EXHIBIT 5
SECURITY AGREEMENT
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DEBTOR: SEDONA CORPORATION
0000 XXXX XXXXX XXXXXX
0XX XXXXX
XXXX XX XXXXXXX, XXXXXXXXXXXX 00000
SECURED PARTY: OAK HARBOR INVESTMENT PROPERTIES, L.L.C.
00000 XXXXXXX XXXXXX, XXXXX X-0
XXXXX XXXXX, XXXXXXXXX 00000
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SECURITY AGREEMENT
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SECURITY AGREEMENT, dated March 13, 2003, but effective as of
January 13, 2003, between Sedona Corporation, a Pennsylvania corporation (the
"Debtor"), and Oak Harbor Investment Properties, L.L.C., (hereinafter referred
to as the "Secured Party").
WHEREAS, the Debtor has entered into a certain Promissory Note
dated January 13, 2003, in the original principal amount of Six Hundred Thousand
and NO/100 Dollars ($600,000.00) (together with all amendments, modifications,
substitutions, replacements, restatements or refinancings, therefor, thereof or
thereto, hereinafter referred to as the "Tranche I Note"); and
WHEREAS, pursuant to a term sheet entered into January 10 2003
between the Debtor and Xxxxx X. Xxx, a principal of the Secured Party, Debtor
shall enter into a second promissory note on or before March 15, 2003, in the
original principal amount of Four Hundred Thousand and NO/100 Dollars
($400,000.00) (together with all amendments, modifications, substitutions,
replacements, restatements or refinancings, therefor, thereof or thereto,
hereinafter referred to as the "Tranche II Note", and, with the Tranche I Note,
collectively, the "Notes"); and
WHEREAS, it is a condition precedent to the Secured Party's
making any loans or otherwise extending credit to the Debtor under the Notes
that the Debtor execute and deliver to the Secured Party a Security Agreement in
substantially the form hereof; and
WHEREAS, the Debtor wishes to grant security interests in
favor of the Secured Party as herein provided;
NOW, THEREFORE, in consideration of the promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto intending to be
legally bound agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used herein without definitions shall
have the respective meanings provided therefor in the Notes. The term "State",
as used herein, means the State of Louisiana. All references herein to the
Uniform Commercial Code shall mean the Uniform Commercial Code in the State. All
terms defined in the Uniform Commercial Code and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code differently than in another Article of
the Uniform Commercial Code, the term has the meaning specified in Article 9.
The term "Obligations", as used herein, means all of the indebtedness,
obligations and liabilities of the Debtor to the Secured Party, individually or
collectively, whether direct or indirect, joint or several, absolute or
contingent, due or to become due, now existing or hereafter arising under or in
respect of the Notes, any promissory notes or other instruments or agreements
executed and delivered pursuant thereto or in connection therewith or this
Agreement, and the term "Event of Default", as used herein, means the failure of
the Debtor to pay or perform any of the Obligations as and when due to be paid
or performed and any default or event of default under the terms of the Notes.
ARTICLE II
GRANT OF SECURITY INTEREST
The Debtor hereby grants to the Secured Party, to secure the
payment and performance in full of all of the Obligations, a security interest
in and so pledges and assigns to the Secured Party the following properties,
assets and rights of the Debtor, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"): all contracts, assets, software
and intellectual property, including but not limited to all personal and fixture
property of every kind and nature including, (including inventory, equipment,
instruments (including promissory notes), documents, accounts, chattel paper
(whether tangible or electronic), deposit accounts, l, commercial tort claims,
securities and all other investment property, supporting obligations, any other
contract rights or rights to the payment of money, insurance claims and
proceeds, tort claims, and all general intangibles (including all payment
intangibles). The Secured Party acknowledges that the attachment of its security
interest in any commercial tort claim as original collateral is subject to the
Debtor's compliance with Article IV.7.
