AGREEMENT BETWEEN SEDONA CORPORATION AND VEY ASSOCIATES, INC.
Exhibit 99.1
AGREEMENT BETWEEN SEDONA CORPORATION AND VEY ASSOCIATES, INC.
This Agreement is made and entered into as of August 31, 2007 by and between: SEDONA
CORPORATION, a Pennsylvania corporation, with principal executive offices located at 0000 X.
0xx Xxxxxx, 0xx Xxxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx (hereafter, “Sedona”);
and VEY ASSOCIATES, INC., a Louisiana corporation, with principal offices located at 00000 Xxxxxxx
Xxxxxx, Xxxxx X-0, Xxxxx Xxxxx, Xxxxxxxxx 00000 (hereafter “Vey”).
THE PARTIES AGREE, AS FOLLOWS:
1. DEFINITIONS. The following definitions shall apply to terms used in this Agreement:
1.1. “Adverse Party” refers, individually or collectively, to Open Solutions, Inc., and
any other or later added party(ies) in the Litigation, whose interests are or may become
adverse to Sedona.
1.2. “Agreement” refers to this agreement and all documents described herein.
1.3. “Assigned Portion” refers to Seventy Five (75%) Percent of the Litigation Proceeds
which shall be payable to Vey after first subtracting all of the Sedona Litigation Expenses.
1.4. “Attorney” refers to Xxxxxx Xxxxxx; Xxxxxxx, Xxxxxxxx & Xxxxxxx and Xxxxxx Xxxxx
Xxxxxx & Xxxxxxx LLP or such other attorneys as may be consulted or engaged by Sedona in
connection with the Litigation.
1.5. “Court” refers to the United States District Court For The District Of Connecticut.
1.6. “Sedona Litigation Expenses” shall mean all costs, fees and expenses paid or to be
paid by Sedona in pursuit of the Litigation. For the purposes of calculating the Sedona
Litigation Expenses, salary of employees and other operating expenses of Sedona shall not be
included. Sedona Litigation Expenses shall also not include any payments made by Sedona or on
behalf of Sedona using any portion of the Financing.
1.7. “Financing” refers to the sum of (U.S.) Seven Hundred Fifty Thousand ($750,000.00)
Dollars to be provided by Vey to Sedona or to the Attorneys or other entities related to the
Litigation on behalf of Sedona pursuant to the terms set forth herein.
1.8. “Full Financing Date” refers to that date on which Vey has provided the total
Financing for Litigation expenses.
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1.9. “First Stage Financing” refers to the sum of up to Three Hundred Thousand
($300,000.00) Dollars which Vey shall provide to Sedona pursuant to the terms set forth herein.
1.10. “Lawsuit” refers to the case of Sedona Corp. v. Open Solutions, Inc., Action No.
3:07-CV-00171-VLB in the United States District Court For The District Of Connecticut.
1.11. “Litigation” refers to the (i) Lawsuit; (ii) all appellate proceedings, proceedings
on remand, re-trial proceedings, enforcement, ancillary, parallel or alternate dispute
resolution proceedings and processes arising out of or related to the Lawsuit; (iii) any other
proceedings founded on the underlying facts giving rise to the Lawsuit in which Sedona or
Sedona’s successor in interest is a party; and (iv) all arrangements made with Sedona by or
among any Adverse Party having the effect of resolving any of Sedona’s claims against any
Adverse Party.
1.12. “Litigation Proceeds” refers to all Proceeds which may be payable in the event of a
settlement, verdict or other conclusion of the Litigation.
1.13. “Proceeds” refers to cash, negotiable instruments, contract rights, annuities, and
any other rights to payment of cash and transfer of things of value or other property.
1.14. “Vey Litigation Expenses” refers to the amount of the financing and expenses
actually paid by Vey to Sedona or on Sedona’s behalf plus interest which shall accrue at a
rate of ten (10%) percent per year.
2. BACKGROUND. Sedona requires funds to finance the costs and fees associated with the
Litigation. The parties have entered into this Agreement for the purpose of providing Sedona the
opportunity to receive such funds prior to the outcome of the Litigation.
Sedona has requested and Vey has agreed to provide Sedona the Financing in exchange for
payment of the Assigned Portion and the Vey Litigation Expenses out of any Litigation Proceeds. In
the event that Sedona is unsuccessful in the Litigation and does not receive any Litigation
Proceeds, it will have no obligation to pay any sums to Vey pursuant to this Agreement.
