SECURED RESTATED AND CONSOLIDATED AND CONVERTIBLE NOTE
EXHIBIT 10.114
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE
STATE SECURITIES LAWS. IT MAY NOT BE CONVERTED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED RESTATED AND CONSOLIDATED AND CONVERTIBLE NOTE
| $4,100,000 | King of Prussia, Pennsylvania |
This Consolidated and Restated Convertible Note is executed and delivered under and pursuant to the
terms of that certain Loan and Financing Agreement dated as of the date hereof by and among SEDONA
CORPORATION, a Pennsylvania corporation, and ▇▇▇▇▇ ▇. ▇▇▇, with the address of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
FOR VALUE RECEIVED, the undersigned, Maker promises to pay to the order of Holder the principal sum
of FOUR MILLION ONE HUNDRED THOUSAND Dollars ($4,100,000.00), pursuant to the terms of a certain
Loan and Refinancing Agreement between Maker and Holder dated as of the date hereof, together with
interest thereon at the rate of eight percent (8%) per annum from the date hereof until the earlier
of Maturity or the date the Outstanding Balance (as defined herein) shall be paid in full; provided
that Holder shall be entitled, at any time that sums due pursuant to this Note are outstanding, to
convert the then Outstanding Balance (as defined herein) or part thereof into shares of Common
Stock at a price of $0.05 per share .
1. Definitions. The following definitions are applicable to the words, phrases or
terms used in this Note.
(a) The term “Common Stock” shall mean the Maker’s common stock, par value $0.001 per
share.
(b) The term “Conversion Price” shall mean $0.05 per share of Common Stock.
(c) The term “Effective Date” shall refer to December 31, 2008.
(d) The term “Holder” shall mean and include such owner or holder and all heirs,
successors and assigns of any owner or holder of this Note.
(e) The term “Maker” shall mean and include all makers, co-makers and other parties
signing of this Note and their successors and assigns, and the use of the plural number shall
include the singular, and vice versa, and the use of any gender shall include all
genders.
(f) The term “Maturity” shall mean the date on which this Note shall be due and
payable in full, which date shall be January 4, 2010, unless theretofore converted.
(g) The term “Note” shall refer to this instrument.
(h) The term “Notice of Exercise” shall mean the Notice of Exercise substantially in
the form of Exhibit A attached hereto.
(i) The term “Oak Harbor” shall mean Oak Harbor Investment Properties. LLC.
(j) The term “Shares” shall mean all shares of Common Stock or other securities issued
or issuable pursuant to the Notice of Exercise.
(k) The term “Vey” shall mean ▇▇▇▇▇ ▇. ▇▇▇.
2. Consolidation. This Note is a consolidation and restatement of the existing
indebtedness of the Maker to the Holder in the aggregate principal sum of Four Million One Hundred
Thousand and 00/100 ($4,100,000.00) Dollars, comprising the total principal due under the certain
notes (the “Existing Notes”), after certain amounts of principal and interest have been converted
into shares of common stock of Maker and then consolidated as more fully set forth and described in
the Loan and Refinancing Agreement. This Note further evidences the Maker’s agreement to pay the
consolidated principal sum hereof in the amount of Four Million One Hundred Thousand and 00/100
($4,100,000.00) Dollars and interest thereon; and this Note evidences a valid, consolidated
indebtedness of Four Million One Hundred Thousand and 00/100 ($4,100,000.00) Dollars owing by the
Maker to the Holder; and the Maker hereby acknowledges and confirms that there are no defenses or
offsets to the Existing Notes or to the same as consolidated, modified and extended by the Amended
and Restated Loan Agreement or to the indebtedness secured thereby and evidenced this Note. It is
further agreed by the Maker that the terms and conditions and provisions of the consolidated
indebtedness evidenced hereby shall control and supersede the terms, conditions and provisions set
forth in the Existing Notes. This Note is given by the Maker as further evidence of the
consolidated principal debt but not in payment, satisfaction or cancellation of the outstanding
principal indebtedness evidenced by the prior notes, which indebtedness is now evidenced by this
Note.
3. Payment Terms. The Maker shall be obligated to make one payment of all outstanding
principal and unpaid interest due thereon at Maturity, unless converted. Unless otherwise
designated in writing, mailed or delivered to Maker, the place for payment of the indebtedness
evidenced by this Note shall be the Holder’s principal address as noted above. Payments received on
this Note shall be applied first to accrued interest, and the balance to principal.
4. Events of Default. The following shall constitute an Event of Default:
(a) In the event Maker shall fail (i) to pay any sums due hereunder when due,
or (ii) to observe or perform any term, condition, covenant, representation or warranty set
forth herein, when due or required, or within any period of time permitted thereunder for cure of
any such default or non-performance.