ARTICLE III
AUTHORIZATION TO FILE FINANCING STATEMENTS
The Debtor hereby irrevocably authorizes the Secured Party at
any time and from time to time to file in any Uniform Commercial Code
jurisdiction (in addition to the state if appropriate) any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of the Debtor securing the Obligations or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Uniform Commercial Code or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the Uniform Commercial Code for the sufficiency or filing office acceptance of
any financing statement or amendment, including whether the Debtor is an
organization, the type of organization and any organization identification
number issued to the Debtor. The Debtor agrees to furnish any such information
to the Secured Party promptly upon request. The Debtor also ratifies its
authorization for the Secured Party to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
ARTICLE IV
OTHER ACTIONS
Further to insure (i) the attachment, perfection and first
priority of the Secured Party's security interest in the Collateral, subject to
the security interests, liens or encumbrances set forth on Appendix A, and (ii)
the ability of the Secured Party to enforce its security interest in the
Collateral, the Debtor agrees, in each case at the Debtor's own expense, to take
the following actions with respect to the following Collateral:
IV.1 Promissory Notes and Tangible Chattel Paper. If the Debtor shall
at any time hold or acquire any promissory notes or tangible chattel paper, the
Debtor shall forthwith endorse, assign and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time specify.
IV.2 Deposit Accounts. For each deposit account that the Debtor at any
time opens or maintains, the Debtor shall, at the Secured Party's request and
option, pursuant to an agreement in form and substance satisfactory to the
Secured Party and the Debtor, either (a) cause the depositary bank to agree to
comply at any time with instructions from the Secured Party to such depositary
bank directing the disposition of funds from time to time credited to such
deposit account, without further consent of the Debtor, or (b) arrange for the
Secured Party to become the customer of the depositary bank with respect to the
deposit account, with the Debtor being permitted, only with the consent of the
Secured Party, to exercise rights to withdraw funds from such deposit account.
The Secured Party agrees with the Debtor that the Secured Party shall not give
any such instructions or withhold any withdrawal rights from the Debtor, unless
an Event of Default has occurred and is continuing for a period of sixty (60)
calendar days, or, after giving effect to any withdrawal not otherwise permitted
by the Notes, would occur. The provisions of this paragraph shall not apply to
(i) any deposit account for which the Debtor, the depositary bank and the
Secured Party have entered into a cash collateral agreement specially negotiated
among the Debtor, the depositary bank and the Secured Party for the specific
purpose set forth therein, (ii) deposit accounts for which the Secured Party is
the depositary and (iii) deposit accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of the Debtor's salaried employees.
IV.3 Investment Property. If the Debtor shall at any time hold or
acquire any certificated securities, the Debtor shall forthwith endorse, assign
and deliver the same to the Secured Party, accompanied by such instruments of
transfer or assignment duly executed in blank as the Secured Party may from time
to time specify. If any securities now or hereafter acquired by the Debtor are
uncertificated and are issued to the Debtor or its nominee directly by the
issuer thereof, the Debtor shall promptly notify the Secured Party thereof and,
at the Secured Party's request and option, pursuant to an agreement in form and
substance satisfactory to the Secured Party, either (a) cause the issuer to
agree to comply with instructions from the Secured Party as to such securities,
without further consent of the Debtor or such nominee, or (b) arrange for the
Secured Party to become the registered owner of the securities. If any
securities, whether certificated or uncertificated, or other investment property
now or hereafter acquired by the Debtor are held by the Debtor or its nominee
through a securities intermediary or commodity intermediary, the Debtor shall
promptly notify the Secured Party thereof and, at the Secured Party's request
and option, pursuant to an agreement in form and substance satisfactory to the
Secured Party, either (i) cause such securities intermediary or (as the case may
be) commodity intermediary to agree to comply with entitlement orders or other
instructions from the Secured Party to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by the
Secured Party to such commodity intermediary, in each case without further
consent of the Debtor or such nominee, or (ii) in the case of financial assets
or other investment property held through a securities intermediary, arrange for
the Secured Party to become the entitlement holder with respect to such
investment property, with the Debtor being permitted, only with the consent of
the Secured Party, to exercise rights to withdraw or otherwise deal with such
investment property. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the Secured Party is
the securities intermediary.
IV.4 Collateral in the Possession of a Bailee. If any Collateral is at
any time in the possession of a bailee, the Debtor shall promptly notify the
Secured Party thereof and, if requested by the Secured Party, shall promptly
seek an acknowledgment from the bailee, in form and substance satisfactory to
the Secured Party, that the bailee holds such Collateral for the benefit of the
Secured Party if an Event of Default has occurred and is continuing for a period
of sixty (60) calendar days shall act upon the instructions of the Secured
Party, without the further consent of the Debtor.
