Document:

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                  COMMON STOCK AND WARRANTS PURCHASE AGREEMENT
                                     Between

                               SEDONA Corporation

                                       and

                         the Investors Signatory Hereto

         COMMON STOCK AND WARRANTS PURCHASE AGREEMENT dated as of _____________,
2001 (the "Agreement"), between the Investors signatory hereto (each an
"Investor" and together the "Investors"), and SEDONA Corporation, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania (the
"Company").

         WHEREAS, each party desires that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to each Investor,
and each Investor shall purchase the number of shares of Common Stock set forth
in the signature pages hereto at a per share price equal to $______; and each
Investor shall receive Warrants to purchase up to a number of shares of Common
Stock equal to one-half the number of shares of Common Stock purchased hereunder
by such Investor at a price equal to $________ per share.

         WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) and/or Section 4(6) of the Securities Act of 1933, as amended,
(the "Securities Act") and/or Regulation D and the other rules and regulations
promulgated under the Securities Act, and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in securities to be made hereunder.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                               Certain Definitions

Section 1.1. "Closing" shall mean the closing of the purchase and sale of the
Common Stock and Warrants pursuant to Section 2.1.

Section 1.2. "Common Stock" shall mean the Company's common stock, $.001 par
value per share, issued pursuant to the terms and conditions hereof.

Section 1.3. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

Section 1.4. "Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

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Section 1.5. "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.

Section 1.6. "Purchase Price" shall equal the total number of shares of Common
Stock set forth in the signature pages hereto multiplied by $________.

Section 1.7. "Registrable Securities" shall mean the Common Stock and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all Common Stock and Warrant Shares have been disposed of
pursuant to the Registration Statement, (ii) all Common Stock and Warrant Shares
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) all Common Stock and Warrant Shares have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive legend
or (iv) such time as, in the opinion of counsel to the Company, all Common Stock
and Warrant Shares may be sold without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act.

Section 1.8. "Registration Rights Agreement" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investor as of the Closing
Date in the form annexed hereto as Exhibit A.

Section 1.9. "Registration Statement" shall mean a registration statement on
Form S-3 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale by the Investors
of the Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.

Section 1.10. "SEC" shall mean the Securities and Exchange Commission.

Section 1.11. "SEC Documents" shall mean the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000 and each report, proxy
statement or registration statement filed by the Company with the SEC pursuant
to the Exchange Act or the Securities Act since the filing of such Annual Report
through the date hereof.

Section 1.12. "Trading Day" shall mean any day during which the Principal Market
shall be open for business.

Section 1.13. "Transfer" shall mean any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by request, devise or
descent, or other transfer or disposition of any kind.

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Section 1.14. "Warrants" shall mean the Warrants substantially in the form of
Exhibit B and Exhibit C to be issued to the Investors hereunder.

Section 1.15. "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.

                                   ARTICLE II

                 Purchase and Sale of Common Stock and Warrants

Section 2.1.      Investment.

         (a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Investors agree to purchase the Common Stock
together with the Warrants at the Purchase Price on the Closing Date (as
hereinafter defined).

         (b) The Closing of the sale and purchase of the Common Stock together
with the Warrants under this Agreement shall take place at the offices of Piper
Marbury Rudnick & Wolfe LLP, 1200 Nineteenth Street, NW, Washington, DC 20036,
at 10:00 a.m. on August 16, 2001, or at such other time, date and place as are
mutually agreeable to the Company and the Investors. At the Closing, the Company
will deliver to the Investors certificates for the Common Stock, registered in
the name of the appropriate Investor, and Warrants against payment to the
Company of each Investor's proportionate amount of the Purchase Price as set
forth on the signature pages hereto, by wire transfer, check or other method
acceptable to the Company. The date of the Closing is hereinafter referred to as
the "Closing Date."

