasonable fees
and disbursements of counsel for such Indemnified Parties (all of which expenses
periodically shall be reimbursed as incurred), in each case, arising out of or
suffered or incurred in connection with any of the following, whether or not
involving a third party claim: (A) any misrepresentation or any breach of any
warranty made by the Indemnifying Party herein or in any of the other Primary
Documents, (B) any breach or non-fulfillment of any covenant or agreement made
by the Indemnifying Party herein or in any of the other Primary Documents, or
(C) any claim relating to or arising out of a violation of applicable federal or
state securities laws by the Indemnifying Party in connection with the sale or
issuance of the Series B Preferred Stock or the Warrants by the Indemnifying
Party to the Indemnified Party (collectively, the “Indemnified Liabilities”). To
the extent that the foregoing undertaking by the Indemnifying Party may be
unenforceable for any reason, the Indemnifying Party shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

(b) Notwithstanding Section 10(a), no indemnification shall be payable in
respect of any Indemnified Liability (i) where the claiming Indemnified Party
prior to the First Closing Date had actual knowledge of or notice from
information set forth in the schedules hereto of facts that would clearly
evidence the existence or basis of such Indemnified Liability or (ii) where such
Indemnified Party entered into a settlement of an Indemnified Liability without
the prior written consent of the applicable Indemnifying Party and such
Indemnifying Party has not unreasonably withheld such written consent.

11. NOTICES

Any notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be effective upon personal delivery, via
facsimile (upon receipt of confirmation of error-free transmission and mailing a
copy of such confirmation, postage prepaid by certified mail, return receipt
requested) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.

 

Company:      eLandia International Inc.      1500 Cordova Road, Suite 312     
Ft. Lauderdale, Florida 33316      Attention: Chief Executive Officer     
Telephone:    954-728-9090      Facsimile:    954-728-9080

 

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with a copy to:      Carlton Fields P.A.      4000 International Place      100
SE 2nd Street      Miami, FL 33131      Attention: Seth P. Joseph     
Telephone:    305-530-0050      Facsimile:    305-530-0055 Purchaser:     
Stanford International Bank Ltd.      No. 11 Pavilion Drive      St. John’s,
Antigua      West Indies      Attention: James M. Davis, Chief Financial Officer
     Telephone:    901-680-5260      Facsimile:    901-680-5265 with a copy to:
     Stanford Financial Group      5050 Westheimer Road      Houston, Texas
77056      Attention: Mauricio Alvarado, Esq.      Telephone    713-964-5145  
   Facsimile:    713-964-5245

12. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of Florida, without regard to
the principles of conflicts of law thereof. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
Miami-Dade County, Florida for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Primary
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

 

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13. MISCELLANEOUS

(a) Entire Agreement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement, together with the other Primary Documents, including any
certificate, schedule, exhibit or other document delivered pursuant to their
terms, constitutes the entire agreement among the parties hereto with respect to
the subject matters hereof and thereof, and supersedes all prior agreements and
understandings, whether written or oral, among the parties with respect to such
subject matters.

(b) Amendments. This Agreement may not be amended except by an instrument in
writing signed by the party to be charged with enforcement.

(c) Waiver. No waiver of any provision of this Agreement shall be deemed a
waiver of any other provisions or shall a waiver of the performance of a
provision in one or more instances be deemed a waiver of future performance
thereof.

(d) Construction. This Agreement and each of the Primary Documents have been
entered into freely by each of the parties, following consultation with their
respective counsel, and shall be interpreted fairly in accordance with its
respective terms, without any construction in favor of or against either party.

(e) Binding Effect of Agreement. This Agreement, and any and all rights, duties
and obligations hereunder, shall not be assigned, transferred, delegated or
sublicensed by the Purchaser to any Person other than an Affiliate of Purchaser
or any of the Persons set forth on Schedule A without the prior written consent
of the Company. Any attempt by the Purchaser without such permission to assign,
transfer, delegate or sublicense any rights, duties or obligations that arise
under this Agreement shall be void. Subject to the foregoing and except as
otherwise provided herein. This Agreement shall inure to the benefit of, and be
binding upon the successors and assigns of each of the parties hereto, including
any assignees of the Purchaser as well as any transferees of the Series B
Preferred Stock and the Warrants.

(f) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or unenforceability of this Agreement in any other jurisdiction.

(g) Attorneys’ Fees. If any action should arise between the parties hereto to
enforce or interpret the provisions of this Agreement, the prevailing party in
such action shall be reimbursed for all reasonable expenses incurred in
connection with such action, including reasonable attorneys’ fees.

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

(i) Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered

 

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by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

(j) Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Purchaser and the
Company will be entitled to specific performance under the Primary Documents.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.

[Signatures Begin on Following Page]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
undersigned as of the date first written above.

 

ELANDIA INTERNATIONAL INC. By:  

/s/ David L. Levine

Name:   David L. Levine Title:   Chairman of the Board STANFORD INTERNATIONAL
BANK LTD. By:  

/s/ James M. Davis

  James M. Davis   Chief Financial Officer

 

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