IV.5 Electronic Chattel Paper and Transferable Records. If the Debtor
at any time holds or acquires an interest in any electronic chattel paper or any
"transferable record," as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, (ESIGN") or in
Section 16 of the Uniform Electronic Transactions Act ("UETA") as in effect in
any relevant jurisdiction, the Debtor shall promptly notify the Secured Party
thereof and, at the request of the Secured Party, shall take such action as the
Secured Party may reasonably request to vest in the Secured Party control, under
Section 9-105 of the Uniform Commercial Code, of such electronic chattel paper
or control under Section 201 of ESIGN or, as the case may be, Section 16 of
UETA, as so in effect in such jurisdiction, of such transferable record.
IV.6 Letter-of-credit Rights. If the Debtor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of the
Debtor, the Debtor shall promptly notify the Secured Party thereof and, at the
request and option of the Secured Party, the Debtor shall, pursuant to an
agreement in form and substance satisfactory to the Secured Party, either (i)
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Secured Party of the proceeds of any drawing under the
letter of credit or (ii) arrange for the Secured Party to become the transferee
beneficiary of the letter of credit, with the Secured Party agreeing, in each
case, that the proceeds of any drawing under the letter to credit are to be
applied as set forth in the Notes.
IV.7 Commercial Tort Claims. If the Debtor shall at any time hold or
acquire a commercial or other tort claim, the Debtor shall immediately notify
the Secured Party in a writing signed by the Debtor of the brief details thereof
and grant to the Secured Party in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such writing
to be in form and substance satisfactory to the Secured Party.
IV.8 Other Actions as to any and all Collateral. The Debtor further
agrees to take any other action reasonably requested by the Secured Party to
insure the attachment, perfection and priority of, and the ability of the
Secured Party to enforce, the Secured Party's security interest in any and all
of the Collateral including, without limitation, (a) executing, delivering and,
where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that the Debtor's
signature thereon is required therefor, (b) causing the Secured Party's name to
be noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability of
the Secured Party to enforce, the Secured Party's security interest in such
Collateral, (c) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
the Secured Party to enforce, the Secured Party's security interest in such
Collateral, (d) obtaining governmental and other third party consents and
approvals, including, without limitation, any consent of any licensor, lessor or
other person obligated on the Collateral, (e) obtaining waivers from mortgagees
and landlords in form and substance satisfactory to the Secured Party and (f)
taking all actions required by any earlier versions of the Uniform Commercial
Code or by other law, as applicable in any relevant Uniform Commercial Code
jurisdiction, or by other law as applicable in any foreign jurisdiction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING DEBTOR'S LEGAL STATUS
The Debtor represents and warrants to the Secured Party as
follows: (a) the Debtor's exact legal name is that indicated on the signature
page hereof, (b) the Debtor is a Corporation organized under the laws of the
Commonwealth of Pennsylvania, (c) the Debtor's organizational identification
number is 00-0000000 and, (d) the address listed on the cover page hereof is
Debtor's chief executive office.
ARTICLE VI
COVENANTS CONCERNING DEBTOR'S LEGAL STATUS
The Debtor covenants with the Secured Party as follows: (a)
without providing at least thirty (30) days prior written notice to the Secured
Party, the Debtor will not change its name, its place of business or, if more
than one, its chief executive office, or its mailing address or organizational
identification number if it has one, (b) if the Debtor does not have an
organizational identification number and later obtains one, the Debtor shall
forthwith notify the Secured Party of such organizational identification number,
and (c) the Debtor will not change its type of organization, jurisdiction of
organization or other legal structure without prior consent of the Secured
Party.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL, ETC.
The Debtor further represents and warrants to the Secured
Party as follows: (a) the Debtor is the owner of or has other rights in or power
to transfer the Collateral, free from any adverse lien, security interest or
other encumbrance, except for the security interests, liens or encumbrances set
forth on Appendices A and B, the security interest created by this Agreement,
other liens permitted by the Notes, and other liens or encumbrances incurred by
the Debtor in the ordinary course of business in an aggregate amount less than
$175,000 (all the foregoing collectively as "Permitted Liens"), except as the
Secured Party may otherwise permit, (b) none of the Collateral constitutes, or
is the proceeds of, "farm products" as defined in Section 9-102(a)(34) of the
Uniform Commercial Code, (c) none of the account debtors or other persons
obligated on any of the Collateral is a governmental authority subject to the
Federal Assignment of Claims Act or like federal, state or local statute or rule
in respect of such Collateral, and (d) the Debtor has at all times materially
operated its business in compliance with all applicable provisions of the
federal Fair Labor Standards Act, as amended, and with all applicable provisions
of federal, state and local statutes and ordinances dealing with the control,
shipment, storage or disposal of hazardous materials or substances.