         (c) The Closing is subject to the satisfaction or waiver by the party
to be benefited thereby of the following conditions:

             (i)      acceptance and execution by the Company and by the
                      Investors of this Agreement and the Registration Rights
                      Agreement;

             (ii)     all representations and warranties of the Investors
                      contained herein shall remain true and correct as of the
                      Closing Date (as a condition to the Company's
                      obligations);

             (iii)    the Company shall have obtained all permits and
                      qualifications required by any state for the offer and
                      sale of the Common Stock and Warrants, or shall have the
                      availability of exemptions therefrom;

             (iv)     the sale and issuance of the Common Stock and the Warrants
                      hereunder, and the proposed issuance by the Company to the
                      Investors of the Common Stock underlying the Warrants upon
                      exercise thereof shall be legally permitted by all laws
                      and regulations to which the Investors and the Company are
                      subject and there shall be no ruling, judgment or writ of
                      any court prohibiting the transactions contemplated by
                      this Agreement;

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                                  ARTICLE III

                 Representations and Warranties of the Investors

         Each Investor, severally and not jointly, represents and warrants to
the Company that:

Section 3.1. Organization. If not a natural person, the Investor is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.

Section 3.2. Intent. The Investor is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Common Stock. The Investor has no present arrangement (whether or not
legally binding) at any time to sell the Common Stock, Warrants or Warrant
Shares to or through any Person or entity; provided, however, that by making the
representations herein, the Investor does not agree to hold such securities for
any minimum or other specific term (other than as specified in Section 4.3
herein) and reserves the right to dispose of the Common Stock and Warrant Shares
at any time in accordance with federal and state securities laws applicable to
such disposition and such Section 4.3.

Section 3.3. Sophisticated Investor. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and the Investor has such experience
in business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Common Stock, Warrants and Warrant
Shares. The Investor acknowledges that an investment in the Common Stock,
Warrants and Warrant Shares is speculative and involves a high degree of risk.

Section 3.4. Authority. This Agreement and each agreement attached as an Exhibit
hereto which is required to be executed by the Investor has been duly authorized
and validly executed and delivered by the Investor and is a valid and binding
agreement of the Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.

Section 3.5. Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

Section 3.6. Disclosure; Access to Information. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Investor has reviewed copies of all SEC Documents deemed relevant
by the Investor.

Section 3.7. Manner of Sale. At no time was the Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.

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                                   ARTICLE IV

                           Covenants of the Investors

         Each Investor, severally and not jointly, covenants with the Company
that:

Section 4.1. Compliance with Law. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.

Section 4.2. Limitation on Short Sales. The Investor agrees that it will make no
short sales (as defined in any applicable SEC or NASD rules) of the Company's
Common Stock while the Investor holds any of the Common Stock issued hereunder.

Section 4.3. Restrictions on Transfer of Common Stock. Notwithstanding the
filing and effectiveness of the Registration Statement, the Investor agrees to
Transfer the Common Stock (not including the Warrant Shares) only as follows:

         (a) The Investor may Transfer up to one hundred percent (100%) of the
aggregate number of shares of Common Stock upon the earlier of (i) 180 days
after the Closing Date and (ii) the close of the fifth consecutive Trading Day
on which the closing sale price of the Common Stock on the Principal Market is
at least $2.00 per share.

Section 4.4. Restrictions on Transfer of Warrant Shares. The Investor agrees not
to Transfer the Warrant Shares until the later of (i) the effectiveness of the
Registration Statement and (ii) 180 days after the Closing Date.

                                   ARTICLE V

                            Covenants of the Company

Section 5.1. Registration Rights. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

Section 5.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Warrant Shares pursuant to the exercise of the
Warrants. The number of shares so reserved from time to time, as theretofore
increased or reduced as hereinafter provided, may be reduced by the number of
shares actually delivered pursuant to any exercise of the Warrants and the
number of shares so reserved shall be increased or decreased to reflect
potential increases or decreases in the Common Stock that the Company may
thereafter be obligated to issue by reason of adjustments to the Warrants.

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                                   ARTICLE VI

         Due Diligence Review; Non-Disclosure of Non-Public Information.

Section 6.1. Due Diligence Review. Subject to Section 6.2, the Company shall
make available for inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the Company), and any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investors pursuant to the Registration Statement, any such registration
statement or amendment or supplement thereto or any blue sky, Nasdaq or other
filing, all SEC Documents and other filings with the SEC, and all other publicly
available corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company's officers,
directors and employees to supply all such publicly available information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.

Section 6.2. Non-Disclosure of Non-Public Information. Nothing herein shall
require the Company to disclose material non-public information to the
Investors, advisors to or representatives of the Investors or any underwriter.
Other than disclosure of any comment letters received from the SEC staff with
respect to the Registration Statement, the Company may, as a condition to
disclosing any non-public information hereunder, require the Investors' advisors
and representatives to enter into a confidentiality agreement in form and
content reasonably satisfactory to the Company and the Investors.

