LITIGATION SUPPORT CONSULTING
AGREEMENT
THIS AGREEMENT, dated and effective as of May 6, 2003 (the "Effective
Date"), is between Hunter M. A. ▇▇▇▇, an individual whose office is located at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Consultant"), and
SEDONA CORPORATION, a Pennsylvania Corporation, whose principal place of
business is ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Client").
RECITALS
WHEREAS, the Client has retained one or more attorneys (the "Client
Attorneys") in connection with litigation against LADENBURG ▇▇▇▇▇▇▇▇ & CO.,
INC.; PERSHING, LLC; WESTMINSTER SECURITIES CORPORATION; ▇▇ ▇. ▇▇▇▇▇▇▇ & CO.,
INC.; RHINO ADVISORS, INC.; MARKHAM HOLDINGS LIMITED; ASPEN INTERNATIONAL LTD.;
THE CUTTYHUNK FUND LIMITED c/o OPTIMA FUND MANAGEMENT L.P.; THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
1995 CHARITABLE REMAINDER TRUST; AMRO INTERNATIONAL, S.A.; ROSEWORTH GROUP
LIMITED; CAMBOIS FINANCE INC.; ▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇; and ▇▇▇▇▇ ▇▇▇▇ relating to manipulation of the Client's stock; and
WHEREAS, the Client has retained the Consultant to provide litigation
support services, including compiling and organizing data, access to a database
of documents relating to similar litigation, and preparation of a searchable
electronic database of the documents, reports, depositions, pleadings and other
information relating litigation filed on behalf of the Client; and
WHEREAS, Consultant has entered into a contract with ITIS, Inc. d/b/a
LITIDEX(R) to perform analysis and evaluation of factual data, assist Client
Attorneys with investigation and organization of factual data, and provide
Automated Litigation Support ("ALS") required by the Consultant, the Client
Attorneys, and any other firm retained in Clients litigation;
NOW THEREFORE, Consultant and the Client agree as follows:
ARTICLE I
SERVICES TO BE PROVIDED
1.01 SERVICES TO BE PROVIDED. The Consultant or his designee or contractors,
under the supervision and direction of Client Attorneys and pursuant to
an agreement between Consultant and Client Attorneys, will:
(a) collect, organize, summarize and validate information relating to
potential causes of action that the Client may have and prepare an
analysis of such information as requested by the Client Attorneys;
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(b) make available to the Client Attorneys access to a database
prepared by LITIDEX(R) consisting of data relating to similar
litigation as such database exists as of the commencement and
through the continuation of this Agreement;
(c) collect, receive, catalog, when necessary convert to electronic
format, and compile the documents, information, statements,
pleadings, attorney notes, and other data relating to the
litigation filed on behalf of the Client and make the same
available to the Client Attorneys in a searchable electronic
format; and
(d) provide ALS as required by Schedule A (attached).
All such services shall be provided by the Consultant in accordance
with the agreement between the Consultant and the Client Attorneys. The
Client acknowledges that the services are Attorney Work Product.
1.02 PAYMENT. The Client agrees to pay Consultant the following amounts in
connection with services and
products provided by the Consultant to the Client Attorneys:
(a) Payment at the rates set forth on the attached Schedule A for the
collection, organization, conversion into electronic format if
required, indexing, and making available to the Client Attorneys
information, documents, pleadings, attorney notes and other data
relating to any litigation filed by the Client Attorneys on behalf
of Client and against LADENBURG ▇▇▇▇▇▇▇▇ & CO., INC.; PERSHING,
LLC; WESTMINSTER SECURITIES CORPORATION; ▇▇ ▇. ▇▇▇▇▇▇▇ & CO., INC.;
RHINO ADVISORS, INC.; MARKHAM HOLDINGS LIMITED; ASPEN INTERNATIONAL
LTD.; THE CUTTYHUNK FUND LIMITED c/o OPTIMA FUND MANAGEMENT L.P.;
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1995 CHARITABLE REMAINDER TRUST; AMRO
INTERNATIONAL, S.A.; ROSEWORTH GROUP LIMITED; CAMBOIS FINANCE INC.;
▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇; and
▇▇▇▇▇ ▇▇▇▇.
(b) Payments as described in the attached Schedule B, except that the
first and last months' payments shall be made within 30 days of
execution of this Agreement.
(c) Invoicing. The Consultant shall prepare a monthly invoice of
services for the Client. All services shall be billed at the rates
set forth on Schedule A as attached to this agreement. Any services
provided by Consultant that are not included in Schedule A shall be
pre-approved by Client or Client Attorneys prior to commencing work
and shall be invoiced at Consultant's standard rates. Monthly
billing amounts for services will be paid in accordance with
Schedule B. All payments required on Schedule B shall be paid not
less than 10 days after the required payment date. A late fee of
five percent (5%) of the total payment shall be charged on any
required payment that remains unpaid after 10 days. Interest shall
not accrue on late charges.
