<PAGE>

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE 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.

                          CONVERTIBLE NOTE AND WARRANTS

$XXX,XXX                                           King of Prussia, Pennsylvania


FOR VALUE RECEIVED, the undersigned, SEDONA CORPORATION, a Pennsylvania
corporation ("Maker"), promises to pay to __________________ ("Holder"), with
the address of, __________________________________, the principal sum of on
hundred thousand and no/100 dollars ($XXX,XXX.00), together with interest
thereon at the rate of ____ percent (X%) per annum from the date hereof until
the earlier of Maturity or the date upon which the unpaid balance shall be paid
in full (the or this "Note"). Further, Holder shall be entitled to receive
Warrants to purchase up to a YY,YYY shares of Common Stock at a price equal to
$Y.YY per share.

         1.       Definitions. The following definitions are applicable to the
words, phrases or terms used in this Note.

                  (a)      The term "Average Daily Price" shall mean the average
                           of the high and low sales price of a share of the
                           Maker's common stock as reported by the Principal
                           Market.

                  (b)      The term "Common Stock" shall mean the Maker's common
                           stock, par value $0.001 per share.

                  (c)      The term "Holder" shall mean and include all
                           successors and assigns of any owner or holder of this
                           Note.

                  (d)      The term "Maker" shall mean and include all makers,
                           co-makers and other parties signing on the face of
                           this Note and their successors and assigns, and the
                           use of the plural number shall include the singular,
                           and vice versa.

                  (e)      The term "Maturity" shall mean the date on which this
                           Note shall be due and payable in full, which date
                           shall be _________________.

                                      -1-

<PAGE>


                  (f)      The term "Principal Market" shall mean the American
                           Stock Exchange, the New York Stock Exchange, the
                           Nasdaq National Market, the Nasdaq SmallCap Market or
                           the OTC Bulletin Board, whichever is at the time the
                           principal trading exchange or market for the Common
                           Stock, based upon share volume.

                  (g)      "Warrants" shall mean the Warrants substantially in
                           the form of Exhibit A to be issued to the Holder
                           hereunder.

                  (h)      "Warrant Shares" shall mean all shares of Common
                           Stock or other securities issued or issuable pursuant
                           to exercise of the Warrants.

         2. Terms of Payment. The Note shall be paid in full, as to principal
and any unpaid interest, on or before Maturity. Such Maturity may be extended by
mutual consent of the Holder and the Company and, if extended, Holder shall have
the right to convert the Note and accrued interest into Common Stock at any time
from the initial Maturity of 60 days. Unless otherwise designated in a 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 shall fail to pay any invoice or other sum
which may be due and payable to Holder, when due or required, according to the
terms thereunder unless prior written waiver has been granted to Maker by
Holder.

         5. Acceleration of Maturity. Upon the happening of any Event of
Default, the unpaid principal and interest due Holder shall, at the option of
the Holder, become immediately due and payable.

         6. 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, pro-rated, 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.

                                      -2-

<PAGE>


         7. 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, including but not limited to reasonable attorney fees (such fees not
to exceed ten percent (10%) of the then outstanding principal balance of the
Note), enforceable as a contract of indemnity, plus all court costs and other
expenses incurred at or prior to trial and in connection with any and all
appeals.

         8. Waivers. The Maker, endorsers, sureties and guarantors hereof, if
any, severally (i) waive presentment, protest and demand, (ii) waive notice of
protest, demand, dishonor and nonpayment of this Note, and (iii) expressly agree
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, neither Maker nor any endorser, surety
or guarantor will 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.

         9. Option to Convert Note Into Stock.

            (a) The Maker represents that if payment of principal and interest
has not been made at Maturity, Holder shall have the right and option to convert
(the "Conversion Right") the unpaid principal balance of this Note, together
with all accrued and unpaid interest, into shares of Maker's voting common stock
(the "Shares") having all rights inherent in common stock under the Maker's
Articles of Incorporation and Bylaws in effect as of the date hereof (the
"Option"). The number Shares shall be determined by dividing the then
outstanding principal balance, together with all accrued and unpaid interest, by
the Conversion Price (defined below).

            (b) For purposes hereunder, the Conversion Price at conversion
("Conversion") shall be equal to twenty cents ($X.XX) per share of the Maker's
Stock.

                                      -3-

<PAGE>


            (c) Maker shall file a registration statement to register for resale
under the Securities Act of 1933, as amended (the "Securities Act") all Shares
that may be issued under subsections (a). Such registration statement shall be
filed within sixty (60) days of Conversion.

         10. 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 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 "Notice of Conversion"). The Maker shall, promptly
thereafter, 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.

         11. Prepayment. The Maker may prepay any part of or the entire balance
of this Note without penalty.


         12. Controlling Law. This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (other than its
conflict of laws principles) and the provisions of applicable federal law.

         13. 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.

         14. 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.

         EXECUTED AND EFFECTIVE as of this the XXth day of ____________, 2001.

Maker's Address:                             Maker:

455 South Gulph Road                         SEDONA CORPORATION
King of Prussia, PA  19406


                                             By:
                                                 ------------------------------
                                                 Marco A. Emrich
                                                 Chief Executive Officer


                                      -4-