(b) In the event Maker fails to pay any invoice or other sum which may be due and payable to
Holder, Vey, or Oak Harbor under certain promissory notes issued in their favor by the Maker, when
due or required, according to the terms thereunder, unless prior written waiver has been granted to
Maker by Holder, Vey, or Oak Harbor.
(c) In the event Maker has received notice of default on any financial obligation of Maker in
excess of One Hundred Thousand Dollars ($100,000.00) which remains uncured for a ten (10) day
period.
5. Acceleration of Maturity. Upon the happening of any Event of Default, the
Outstanding Balance (as defined herein) shall, at the option of the Holder, become immediately due
and payable.
6. Security. The obligation of the Maker pursuant to this Note is secured by a lien
and security interest in the collateral of the Maker as specifically set forth in a Security
Agreement of even date herewith (the “Security Agreement”).
7. Limitation on Interest. In no contingency, whether by reason of acceleration of the
Maturity of this Note or otherwise, shall the interest contracted for, charged or received by
Holder exceed the maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to Holder in excess of the maximum lawful amount,
the interest payable to Holder shall be reduced to the maximum amount permitted under applicable
law; and, if from any circumstance the Holder shall ever receive anything of value deemed interest
by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest
shall be applied to the reduction of the principal of this Note and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal of the Note such excess shall
be refunded to Maker. All interest paid or agreed to be paid to Holder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full
period until payment in full of the principal of the Note (including the period of any renewal or
extension thereof) so that interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law.
8. Remedies; Nonwaiver. Failure of Holder to exercise any right or remedy available to
Holder upon the occurrence of an Event of Default hereunder shall not constitute a waiver on the
part of Holder of the right to exercise any such right or remedy for that Event of Default or any
subsequent Event of Default. The exercise of any remedy by Holder shall not constitute an election
of any such remedy to the exclusion of any other remedies afforded Holder at law or in equity, all
such remedies being nonexclusive and cumulative. If an Event of Default occurs under this Note and
this Note is referred to an attorney at law for collection, Maker agrees to pay all costs incurred
by Holder incident to collection up to a limit of 10% of the unpaid principal balance, including
but not limited to reasonable attorney fees, enforceable as a contract of
indemnity, plus all court costs.
9. Waivers. The Maker (i) waives presentment, protest and demand, (ii) waives notice
of protest, demand, dishonor and nonpayment of this Note, and (iii) expressly agrees that this Note
may be renewed in whole or in part, or any nonpayment hereunder may be extended, or a new note of
different form may be substituted for this Note or changes may be made in consideration of the
extension of the Maturity date hereof, or any combination thereof, from time to time, but, in any
singular event or any combination of such events, Maker will not be released from liability by
reason of the occurrence of any such event, nor shall Holder hereof be deemed by the occurrence of
any such event to have waived or surrendered, either in whole or in part, any right it otherwise
might have.
10. Option to Convert Note into Stock.
(a) Holder shall have the right and option (the “Conversion Right”) to convert the unpaid
principal balance of this Note or any part thereof, together with all accrued and unpaid interest
(the “Outstanding Balance”), into shares of Common Stock The number of Shares to be delivered on
conversion shall be equal to the amount of the then Outstanding Balance divided by the Conversion
Price, as adjusted, in compliance with the terms contained in Section 10 hereof.
(b) Maker shall use its best efforts to effectuate a registration statement for all Shares
that may be issued under this Note within 120 days of the Effective Date.
11. Anti-Dilution.
(a) The Conversion Price shall be protected by the anti-dilution provisions set forth in this
Section 10, provided that such anti-dilution shall not apply with respect to: (a) Maker’s grant of
restricted stock to employees or directors (whether granted prior to or after the Effective Date)
pursuant to the terms and conditions of the Maker’s 2000 Incentive Stock Option Plan; (b) Maker’s
grant of stock options to employees or directors or the exercise of stock options (whether granted
prior to or after the Effective Date) by current, future, or past employee’s or directors of the
Maker; (c) the issuance of shares for a consideration greater than the Conversion Price in effect
on the date of, and immediately prior to, such issuance, or (d) an issuance of shares for which the
Holder gives a written waiver of such adjustment.
(b) Except as otherwise provided in this Section, in the event that the Maker shall, at any
time after the Effective Date, issue or sell any shares of Common Stock, including shares held in
the Maker’s treasury and shares issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock and Common Stock issued upon the direct or indirect
conversion or exchange of securities for Shares, (i) for consideration per share less than the
Conversion Price in effect immediately prior to such issuance or sale, or (ii) without
consideration, then forthwith upon such issuance or sale, the Conversion Price (until another such
issuance or sale) shall be reduced (the “Adjusted Conversion Price”) to the price (calculated to
the nearest full cent) determined by multiplying the Conversion Price in effect immediately prior
to such issuance or sale by a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Conversion Price immediately prior to such issuance or sale, plus (2) the
consideration received by the Maker upon such issuance or sale, and the denominator of which shall
be the product of (x) the total number of shares of Common Stock outstanding immediately after such
issuance or sale, multiplied by (y) the Conversion Price,
immediately prior to such issuance or
sale; provided, however, that in no event shall the Adjusted Conversion Price exceed the Conversion
Price in effect immediately prior to such computation, except in the case of a combination of
outstanding shares of Common Stock, as provided by Section 10(e) hereof. In no event shall the
Conversion Price be increased.