ARTICLE VIII
COVENANTS CONCERNING COLLATERAL, ETC.
The Debtor further covenants with the Secured Party as
follows: (a) the Collateral, to the extent not delivered to the Secured Party
pursuant to Article IV, will be kept at those locations listed on the address
listed on the cover page hereof and the Debtor will not remove the Collateral
from such locations, without providing at least thirty (30) days prior written
notice to the Secured Party, (b) except for Permitted Liens, the Debtor shall be
the owner of or have other rights in the Collateral free from any lien, security
interest or other encumbrance, and the Debtor shall defend the same against all
claims and demands of all persons at any time claiming the same or any interests
therein adverse to the Secured Party, (c) the Debtor shall not pledge, mortgage
or create, or suffer to exist a security interest in the Collateral in favor of
any person other than the Secured Party except for Permitted Liens and the
contemplated subordinated security interest set forth on Appendix B, (d) the
Debtor will keep the Collateral in good order and repair reasonable wear and
tear excepted and will not use the same in violation of law or any policy of
insurance thereon, (e) the Debtor will permit the Secured Party, or its
designee, to inspect the Collateral at any reasonable time, wherever located,
during regular business hours of the Debtor, and upon reasonable prior written
notice to the Debtor. (f) the Debtor will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement, (g) the Debtor will continue to operate its
business in material compliance with all applicable provisions of the federal
Fair Labor Standards Act, as amended, and with all applicable provisions of
federal, state and local statutes and ordinances dealing with the control,
shipment, storage or disposal of hazardous materials or substances, and (h) the
Debtor will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein except for (i) sales and
leases of inventory and licenses of general intangibles in the ordinary course
of business and (ii) so long as no Event of Default has occurred and is
continuing for a period of sixty (60) calendar days, sales or other dispositions
of obsolescent Collateral in the ordinary course of business consistent with
past practices dispositions permitted by the Notes.
ARTICLE IX
INSURANCE
The following provisions regarding insurance are made part of
this Agreement.
IX.1 Maintenance of Insurance. The Debtor will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar activities in
similar geographic areas. Such insurance shall be in such minimum amounts that
the Debtor will not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Secured Party. In addition, all such insurance shall be
payable to the Secured Party as loss payee under a "standard" or "New York" loss
payee clause. Without limiting the foregoing, the Debtor will (i) keep all of
the Collateral constituting physical property insured with casualty or physical
hazard insurance on an "all risks" basis, with broad form flood and earthquake
coverages and electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the full
replacement cost of such property, (ii) maintain all such workers' compensation
or similar insurance as may be required by law and (iii) maintain, in amounts
and with deductibles equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims of bodily injury, death or property damage occurring,
on, in or about the properties of the Debtor; business interruption insurance;
and product liability insurance.
IX.2 Insurance Proceeds. The proceeds of any casualty insurance in
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property covered
thereby, (i) so long as no Default or Event of Default has occurred and is
continuing for a period of sixty (60) days, be disbursed to the Debtor for
direct application by the Debtor solely to the repair or replacement of the
Debtor's property so damaged or destroyed and (ii) in all other circumstances,
be held by the Secured Party as cash collateral for the Obligations. The Secured
Party may, at its sole option, disburse from time to time all or any part of
such proceeds so held as cash collateral, upon such terms and conditions as the
Secured Party may reasonably prescribe, for direct application by the Debtor
solely to the repair or replacement of the Debtor's property so damaged or
destroyed, or the Secured Party may apply all or any part of such proceeds to
the Obligations.
IX.3 Notice of Cancellation, etc. All policies of insurance shall
provide for at least thirty (30) days prior written cancellation notice to the
Secured Party. In the event of failure by the Debtor to provide and maintain
insurance as herein provided, the Secured Party may, at its option, provide such
insurance and charge the amount thereof to the Debtor. The Debtor shall furnish
the Secured Party with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
ARTICLE X
COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL
The following provisions regarding the Collateral are made
part of this Agreement.
X.1 Expenses Incurred by Secured Party. In its discretion, the Secured
Party may discharge taxes and other encumbrances at any time levied or placed on
any of the Collateral, make repairs thereto and pay any necessary filing fees
or, if the Debtor fails to do so, insurance premiums. The Debtor agrees to
reimburse the Secured Party on demand for any and all expenditures so made. The
Secured Party shall have no obligation to the Debtor to make any such
expenditures, nor shall the making thereof relieve the Debtor of any default or
Event of Default.
X.2 Secured Party's Obligations and Duties. Anything herein to the
contrary notwithstanding, the Debtor shall remain liable under each contract or
agreement included in the Collateral to be observed or performed by the Debtor
thereunder. The Secured Party shall not have any obligation or liability under
any such contract or agreement by reason of or arising out of this Agreement or
the receipt by the Secured Party of any payment relating to any of the
Collateral, nor shall the Secured Party be obligated in any manner to perform
any of the obligations of the Debtor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party's sole duty with respect to the custody,
safe-keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to
deal with such Collateral in the same manner as the Secured Party deals with
similar property for its own account.
ARTICLE XI
SECURITIES AND DEPOSITS
The Secured Party may if an Event of Default exists and is
continuing for a period of sixty (60) calendar days, at its option, transfer to
itself or any nominee any securities constituting Collateral, receive any income
thereon and hold such income as additional Collateral or apply it to the
Obligations. Whether or not any Obligations are due, the Secured Party may
demand, xxx for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Secured Party to the Debtor may at any
time be applied to or set off against any of the Obligations.
ARTICLE XII
NOTIFICATION TO ACCOUNT DEBTORS AND
OTHER PERSONS OBLIGATED ON COLLATERAL
The Debtor shall, at the request of the Secured Party, and
only if an Event of Default has occurred, notify account debtors and other
persons obligated on any of the Collateral of the security interest of the
Secured Party in any account, chattel paper, general intangible, instrument or
other Collateral and that payment thereof is to be made directly to the Secured
Party or to any financial institution designated by the Secured Party as the
Secured Party's agent therefor, and the Secured Party may itself, without notice
to or demand upon the Debtor, so notify account debtors and other persons
obligated on Collateral. After the making of such a request or the giving of any
such notification, the Debtor shall hold any proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by
the Debtor as trustee for the Secured Party without commingling the same with
other funds of the Debtor and shall turn the same over to the Secured Party in
the identical form received, together with any necessary endorsements or
assignments. The Secured Party shall apply the proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by the Secured Party to the Obligations, such proceeds to be
immediately entered after final payment in cash or other immediately available
funds of the items giving rise to them.
ARTICLE XIII
POWER OF ATTORNEY
The following provisions regarding power of attorney are made
part of this Agreement.
XIII.1 Appointment and Powers of Secured Party. The Debtor hereby
irrevocably constitutes and appoints the Secured Party and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of the Debtor or in the Secured Party's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right, on
behalf of the Debtor, without notice to or assent by the Debtor, to do the
following:
XIII.1.1.1 Upon the occurrence and during the continuance of
an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
in such manner as is consistent with the Uniform Commercial Code and as
fully and completely as though the Secured Party were the absolute
owner thereof for all purposes, and to do at the Debtor's expense, at
any time, or from time to time, all acts and things which the Secured
Party deems necessary to protect, preserve or realize upon the
Collateral and the Secured Party's security interest therein, in order
to effect the intent of this Agreement, all as fully and effectively as
the Debtor might do, including, without limitation, (i) the filing and
prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and processes, (ii)
upon written notice to the Debtor, the exercise of voting rights with
respect to voting securities, which rights may be exercised, if the
Secured Party so elects, with a view to causing the liquidation in a
commercially reasonable manner of assets of the issuer of any such
securities and (iii) the execution, delivery and recording, in
connection with any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance or
transfer with respect to such Collateral; and
XIII.1.1.2 To the extent that the Debtor's authorization given
in Article III is not sufficient, to file such financing statements
with respect hereto, with or without the Debtor's signature, or a
photocopy of this Agreement in substitution for a financing statement,
as the Secured Party may deem appropriate and to execute in the
Debtor's name such financing statements and amendments thereto and
continuation statements which may require the Debtor's signature.
XIII.2 Ratification by Debtor. To the extent permitted by law, the
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
XIII.3 No Duty on Secured Party. The powers conferred on the Secured
Party hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The Secured Party shall
be accountable only for the amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Debtor for any act or failure to
act, except for the gross negligence or willful misconduct of the Secured Party
or any of its officers, directors, or employees
ARTICLE XIV
REMEDIES
If an Event of Default occurs under this Agreement and remains
uncured for a period of sixty (60) calendar days, at any time thereafter, the
Secured Party shall have all of the rights of a secured party under applicable
law, and more specifically under the Uniform Commercial Code and shall have all
of the rights and remedies set forth in the Notes. In addition and without
limitation, the Secured Party may exercise any one or more of the following
rights and remedies:
XIV.1 General Remedies. The Secured Party may, without notice to or
demand upon the Debtor, declare this Agreement to be in default, and the Secured
Party shall thereafter have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of
a secured party under the Uniform Commercial Code or of any jurisdiction in
which Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Party may, so far
as the Debtor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Secured Party may
in its discretion require the Debtor to assemble all or any part of the
Collateral at such location or locations within the jurisdiction(s) of the
Debtor's principal office(s) or at such other locations as the Secured Party may
reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give to the Debtor at least five (5) business
days prior written notice of the time and place of any public sale of Collateral
or of the time after which any private sale or any other intended disposition is
to be made. The Debtor hereby acknowledges that five (5) business days prior
written notice of such sale or sales shall be reasonable notice. In addition,
the Debtor waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Secured Party's rights hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights with respect
thereto.
XIV.2 Seizure and Sale of Collateral in Louisiana. In the event that
the Secured Party elects to commence appropriate Louisiana foreclosure
proceedings under this Agreement, the Secured Party may cause the Collateral, or
any part or parts thereof, to be immediately seized wherever found, and sold,
whether in term of court or in vacation, under ordinary or executory process, in
accordance with applicable Louisiana law, to the highest bidder for cash, with
or without appraisement, and without the necessity of making additional demand
upon or notifying the Debtor or placing the Debtor in default, all of which are
expressly waived.
XIV.3 Confession of Judgment. For purposes of foreclosure under
Louisiana executory process procedures, the Debtor confesses judgment and
acknowledges to be indebted unto and in favor of the Secured Party, up to the
full amount of the Obligations, in principal, interest, costs, expenses,
attorneys' fees and other fees and charges. . To the extent permitted under
applicable Louisiana law, the Debtor additionally waives: (a) the benefit of
appraisal as provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana
Code of Civil Procedure, and all other laws with regard to appraisal upon
judicial sale; (b) the demand and three (3) days' delay as provided under
Articles 2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice
of seizure as provided under Articles 2293 and 2721 of the Louisiana Code of
Civil Procedure; (d) the three (3) days' delay provided under Articles 2331 and
2722 of the Louisiana Code of Civil Procedure; and (e) all other benefits
provided under Articles 2331, 2722 and 2723 of the Louisiana Code of Civil
Procedure and all other Articles not specifically mentioned above.
XIV.4 Keeper. Should any or all of the Collateral be seized as an
incident to an action for the recognition or enforcement of this Agreement, by
executory process, sequestration, attachment, writ of fieri facias or otherwise,
the Debtor hereby agrees that the court issuing any such order shall, if
requested by the Secured Party, appoint the Secured Party, or any agent
designated by the Secured Party, or any person or entity named by the Secured
Party at the time such seizure is requested, or any time thereafter, as Keeper
of the Collateral as provided under La. R.S. 9:5136, et seq. Such a Keeper shall
be entitled to reasonable compensation. The Debtor agrees to pay the reasonable
fees of such Keeper,
XIV.5 Declaration of Fact. Should it become necessary for the
Secured Party to foreclose under this Agreement, all declarations of fact, which
are made under an authentic act before a Notary Public in the presence of two
(2) competent witnesses, by a person declaring such facts to lie within his or
her knowledge, shall constitute authentic evidence for purposes of executory
process and also for purposes of La. R.S. 9:3509.1, La. R.S. 9:3504(D)(6) and
La. R.S. 10:9-508, as applicable.
XIV.6 Other Rights and Remedies. In addition, the Secured Party shall
have and may exercise any or all other rights and remedies it may have available
at law, in equity, or otherwise.
XIV.7 Cumulative Remedies. All of the Secured Party's rights and
remedies, whether evidenced by this Agreement or the Notes or by any amendments,
shall be cumulative and may be exercised singularly or concurrently. Election by
the Secured Party to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of the Debtor under this Agreement, after the Debtor's failure to
perform, shall not affect the Secured Party's right to declare a default and to
exercise its remedies.
ARTICLE XV
STANDARDS FOR EXERCISING REMEDIES
To the extent that applicable law imposes duties on the
Secured Party to exercise remedies in a commercially reasonable manner, the
Debtor acknowledges and agrees that it is not commercially unreasonable for the
Secured Party (a) to fail to incur expenses reasonably deemed significant by the
Secured Party to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
remove liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, at commercially reasonable rates
whether or not the Collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets at commercially reasonable
rates, (i) to dispose of assets in wholesale rather than retail markets, (j) to
disclaim disposition warranties, (k) to purchase reasonable insurance or credit
enhancements to insure the Secured Party against risks of loss, collection or
disposition of Collateral or to provide to the Secured Party a guaranteed return
from the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Secured Party, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Secured
Party in the collection or disposition of any of the Collateral. The Debtor
acknowledges that the purpose of this Article XV is to provide non-exhaustive
indications of what actions or omissions by the Secured Party would not be
commercially unreasonable in the Secured Party's exercise of remedies against
the Collateral and that other actions or omissions by the Secured Party shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Article XV. Without limitation upon the foregoing, nothing contained in
this Article XV shall be construed to grant any rights to the Debtor or to
impose any duties on the Secured Party that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Article
XV.
ARTICLE XVI
NO WAIVER BY SECURED PARTY, ETC.
The Secured Party shall not be deemed to have waived any of
its rights upon or under the Obligations or the Collateral unless such waiver
shall be in writing and signed by the Secured Party. No delay or omission on the
part of the Secured Party in exercising any right shall operate as a waiver of
such right or any other right. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion. All rights
and remedies of the Secured Party with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Secured Party deems expedient.
ARTICLE XVII
SURETYSHIP WAIVERS BY DEBTOR
The Debtor waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations and
the Collateral, the Debtor assents to any extension or postponement of the time
of payment or any other indulgence, to any substitution, exchange or release of
or failure to perfect any security interest in any Collateral, to the addition
or release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Secured Party may deem advisable. The Secured Party shall have no duty as to the
collection or protection of the Collateral or any income thereon, nor as to the
preservation of rights against prior parties, nor as to the preservation of any
rights pertaining thereto beyond the safe custody thereof as set forth in
Article X.2. The Debtor further waives any and all other suretyship defenses.
ARTICLE XVIII
MARSHALLING
The Secured Party shall not be required to marshal any present
or future collateral security (including, but not limited to, this Agreement and
the Collateral) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and, in
addition to all other rights, however existing or arising. To the extent that it
lawfully may, the Debtor hereby agrees that it will not invoke any law relating
to the marshalling of collateral which might cause delay in or impede the
enforcement of the Secured Party's rights under this Agreement or under any
other instrument creating or evidencing any of the Obligations or under which
any of the Obligations is outstanding or by which any of the Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, the Debtor hereby irrevocably waives the benefits of all such
laws.
ARTICLE XIX
PROCEEDS OF DISPOSITIONS; EXPENSES
The Debtor shall pay to the Secured Party, on demand, any and
all expenses, including reasonable attorneys' fees and disbursements, incurred
by the Secured Party in protecting, preserving or enforcing the Secured Party's
rights under or in respect of any of the Obligations or any of the Collateral.
After deducting all of said expenses, the residue of any proceeds of collection
or sale of the Obligations or Collateral shall, to the extent actually received
in cash, be applied to the payment of the Obligations in such order or
preference as the Secured Party may determine or in such order or preference as
is provided in the Notes, proper allowance and provision being made for any
Obligations not then due. Upon the final payment and satisfaction in full of all
of the Obligations and, after making any payments required by Sections
9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code, any excess shall
be returned to the Debtor, and the Debtor shall remain liable for any deficiency
in the payment of the Obligations.
