Document:

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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-

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                  (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-

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         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-

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            (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-<PAGE>

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION D AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.

                             STOCK PURCHASE WARRANT

                              Certificate No: ____

        To Purchase _______ Shares of Common Stock of SEDONA Corporation

         THIS CERTIFIES that, for value received, ___________ (the "Holder"), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
"Initial Exercise Date") and on or prior to the close of business on
_________________, (the "Termination Date") but not thereafter, to subscribe for
and purchase from SEDONA Corporation, a corporation incorporated in the State of
Pennsylvania (the "Company"), up to ______________ shares (the "Warrant Shares")
of Common Stock, $0.001 par value, of the Company (the "Common Stock"). The
purchase price of one share of Common Stock (the "Exercise Price") under this
Warrant shall be $______. The Exercise Price and the number of shares for which
the Warrant is exercisable shall be subject to adjustment as provided herein.

                  1. Title to Warrant. Prior to the Termination Date and subject
to compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

                  2. Authorization of Shares. The Company covenants that all
shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

                  3. Exercise of Warrant.

                  (a) Except as provided in Section 4 herein, exercise of
the purchase rights represented by this Warrant may be made at any time or times
on or after the Initial Exercise Date, and before the close of business on the
Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books of
the Company) and upon payment of the Exercise Price of the shares thereby
purchased by wire transfer or cashier's check drawn on a United States bank, the
holder of this Warrant shall be entitled to receive a certificate for the number
of shares of Common Stock so purchased. Certificates for shares purchased
hereunder shall be delivered to the holder hereof within three (3) Trading Days
after the date on which this Warrant shall have been exercised as aforesaid.
This Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes required
to be paid by Holder, if any, pursuant to Section 5 prior to the issuance of
such shares, have been paid.

                                       1

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                  (b) If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.

                  (c) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:

                  THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
                  (THE "SECURITIES ACT"), OR STATE SECURITIES LAWS AND HAVE BEEN
                  ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. NEITHER THIS
                  SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
                  OFFERED, SOLD OR TRANSFERRED UNTIL (i) A REGISTRATION
                  STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE
                  SECURITIES SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
                  (ii) IN THE OPINION OF COUNSEL, ACCEPTABLE TO THE COMPANY,
                  REGISTRATION UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE
                  SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
                  PROPOSED OFFER, SALE OR TRANSFER.

                  The foregoing legend shall be removed from the certificates
representing the Warrant Shares, at the request of the Holder, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities Act
or at such time as the Holder shall have obtained an opinion of counsel,
reasonably acceptable to the Company, to the effect that the Warrant Shares
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.

                  4. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.

                                       2

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                  5. Charges, Taxes and Expenses. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in
the name of the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

                  6. Closing of Books. The Company will not close its
shareholder books or records in any manner which prevents the timely exercise of
this Warrant.

                  7. Transfer, Division and Combination.

                  (a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of shares
of Common Stock without having a new Warrant issued.

                  (b) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.

                  (c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.

                  (d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.

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                  8. No Rights as Shareholder until Exercise. This Warrant does
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to such holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment.

                  9. Loss, Theft, Destruction or Mutilation of Warrant. The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

                  10. Saturdays, Sundays, Holidays, etc. If the last or
appointed day for 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 action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.

                  11. Adjustments of Exercise Price and Number of Warrant
Shares.

                  (a) Stock Splits, etc. The number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the holder of this Warrant
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the holder of this Warrant shall
thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company resulting from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.

                                       4
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                  (b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 11.
For purposes of this Section 11, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 11 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

                  12. Voluntary Adjustment by the Company. The Company may at
any time during the term of this Warrant, reduce the then current Exercise Price
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.

                  13. Notice of Adjustment. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice, in
the absence of manifest error, shall be conclusive evidence of the correctness
of such adjustment.

                                       5

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                  14. Notice of Corporate Action. If at any time:

                  (a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                  (b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,

                  (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and
(ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 16(d).

                  15. Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant.
The Company will take all such reasonable action as may be necessary to assure
that such Warrant Shares may be issued as provided herein without violation of
any applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.

                                       6

<PAGE>

                  The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.

                  Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

                  16. Miscellaneous.

                  (a) Jurisdiction. This Warrant shall constitute a contract
under the laws of the Commonwealth of Pennsylvania, without regard to its
conflict of law, principles or rules. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the non-exclusive
jurisdiction of the courts of the Commonwealth of Pennsylvania and of the United
States of America, located in the Commonwealth of Pennsylvania, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Warrant and the transactions
contemplated hereby, and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Warrant shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Warrant in the courts of the Commonwealth of Pennsylvania or
the United States of America, located in the Commonwealth of Pennsylvania, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum.

                  (b) Restrictions. The holder hereof acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.

                  (c) Nonwaiver and Expenses. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

                                       7

<PAGE>

                  (d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered to the address set forth in that certain Common Stock and Warrants
Purchase Agreement dated June __, 2001, or at such other address or addresses as
may have been furnished in writing by any holder to the Company.

                  All notices and other communications from Holder to the
Company shall be delivered to:

                                    SEDONA Corporation
                                    455 Gulph Road
                                    King of Prussia, PA  19406
                                    FAX: (484) 679-2201
                                    Attention: Chief Financial Officer

or at such other address or addresses as may have been furnished in writing by
the Company to Holder.

                  (e) No Rights as Shareholder. Until the exercise of this
Warrant, the Holder shall not have or exercise any rights by virtue hereof as a
shareholder of the Company.

                  (f) Successors and Assigns. Neither this Warrant nor any
rights of the Holder or the Company hereunder may be assigned by either party to
any other person. This Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the Holder.

                  (g) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

                  (h) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

                  (i) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

                                       8
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated: _____________, 2001
                                           SEDONA Corporation

                                  By:      _____________________________________
                                           Marco A. Emrich,
                                           President and Chief Executive Officer

                                       9

<PAGE>

                               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 Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.

         (2)  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:

                           -------------------------------
                                       (Name)

                           -------------------------------
                                      (Address)

                           -------------------------------

Dated:  ______________

                               Name of entity:
                                              ----------------------------------
                               (if applicable)

                               Signed:
                                        ----------------------------------------

                               Name:
                                        ----------------------------------------
                                                         [Print]

                               Title:
                                        ----------------------------------------
                               (if applicable)

                               Address:
                                        ----------------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

                               Tax Identification Number
                                                          ----------------------

<PAGE>

                               SEDONA CORPORATION

                             WARRANT ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

         FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to __________________________________________ whose
address is ___________________________________________________________________
________________________________________________________________________________
_____________________________________________________________________________.

                      Dated:   ______________________, ___________

                               Name of entity:
                                              ----------------------------------
                               (if applicable)

                               Signed:
                                        ----------------------------------------

                               Name:
                                        ----------------------------------------
                                                         [Print]

                               Title:
                                        ----------------------------------------
                               (if applicable)

                               Address:
                                        ----------------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

Signature Guaranteed:  _____________________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

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