(c) For the purposes of any computation to be made in accordance with this Section, 10 the
following shall be applicable:
(i) In the case of issuance or sale of shares of Common Stock for a consideration part or all
of which shall be cash, the amount of the cash consideration therefore shall be deemed to be the
amount of cash received by the Maker for such shares (or, if shares of Common Stock are offered by
the Maker for subscription, the subscription price, or, if such securities shall be sold to
underwriters or dealers for public offering without subscription offering, the public offering
price) before deducting therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others performing similar services,
or any expenses incurred in connection therewith.
(ii) In the case of the issuance or sale (otherwise than as a dividend or other distribution
on any stock of the Maker) of shares of Common Stock for a consideration part or all of which shall
be other than cash, the amount of the consideration therefor other than cash shall be deemed to be
the fair market value of such consideration as determined in good faith by the Board of Directors
of the Maker.
(iii) Shares of Common Stock issuable by way of dividend or other distribution on any stock of
the Maker shall be deemed to have been issued immediately after the opening of business on the day
following the record date for the determination of shareholders entitled to receive such dividend
or other distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Maker other than shares of Common Stock into
securities including shares of Common Stock shall be deemed to involve the issuance of such shares
of Common Stock for a consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to receive such shares, and the
value of the consideration allocable to such shares of Common Stock shall be determined as provided
in subsection (ii) above.
(v) The number of shares of Common Stock at any one time outstanding shall include the
aggregate number of shares issued or issuable upon the exercise of options, warrants or rights and
upon the conversion or exchange of convertible or exchangeable securities.
(d) In case the Maker shall, at any time after the Effective Date, subdivide Common Stock, the
Conversion Price shall forthwith be proportionately decreased.
(e) The Maker will, at all times, reserve and keep available out of its authorized Common
Stock or its treasury shares, solely for the purpose of issue upon the conversion of this Note as
herein provided, such number of shares of Common Stock as shall then be issuable upon the
conversion of this Note.
12. Mechanics of Conversion. Before the Holder shall be entitled to convert this Note
into Shares, the Holder shall surrender this Note, duly endorsed, at the office of the Maker, and
shall give written Notice of Exercise (the “Notice of Conversion”) to the Maker at its principal
corporate office of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for the Shares are to be issued. The form of Notice of
Conversion is attached hereto as Exhibit A. The Maker shall, promptly after receipt of the Notice
of Conversion, issue and deliver to such persons at the address specified by the Holder, a
certificate or certificates for the Shares to which the Holder is entitled. Such conversion shall
be deemed to have been made immediately prior to the close of business on the date of surrender of
this Note, and the persons entitled to receive the Shares issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Shares as of such date. No
fractional shares shall be issued upon conversion of this Note and the number of Shares to be
issued shall be rounded down to the nearest whole share. In the event that Holder elects to convert
only a portion of the Outstanding Balance into Shares, Holder shall deliver to Maker a written
acknowledgement of partial payment.
13. Prepayment. The Maker may, upon thirty (30) days prior written notice to Holder,
prepay any part of or the entire balance of this Note without penalty.
14. Mandatory Prepayment. In the event that:
(a) The net proceeds actually received by Maker from (i) sales of Maker’s securities (other
than to Holder or its affiliates) and (ii) litigation awards, exceeds $1,000,000 during the term
of this Note; or
(b) Maker has current cash on hand in excess of $2,000,000.00 for a period exceeding 30 days,
then an amount equal to fifty percent of such proceeds or cash shall be paid by the Maker to the
Holder as a mandatory prepayment.
15. Controlling Law. This Note shall be governed by and construed in accordance with
the laws of the State of Louisiana (other than its conflict of laws principles) and the provisions
of applicable federal law.
16. Shareholder Status. Nothing contained in this Note shall be construed as
conferring upon the Holder the right to vote, or to receive dividends, or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders for the election of directors of
the Maker or of any other matter, or any rights whatsoever as a shareholder of the Maker prior to
conversion hereof.
17. Notices. Any notice required or permitted under this Note shall be in writing and
shall be deemed to have been given on the date of delivery, if personally delivered or delivered by
courier, overnight express or other method of verified delivery, to the party to whom notice is to
be given, and addressed to the addressee at the address of the addressee set forth herein, or the
most recent address, specified by written notice, given to the sender pursuant to this paragraph.