3. PURPOSE OF THE FINANCING.
The Financing shall be used to pay the following fees and costs of the Lawsuit: (i) expert
witness fees, (ii) Attorney’s fees and expenses incurred after the execution of this Agreement, and
(iii) up to fifty (50%) percent of the Attorney’s fees and costs incurred but unpaid prior to the
execution of this Agreement which shall not exceed $75,000.00 (the “Arrears”).
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4. FINANCING. Vey agrees to provide the First Stage Financing (either by payment to Sedona
or directly to the Attorney as Vey shall determine in its discretion) according to the following
schedule:
a). Vey shall make available up to $75,000 to pay the Arrears upon the execution of this
Agreement. Additional funds from the First Stage Financing shall be made available as Litigation
expenses are incurred.
b). Financing in excess of the First Stage Financing shall be made available to pay expenses
as they are incurred upon the conclusion of the depositions and reports of Sedona’s expert
witnesses, and only in the event that Vey in its sole discretion believe that such depositions and
reports sufficiently demonstrate that the Adverse Parties breached the terms of the Master Software
License Agreement.
5. MANAGEMENT OF THE LITIGATION. Sedona and Vey shall jointly prepare an Operating Budget
for the Litigation, after consulting with the Attorney, which Operating Budget will detail the
monthly expenses of the Litigation within 14 days of the effective date of this Agreement. Vey and
Sedona will jointly manage the Operating Budget and make all other financial decisions that they
deem to be in the best interests of Sedona. Notwithstanding the foregoing, Sedona shall retain the
right to make all other strategic and legal decisions with respect to the Litigation, provided
however, that no action or decision shall be made without the prior consent of a special committee
of the Board of Directors of Sedona, the members of which shall be reasonably acceptable to Vey.
6. NATURE OF TRANSACTION. This transaction is deemed to be a contingent advance and not a
loan. It is not intended as collateral for any loan.
7. ASSIGNMENT.
7.1. Under and subject to the terms and conditions of this Agreement and in exchange for
the Financing, Sedona hereby agrees to and, upon remittance of the Financing by Vey, shall,
sell, transfer, assign and deliver to Vey, Sedona’s legal and equitable rights, title and
interest in and to the Assigned Portion of the Litigation Proceeds. Vey agrees to accept all
of said rights and interests from Sedona and to provide the Financing under and subject to the
terms and conditions of this Agreement. Upon Vey’s tender of the Financing to Sedona, Vey’s
rights, as provided for in this Agreement, shall be fully vested and Sedona’s assignment shall
be absolute and irrevocable by Sedona.
7.2. In making this Agreement and accepting the Assigned Portion of Sedona’s Litigation
Proceeds, Vey is not otherwise acquiring or assuming any responsibility, obligation or
liability of Sedona or arising out of any rights or interests of Sedona being purchased
including, but not limited to, any obligation or expense with regard to the Litigation, or any
retrial of the subject matter of the Litigation or issues related thereto (including court
costs or sanctions).
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8. RIGHTS IN PROCEEDS.
8.1. Any Litigation Proceeds (except in the event of a failure to provide the Financing as
described in Section 8.2), if any, shall be distributed within thirty (30) days of receipt by
Sedona in the following manner:
a). First, to pay (i) the Sedona Litigation Expenses to Sedona, and (ii) the Vey Litigation
Expenses to Vey, on a pari passu basis.
b). Then to pay the Assigned Portion to Vey and the balance of the Litigation Proceeds to
Sedona.
8.2. In the event that Vey does not provide the Financing for any reason whatsoever other
than a settlement or other termination of the Litigation without any necessity of the
Financing, Sedona shall only be obligated to pay Vey out of any Litigation Proceeds as follows:
a). First to pay the Sedona Litigation Expenses to Sedona and the Vey Litigation Expenses to
Vey on a pari passu basis; and
b). The balance of the recovery shall be shared by Vey and Sedona according to their
percentage interests calculated as follows:
(i) the Vey percentage interest shall be the fraction, expressed as a
percentage, determined by dividing the Vey Litigation Expenses by the sum of the
Vey Litigation Expenses and the Sedona Litigation Expenses.
(ii) the Sedona percentage interest shall be the fraction, expressed as a percentage,
determined by dividing the Sedona Litigation Expenses by the sum of the Vey Litigation Expenses
and the Sedona Litigation Expenses.
8.3. In the event Litigation Proceeds are received in any form other than a lump sum cash
payment, Sedona and Vey shall share such proceeds as provided for in this section on a pari
passu basis, in like kind distributions, as and when such distributions are made to Sedona.