1.03 PAYMENT IN STOCK. At the Client's sole option, up to $533,097 of fees
payable under this Agreement may be paid by delivery to Consultant of
fully registered and freely transferable S-8 shares of common stock of
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the Client, each share of stock valued at a price determined by the
immediately preceding 10-day trading average. In the event of an early
cash settlement of Client's litigation, Client will instruct its
Attorneys to pay all outstanding balances to Consultant prior to any
distribution to Client or Clients Attorney.
1.04 SECURITY FOR PAYMENT. Client agrees that for each $100,000 of the
amount due Consultant that remains unpaid at the time of receipt of any
settlement of the litigation Client Attorneys shall pay Consultant 1%
of the damages received or the balance remaining unpaid, whichever is
greater. At execution of this Agreement, Client shall file an S-8 Plan
providing for the issuance of sufficient shares of Client's stock to
pay Consultant all amounts that may become due under this Agreement.
ARTICLE II
RESPONSIBILITIES OF PARTIES
2.01 CO-OPERATION. The Client will use its best efforts to make all
information, documents, and other data relating to the litigation
available to the Consultant and its designees and contractors in an
organized and timely manner as such data becomes available. The Client
further agrees that it will instruct the Client Attorneys to provide
Consultant or its designees and contractors with copies of all
pleadings filed in the litigation, transcripts and video records of all
depositions, copies of all material received or produced in response to
subpoenas or other discovery, and all other information created or
received in connection with such litigation.
2.02 RESPONSIBILITY FOR CONTENT. The Client and the Client Attorneys are
solely responsible for the content of all data provided to Consultant
pursuant to this Agreement and for providing such data in a format and
at the times required. All data delivered by the Client or the Client
Attorneys shall be free of executable files, viruses, corruptions or
other programs.
2.03 ERRORS. Consultant shall promptly correct any errors arising from the
compilation or entry of data by Consultant. All cost relating to the
correction of errors shall be the sole responsibility of Consultant
except those that are caused by errors in data supplied by the Client
or the Client Attorneys or breach of this Agreement or the agreement
between Consultant and the Client Attorneys. Consultant shall be
permitted a reasonable period of time, not to exceed 10 days, within
which to make any required corrections.
2.04 COPYRIGHTS. The Client shall grant copyrights to Consultant for all
information that may become public record as a result of this
litigation. Consultant may not use or print any information considered
to be privileged and shall not release any information to third parties
during the term of this Agreement without written consent of Client
Attorneys.
2.05 CONFIDENTIALITY. The Client Attorneys shall keep all information,
programs, documentation, systems, techniques, and know how that they
learn as a result of the performance of this Agreement or the use of
Consultant's work product confidential. Client shall only have rights
to information derived from the database that is solely applicable to
Client's case.
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2.06 RETURN OF DATA. Consultant shall return to the Client the original
media provided to Consultant by Client. Client acknowledges and agrees
that Consultant may make and retain copies of any information contained
in such original media; however, all information used in Client's
litigation shall remain privileged until the case is concluded.
2.07 DEFAULT. "Default" shall be defined as failure by Client or Consultant
to provide records in a timely manner; Client Attorney not providing
records in a timely manner, or payment not being received as required
by Schedule B in a timely manner. In the event of default and Client's
failure to cure any such default within 10 days, Consultant shall have
the right to immediately receive all stock in the S-8 Plan sufficient
to pay any existing outstanding balances.
2.08 BANKRUPTCY: Consultant represents to Client that he or she is not
presently filing, nor contemplating filing, for protection under the
United States Bankruptcy Code. Consultant agrees that in the event he
or she files a petition in bankruptcy, Client will be promptly notified
of any such event and that the services covered by this Agreement may
be canceled at the Clients election, Upon notice of cancellation all
payment obligations will be void other than any current outstanding and
unpaid invoices which shall be paid in accordance with Schedule A of
this Agreement. All work product prepared in connection with this
contract shall be retained by Client Attorneys.
ARTICLE III
WARRANTY
CONSULTANT MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE, AS TO ANY MATTER WHATSOEVER,
INCLUDING BUT NOT LIMITED TO THE HARDWARE, PROGRAMS, DOCUMENTATION, DATA FILES,
OUTPUT SERVICES, OR OTHER MATTERS PRODUCED OR PROVIDED TO THE CLIENT ATTORNEYS
HEREUNDER. CONSULTANT SHALL NOT BE RESPONSIBLE FOR ANY DAMAGES, WHETHER DIRECT,
INDIRECT, OR CONSEQUENTIAL, ARISING FROM THE LOSS OR CORRUPTION OF DATA, THE
SOLE REMEDY OF THE CLIENT FOR ALL SUCH CASES BEING THE RESTORATION OF SUCH DATA
FROM BACK UP FILES. HOWEVER, THE DATABASE WILL BE PREPARED AND WILL BE
MAINTAINED AS PREVIOUSLY DEFINED BY CLIENT ATTORNEYS.
ARTICLE IV
CONTRACTED SERVICES
CLIENT ACKNOWLEDGES THAT CONSULTANT WILL CONTRACT WITH ITIS, INC. d/b/a
LITIDEX(R) TO PERFORM THE SERVICES REQUIRED PURSUANT TO THIS AGREEMENT AND THE
AGREEMENT BETWEEN CONSULTANT AND CLIENT ATTORNEYS AND SPECIFICALLY GRANTS TO
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CONSULTANT THE RIGHT TO ENTER INTO SUCH CONTRACTS FOR THE BENEFIT OF THE CLIENT.
A SUBSTANTIAL PORTION OF THE FEES PAID HEREUNDER WILL BE PAID BY CONSULTANT TO
LITIDEX(R) TO PERFORM THE OBLIGATIONS OF CONSULTANT HEREUNDER. CLIENT AGREES
THAT LITIDEX(R) IS A THIRD-PARTY BENEFICIARY OF THIS AGREEMENT, MAY ENFORCE IN
ITS OWN RIGHT THE RIGHTS OF CONSULTANT UNDER THIS AGREEMENT, AND THAT CLIENT
WILL LOOK SOLELY TO LITIDEX(R) FOR ANY REMEDY IN CONNECTION WITH A CLAIM FOR
BREACH OF THIS AGREEMENT.
ARTICLE V
POTENTIAL CONFLICTS
CLIENT ACKNOWLEDGES THAT CONSULTANT IS AN EXECUTIVE OFFICER, DIRECTOR AND MAJOR
SHAREHOLDER OF ITIS, INC. d/b/a LITIDEX(R) AND WAIVES ANY CONFLICT OF INTEREST
THAT MAY EXIST AS A RESULT OF THE DELEGATION OF ANY OF CONSULTANT'S
RESPONSIBILITIES UNDER THIS AGREEMENT TO LITIDEX(R).
ARTICLE VI
MISCELLANEOUS
6.01 NO LEGAL SERVICES. Consultant does represent Client and is not engaged
to represent Client before any court or other judicial body, and no
part of the compensation paid hereunder is for the referral of any
claim to an attorney, the rendering of legal advice, or other legal
services. Nothing herein is intended or shall be construed to require
Consultant to perform or provide legal services on behalf of the
Client. Consultant has been hired by Client only to develop a database
for Client Attorneys.
6.02 TAXES. The Client shall be responsible for the payment of any sales,
use or other taxes measured by the gross receipts under this Agreement
and shall reimburse Consultant therefor upon demand.
6.03 FORCE MAJEURE. Neither Party hereto shall have any liability to the
other if its performance under this Agreement is hindered or delayed by
forces beyond its control, including labor disturbances, war, acts of
God, fires, storms, accidents, acts of governments and acts of
terrorism or civil unrest.
6.04 NOTICES. All notices required or permitted by this Agreement shall be
in writing and sent by receipted mail or delivery to the following
addresses:
If to Consultant Hunter M. A. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to Client: Sedona Corporation
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6.05 NON-WAIVER. Neither Party's failure at any time to require strict
performance by the other Party of any of the provisions of this
Agreement shall be a waiver of such Party's right hereunder to demand
strict compliance herewith or with any other provision. Waivers by
either Party of any default by the other Party shall not waive any
subsequent default of the same or any other provision.
6.06 JURISDICTION; LAW; ETC. This Agreement shall be construed and
interpreted and any dispute relating hereto resolved in accordance with
the laws of the State of Texas, excluding any such law that would
direct the application of the laws of any other jurisdiction. Any
litigation relating to this Agreement shall be brought in a court of
appropriate jurisdiction in ▇▇▇▇▇▇ County, Texas. The Parties hereby
submit to exclusive jurisdiction and venue in such court and waive any
claim that such venue is improper or inconvenient.
6.07 INTEGRATION. This Agreement is the sole agreement between the Parties
and incorporates, supersedes and replaces all prior negotiations, oral
agreements and written agreements. It may be amended, supplemented or
explained only by a written document dated after the date hereof and
signed by the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date above.
HUNTER M. A. ▇▇▇▇, Consultant
__________________________________
SEDONA CORPORATION, Client
By _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
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SCHEDULE B
SEDONA CORPORATION/CONSULTANT
CONSULTING AGREEMENT
FEE AMOUNT: $533,097
PAYMENT TERMS: Sedona Corporation shall pay in Company S-8 Stock or
Cash at the sole discretion of the company an amount
not less than $14,810 per month for a period not to
exceed 36 months, in accordance with the terms of
this Agreement.
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