18. Captions. The captions of the sections of this Note are for the purpose of
convenience only and are not intended to be a part of this Note and shall not be deemed to modify,
explain, enlarge or restrict any of the provisions hereof.
19. Remedies Not Exclusive. The remedies provided in this Note and the Security
Agreement or otherwise available to Holder for enforcing the payment of the principal sum together
with interest and the performance of the covenants, conditions and agreements herein and therein
contained are cumulative and concurrent and may be pursued singly or successively or together at
the sole discretion of Holder, and may be exercised from time to time as often as occasion
therefore shall occur until Holder has been paid all sums due in full.
20. Severability. The terms and provisions of this Note are severable. In the event of
the unenforceability or invalidity of any one or more of the terms, covenants, conditions or
provisions of this Note under federal, state or other applicable law, such unenforceability or
invalidity shall not render any other term, covenant, condition or provision hereunder
unenforceable or invalid. In the event any waiver by Maker hereunder is prohibited by law, such
waiver shall be and be deemed to be deleted herefrom.
21. Integration. This Note, together with the Loan and Refinancing Agreement between
Maker and Holder, dated as of even date herewith, the Security Agreement, and the Amended and
Restated Intercreditor Agreement between Maker, Holder, Oak Harbor and Vey Associates Incorporated
dated as of even date herewith (collectively, the “Loan Documents”) express the entire agreement
between the Maker and Holder concerning the subject matter hereof and no modification of the Loan
Documents shall be effective unless expressed in a mutually signed writing. None of Holder’s
rights, powers, privileges or immunities under this Note can be waived unless (and then only to the
extent that) such waiver is expressed in a writing signed by Holder.
22. Successors and Assigns. This Note shall be binding upon the Maker, its successors
and assigns, and shall inure to the benefit of Holder, his heirs and assigns.
23. Time of Essence. Subject to the provisions hereof, time is of the essence of each
and every provision of this Note.
24. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the making of
any payment, the taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such payment may be made, such action may be
taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.
25. Loss, Theft, Destruction or Mutilation of Note. Maker covenants that upon receipt
by the Maker of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Note, and in case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (which shall not include the posting of any bond), and upon surrender and
cancellation of such Note if mutilated, the Maker will make and deliver a new Note in the same form
and dated as of the date hereof, in lieu of such Note.
26. WAIVER OF JURY TRIAL.
MAKER AND HOLDER ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS NOTE OR
WITH RESPECT TO THE TRANSACTION CONTEMPLATED HEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY
SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
ACCORDINGLY, MAKER AND HOLDER IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT EITHER PARTY MAY NOW OR HEREAFTER HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY OF THE LOAN
DOCUMENTS.
27. JURISDICTION AND VENUE.
MAKER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY MAKER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN DOCUMENTS SHALL BE LITIGATED IN THE COURTS OF THE STATE OF LOUISIANA, OR
THE UNITED STATES DISTRICT COURT IN LOUISIANA, OR IN ANY OTHER COURT IN WHICH HOLDER SHALL INITIATE
SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. MAKER HEREBY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY HOLDER IN ANY OF SUCH
COURTS AND HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS
ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE MAKER AT THE ADDRESS TO WHICH NOTICES
ARE TO BE SENT PURSUANT TO THIS NOTE. MAKER WAIVES ANY CLAIM THAT LOUISIANA IS AN INCONVENIENT
FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD MAKER, AFTER BEING SO SERVED, FAIL TO
APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS
PRESCRIBED BY LAW AFTER THE MAILING THEREOF, MAKER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED BY HOLDER AGAINST MAKER AS DEMANDED OR PRAYED.
IN WITNESS WHEREOF and intending to be legally bound hereby, Maker has duly executed this Note
as of this the 31st day of December, 2008.
| Maker’s Address: | Maker: | |||
| ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ floor | SEDONA CORPORATION | |||
King of Prussia, PA 19406 |
||||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| By: | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Chief Executive Officer | ||||
EXHIBIT A
NOTICE OF EXERCISE
TO: SEDONA CORPORATION
(1) The undersigned hereby elects to purchase shares of Common Stock (the “Common Stock”),
of SEDONA CORPORATION pursuant to the terms of the attached Secured Convertible Note dated
December ___, 2008 between Sedona Corporation, as Maker, and ▇▇▇▇▇ ▇. ▇▇▇, as Holder (the “Note”)
and tenders herewith [the original Note] [an acknowledgement of partial payment of the Note]
together with all applicable transfer taxes.
Please issue a certificate or certificates representing said shares of Common Stock in the
name of the undersigned or in such other name as is specified below: