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EXHIBIT 10.84
SECURITY AGREEMENT
DEBTOR:
SEDONA CORPORATION
1003 WEST NINTH AVENUE
2ND FLOOR
KING OF PRUSSIA, PENNSYLVANIA 19406
SECURED PARTY:
DAVID R. VEY
11822 JUSTICE AVENUE, SUITE B-6
BATON ROUGE, LOUISIANA 70816
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October 23, 2006, between
SEDONA
CORPORATION, a Pennsylvania corporation, with an office at 1003
West Ninth
Avenue, 2nd Floor, King of Prussia, Pennsylvania, 19406 (THE
"DEBTOR"), and
David R. Vey, an individual with an office at 11822 Justice Avenue,
Suite B-6,
Baton Rouge, Louisiana 70816, (HEREINAFTER REFERRED TO AS THE
"SECURED PARTY").
WHEREAS, the Debtor has made certain loans and extensions of credit
to
the Debtor and the Debtor has agreed and is obligated to make
certain payments
to the Secured Party under the terms of the following: (i) a
promissory note of
even date herewith in the principal sum of $1,213,952.81; (ii) a
revolving
promissory note dated September 27, 2006 herewith in the principal
sum of
$500,000.00; (iii) a secured convertible note of even date herewith
in the
principal sum of $2,691,263.36 (collectively refereed to herein as
the "Notes");
and
WHEREAS, in order to induce the Secured Party to lend to the
Debtor
the sums set forth in the Notes, the Debtor has agreed to grant to
the Secured
Party an interest in certain property of Debtor as security for the
Obligations
(as defined herein) pursuant to the terms of this Security
Agreement; and
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 or Oak Harbor (as defined
herein) 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, including but not limited to those 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.
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ARTICLE II
GRANT OF SECURITY INTEREST AND SUBORDINATION
The Debtor hereby grants to the Secured Party, to secure the
payment
and performance in full of all of the Obligations, a lien and
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, personal and fixture property of every
kind and
nature, (including inventory and equipment), instruments (including
promissory
notes), documents, accounts, accounts receivable, chattel paper
(whether
tangible or electronic), deposit accounts, 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
security interest of the Secured Party shall be subordinate only to
the security
interest of Oak Harbor Investment Properties, L.L.C. ("Oak
Harbor"), pursuant to
that certain Amended and Restated Security Agreement of even date
herewith from
the Debtor to Oak Harbor. The security interest of the Secured
Party shall be
junior only to the secured interest and lien of Oak Harbor and
shall be senior
to all other liens and interests in the Collateral. 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
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 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:
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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
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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
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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 95-4091769 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 Appendix A, 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.
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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) except for Permitted
Liens, 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
Par