9. SEDONA REPRESENTATIONS. Sedona hereby represents and warrants to Vey as follows:
9.1. Sedona has not assigned, transferred or given, as collateral to any party other than
Vey, any right or interest of Sedona in the Litigation or the Litigation Proceeds. Sedona
shall not: make any assignment or transfer or give, as collateral, any right or beneficial
interest of Sedona in the Litigation, the Litigation Proceeds or rights therein, or take any
other action that could have the effect of impairing or delaying Vey’s receipt of the Amount
Assigned. It is intended and understood that any assignment or transfer of right or beneficial
interest in the Litigation and the Litigation Proceeds thereof or rights therein shall be
subordinate to and shall not
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adversely affect any right or interest of Vey in the Litigation and the Litigation Proceeds thereof or rights therein.
9.2. There are no persons who have liens against amounts to which Sedona may be entitled
on account of the Litigation. Sedona agrees to refrain from causing or permitting any other
liens to be placed against the Litigation Proceeds, without the prior written consent of Vey,
which consent may not be withheld unless a proposed lien materially impairs the rights, value,
priority or collectability of the rights assigned to Vey hereunder.
9.3. Sedona is not aware of any asserted or unasserted claims, liens or judgments against
Sedona which would materially impair the rights, value, priority or collectability of the
rights assigned to Vey hereunder.
9.4. Sedona has the power, authority, right and competence to enter into this Agreement,
and does so willingly and freely. All approvals, actions and consents required to authorize
Sedona to enter into this Agreement have been obtained and taken and, upon execution by Sedona,
this Agreement and all documents contemplated to be signed by Sedona herein shall be valid and
binding obligations and undertakings of Sedona. Entering into this Agreement and carrying out
the actions provided for in this Agreement will not cause Sedona to be in breach or violation
of any other agreement or legal obligation to which Sedona is a party or subject.
10. VEY REPRESENTATIONS. Vey hereby represents and warrants to Sedona as follows:
10.1. Vey has reviewed copies of all court documents related to the Lawsuit including but
not limited to all pleadings, briefs, notices, orders, verdicts and judgments presented to any
party to the Litigation or filed with any Court.
10.2. Vey has the power, authority, right and competence to enter into this Agreement, and
does so willingly and freely. All approvals, actions and consents required to authorize Vey to
enter into this Agreement have been obtained and taken and, upon execution by Vey, this
Agreement and all documents contemplated to be signed by Vey herein shall be valid and binding
obligations and undertakings of Vey. Entering into this Agreement and carrying out the actions
provided for in this Agreement will not cause Vey to be in breach or violation of any other
agreement or legal obligation to which Vey is a party or subject.
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11. LITIGATION DOCUMENTATION. Unless otherwise requested in writing by Vey, Sedona shall,
and Sedona hereby provides attorney with this agreement and instructs Attorney, as Sedona’s agent,
to promptly provide and continue to provide Vey with:
11.1. All future Court documents, including but not limited to any Pleadings, Notices,
Orders or Briefs presented to any party to the Litigation or filed with any court.
11.2. All future discussions, correspondence, written proposals or agreements, and notice
of any oral proposals or agreements between Sedona and any Adverse Party relating to the
Litigation, settlement or alternative dispute resolution procedures.
11.3. Notices of and documents relating to payment or receipt of any money, consideration
or other Litigation Proceeds by Sedona or Attorney, settlement and all accountings of the
application of said money or other things of value received.
11.4. Information requested by Vey relating to the status of the Litigation, settlement
and alternative dispute resolution proceedings.
12. INDEMNIFICATION.
12.1. Sedona agrees to indemnify, defend and hold Vey harmless from and against any and
all losses, costs, damages, claims and expenses (including reasonable attorneys’ fees) which
Vey may sustain at anytime by reason of: (a) any debt, liability or obligation incurred by
Sedona, (b) any liability or obligation of any kind for prosecution or defense of such debt,
liability or obligation incurred by Sedona, and (c) the breach of, inaccuracy of, or failure to
comply with, or the existence of any facts resulting in the inaccuracy of, any of the
warranties, representations, or covenants of Sedona contained in this Agreement or in any
documents delivered pursuant hereto or in connection with the subject matter of this Agreement.