ARTICLE XX
OVERDUE AMOUNTS
Until paid, all amounts due and payable by the Debtor
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the applicable rate as set forth in the
Notes.
ARTICLE XXI
GOVERNING LAW; CONSENT TO JURISDICTION
THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE. The Debtor agrees that any suit for the enforcement of this
Agreement may be brought in either the courts of the State or any jurisdiction
in which the Collateral is located, or any federal court sitting in any of the
foregoing and consents to the non-exclusive jurisdiction of such courts and to
service of process in any such suit being made upon the Debtor by mail at the
address set forth on the cover page hereof. The Debtor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
ARTICLE XXII
WAIVER OF JURY TRIAL
THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH
RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Debtor waives any right
which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Debtor (i)
certifies that neither the Secured Party nor any representative, agent or
attorney of the Secured Party has represented, expressly or otherwise, that the
Secured Party would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that, in entering into the Notes, the
Secured Party is relying upon, among other things, the waivers and
certifications contained in this Article XXII.
ARTICLE XXIII
MISCELLANEOUS
This agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof. No change, modification or addition
to this Agreement shall be enforceable unless in writing and signed by the party
against whom enforcement is sought. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Debtor and its respective successors and assigns, and shall
inure to the benefit of the Secured Party and its successors and assigns. If any
term of this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and
this Agreement shall be construed and be enforceable as if such invalid, illegal
or unenforceable term had not been included herein. The Debtor acknowledges
receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Debtor
has caused this Agreement to be duly executed as of the date first above
written.
DEBTOR:
SEDONA CORPORATION
BY: XXXXX XXXXXX
--------------------------------
NAME: XXXXX X. XXXXXX
TITLE: PRESIDENT AND CEO
STATE OF Pennsylvania )
---------------------------------------------
)ss
COUNTY OF XXXXXXXXXX )
--------------------------------------------
I, the undersigned authority, a Notary Public in and for said
county in said state, hereby certify that Xxxxx Xxxxxx, the President/CEO of
SEDONA CORPORATION, whose name is signed to the foregoing instrument, and who is
known to me, acknowledged before me on this day that, being informed of the
contents of said Agreement, he or she executed the same voluntarily on the day
the same bears date.
Given under my hand and official seal this 13th day of March,
2003.
Xxxx X. Xxxxxxxx
------------------------------------------------------
NOTARY PUBLIC
XXXX X. XXXXXXXX
MY COMMISSION EXPIRES NOTARY PUBLIC
---------------------------------
MY COMMISSION EXPIRES
FEBRUARY 2, 2007
APPENDIX A
to
SECURITY AGREEMENT between SEDONA CORPORATION and
OAK HARBOR INVESTMENT PROPERTIES, L.L.C., dated March 13, 2003
FINANCING STATEMENTS
--------------------
Jurisdiction: Xxxxxxxxxx County, Pennsylvania (Interchange Capital Company)
File Date: 11/02/00
File No.: 292957
Jurisdiction: Xxxxxxxxxx County, Pennsylvania (Progress Leasing Company)
File Date: 04/16/01
File No.: 295973
Jurisdiction: Xxxxxxxxxx County, Pennsylvania (Commonwealth of Pennsylvania)
File Date: 03/22/02
File No.: 02-5780
Jurisdiction: Commonwealth of Pennsylvania (Interchange Capital Co.)
File Date: 06/29/00
File No.: 31791384
Jurisdiction: Commonwealth of Pennsylvania (Progress Leasing Co.)
File Date: 04/16/01
File No.: 33821523
OTHER
-----
Lease Agreement effective June 8, 2000 between SEDONA Corporation and
Glenborough Fund V, Limited Partnership, (a Delaware limited partnership),
landlord, commonly referred to as:
Suite 850
Riverview Office Tower
0000 00xx Xxxxxx
Xxxxxxxxxxx, XX
APPENDIX B
to
SECURITY AGREEMENT between SEDONA CORPORATION and
OAK HARBOR INVESTMENT PROPERTIES, L.L.C., dated March 13, 2003
CONTEMPLATED SUBORDINATED SECURITY INTERESTS
In favor of Xxxxxxxx X. Xxxxxxxxx pursuant to that certain Convertible Note
Agreement between SEDONA Corporation and Xxxxxxxx X. Xxxxxxxxx, dated as of
February 1, 2003, in the principal amount of $160,000.00
