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EXHIBIT 10.116 SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of December 31, 2008,
between SEDONA CORPORATION , a Pennsylvania corporation,
with an office at 1003 West Ninth Avenue, 2nd Floor, King of
Prussia, Pennsylvania, 19406 (the "Debtor"), and Vey
Associates Incorporated, a Louisiana Corporation with an office at
11822 Justice Avenue, Suite B-6, Baton Rouge, Louisiana 70816
, (the "Secured Party") .
WHEREAS, the Secured Party has made a loan to the Debtor and
the Debtor has agreed and is obligated to make certain payments to
the Secured Party under the terms of the promissory note of even
date herewith in the principal sum of up to $2,250,000 (the
"Note"); and
WHEREAS , in order to induce the Secured Party to lend to
the Debtor the sums set forth in the Note, 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); and
NOW, THEREFORE , in consideration for 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 Note. 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 definitions
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, 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 Note 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 Note. An Event of Default shall also exist in the event that
Debtor defaults in payment of any indebtness due and owing to
either Oak Harbor Investment Properties, LLC or David R. Vey.
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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 and be junior only to the
security interest of Oak Harbor Investment Properties, LLC and
shall be senior to all other liens and interests in the Collateral,
including the interest of David R. Vey. 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, Section 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
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respect to the following Collateral:
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. 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 bank to agree to comply at any
time with instructions from the Secured Party to such 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 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 Note, would
occur. The provisions of this paragraph shall not apply to
(i) any deposit account for which the Debtor, the bank and the
Secured Party have entered into a cash collateral agreement
specially negotiated among the Debtor, the bank and the Secured
Party for the specific purpose set forth therein, (ii) deposit
accounts for which the Secured Party is the Depository 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.
3. Investment Property
. If the Debtor shall, at any time, hold or acquire any
certificated securities (other than securities of the Debtor), 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
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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.
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
and that if an Event of Default has occurred and is continuing for
a period of sixty (60) calendar days the bailee shall act upon
the instructions of the Secured Party, without the further consent
of the Debtor. 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. 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 Note. 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.
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
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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 tax 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 tax identification
number, if it has one, (b) if the Debtor does not have an tax
identification number and later obtains one, the Debtor shall
forthwith notify the Secured Party of such tax 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 Note, and other liens or encumbrances incurred by the Debtor
in the ordinary
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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) 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 Party, Vey, and Oak
Harbor; (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,
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