12.2. If Vey receives notice of a claim for which it will seek indemnification hereunder
shall promptly notify Sedona of such claim in writing. Sedona shall have the right to assume
the defense of such action at its cost with counsel reasonably satisfactory to Vey. Vey shall
have the right to participate in such defense with its own counsel at its cost, however such
costs will be considered as cost of the lawsuit
13. ATTORNEY — CLIENT RELATIONSHIP. Nothing in this agreement is intended to require
action that may impair the attorney-client privilege, or other evidentiary privilege as may exist
in favor of Sedona in connection with the Litigation. This agreement shall not be interpreted or
enforced in a manner that would have the effect of loss of any such privilege. Further, nothing in
this agreement is intended to prevent or impair Sedona’s and Attorney’s ability to vigorously
conduct the Litigation in such
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manner as they deem in good faith and in their sole discretion will
benefit Sedona, without interference from Vey.
14. COOPERATION. Sedona will, and will so instruct Attorney to, keep Vey fully advised
about and will cooperate and consult with Vey in connection with any and all matters relating to
the Litigation, including, but not limited to, matters with regard to Sedona’s and Attorney’s legal
positions, briefs and oral arguments, settlement negotiations, alternate dispute resolution
proceedings, and engagement of counsel.
15. MISCELLANEOUS.
15.1. Entire Agreement. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of every kind and nature between them. No party
hereto shall be bound by any term, condition, warranty or representation other than as
expressly provided for in this Agreement, or as may be on a date on or after to the date hereof
duly set forth in writing signed by the party hereto which is to be bound thereby. This
Agreement shall not be changed, modified or amended except by a writing dated and signed by the
party to be charged.
15.2. Governing Law. This Agreement and its validity, construction and performance shall
be governed in all respects by the laws of the State of Connecticut, without giving effect to
principles of conflicts of laws.
15.3. Severability. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, the remainder of this Agreement
and the application of such provision to other persons or circumstances shall not be affected
unless the provision held invalid shall substantially impair the benefits of the remaining
portions of this Agreement.
15.4. Benefits of Parties. This Agreement shall be binding upon, and inure to the benefit
of the parties hereto, individually and to each and all their agents, attorneys, beneficiaries,
representatives and its respective successors, spouses, heirs, legal representatives and
assigns. Any assignments by any party shall relieve the assigning party from any obligation,
duty, representation, warranty or agreement absent an express written release given by the
non-assigning party.
15.5. Headings Singular/Plural. The headings in the section of this Agreement are
inserted for convenience or reference only and shall not constitute a part hereof. Where
context so permits, the singular form of a word shall include the plural and the plural form
shall include the singular.
15.6. Notices. All notices, requests, demands and other communications provided for by
this Agreement shall be in writing to the addresses set forth herein and, unless otherwise
specifically provided for herein, shall be deemed to have been given upon transmission by
telecopy, with receipt confirmed, upon hand delivery or delivery by air freight or courier
service, or three (3) days after the time when deposited with the United States Postal Service,
enclosed in a registered, certified or
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other postage-paid envelope, addressed to the address of the parties stated below or to such changed address as such party may have fixed by notice: provided, however, that any such change of address shall be effective only upon receipt.
15.7. Attorney’s Fees. In the event that any action or proceeding is brought to enforce
or interpret any provision, covenant or condition contained in the Agreement on the part of Vey
or Sedona, the prevailing party in such action or proceeding shall be entitled to recover from
the party not prevailing its expenses therein, including reasonable attorneys’ fees and
allowable costs.
15.8. Disputes Between The Parties. At the request of any party, any dispute between the
parties arising out of the transaction provided for in this Agreement shall be submitted to
final and binding arbitration in Philadelphia, Pennsylvania, by a three (3) member panel, under
the Commercial Arbitration Rules of the American Arbitration Association then in effect. The
Association shall be requested to provide a panel of prospective arbitrators consisting of
persons experienced in business law matters. Prior to appointment of the arbitrator, either
party may commence judicial proceedings, in either the state or federal court having
jurisdiction over the party against whom relief is sought, to obtain preliminary relief,
including injunctive relief, for the purposes of: (i) enforcement of this arbitration
provision; (ii) obtaining appointment of arbitrator(s); (iii) preserving the status quo; (iv)
preventing the disbursement by any person of disputed funds; and (v) preserving and protecting
the rights of either party pending the outcome of the arbitration. Any party may have judgment
entered on the arbitration award. Section 15.7, above, shall apply to any arbitration or court
proceeding between the parties.
15.9. Further Assurances. Each party agrees to execute and file or caused to be filed
such other or further documents as may be requested by the other party to give effect to the
purposes of the Agreement.
Dated: September 4, 2007
| SEDONA CORPORATION |
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| By: | /s/ Xxxxx Xxxxxx | |||
| Xxxxx Xxxxxx, President | ||||
| VEY ASSOCIATES, INC. |
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| By: | /s/ Xxxxx Xxx | |||
| Xxxxx Xxx, President | ||||
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