                                  ARTICLE VII

                                     Legends

Section 7.1. Legends. Unless otherwise provided below, each certificate
representing the Common Stock, Warrants and Warrants Shares will bear the
following legend or equivalent (the "Legend"):

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.

                                       6

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                                  ARTICLE VIII

                                  Choice of Law

Section 8.1. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to the choice of law or conflicts of law provisions
thereof. 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 Agreement 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 Agreement 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
Agreement or the transaction contemplated hereby 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.

                                   ARTICLE IX

                                   Assignment

Section 9.1. Assignment. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other Person.
Notwithstanding the foregoing, the provisions of this Agreement shall inure to
the benefit of, and be enforceable by, any permitted transferee of any of the
Common Stock or Warrants purchased or acquired by any Investor hereunder with
respect to the Common Stock or Warrants held by such Person. The Investor shall
not assign its rights under this Agreement to any Person identified to the
Investor by the Company as a competitor of the Company.

                                   ARTICLE X

                                     Notices

Section 10.1. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) hand delivered,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the first business day following the date of sending by reputable
courier service, fully prepaid, addressed to such address, or (c) upon actual
receipt of such mailing, if mailed. The addresses for such communications shall
be:

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If to the Company:                            SEDONA Corporation
                                              455 South Gulph Road
                                              Suite 300
                                              King of Prussia, PA  19406
                                              Attention:  William K. Williams
                                              Facsimile:  484-679-2201

with a copy to (shall not constitute          Piper Marbury Rudnick & Wolfe LLP
notice):                                      1200 Nineteenth Street, NW
                                              Washington, DC 20036
                                              Attention: Robert B. Murphy, Esq.
                                              Telephone: 202-861-3900
                                              Facsimile: 202-223-2085

if to the Investors:                          As set forth on the signature
                                              pages hereto.

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 10.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 10.1.

                                   ARTICLE XI

                                  Miscellaneous

Section 11.1. Counterparts/Facsimile/Amendments. This Agreement may be executed
in multiple counterparts, each of which may be executed by less than all of the
parties and shall be deemed to be an original instrument which shall be
enforceable against the parties actually executing such counterparts and all of
which together shall constitute one and the same instrument. Except as otherwise
stated herein, in lieu of the original documents, a facsimile transmission or
copy of the original documents shall be as effective and enforceable as the
original. This Agreement may be amended only by a writing executed by all
parties.

Section 11.2. Entire Agreement. This Agreement, the agreements attached as
Exhibits hereto, which include the Warrants and the Registration Rights
Agreement, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as is fully set forth
herein.

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Section 11.3. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

Section 11.4. Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

Section 11.5. Number and Gender. There may be one or more Investors parties to
this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if there
is only one Investor, and all references to an Investor as "it" shall apply
equally to a natural person.

Section 11.6. Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Common Stock, Warrants or Warrant
Shares and (ii) in the case of any such loss, theft or destruction of such
certificate, upon delivery of an indemnity agreement or security reasonably
satisfactory in form to the Company (which shall not include the posting of any
bond) or (iii) in the case of any such mutilation, on surrender and cancellation
of such certificate, the Company at its expense will execute and deliver, in
lieu thereof, a new certificate of like tenor.

Section 11.7. Fees and Expenses. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder.

                                       9
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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

                                           SEDONA CORPORATION

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

Investor:

  Address:                                 By:__________________________________

  Amount: $______________________

  Number of shares of Common Stock: ________________

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                                                                       Exhibit A

                          Registration Rights Agreement

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                                                                       Exhibit B

                                     Warrant

                                       12<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT, dated as of___________,
2001, between the investors signatory hereto (the "Investors" and each an
"Investor"), and Sedona Corporation, a Pennsylvania corporation (the "Company").

                  WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Investors are purchasing from the Company, pursuant to a
Common Stock and Warrants Purchase Agreement dated the date hereof (the
"Purchase Agreement"), __________ shares of Common Stock and Warrants to
purchase _________ shares of the Company's Common Stock; and

                  WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the shares of Common Stock
purchased pursuant to the Purchase Agreement and the Warrant Shares (hereinafter
referred to as the "Stock" or "Securities" of the Company); and

                  WHEREAS, terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement.

                  NOW, THEREFORE, the parties hereto mutually agree as follows:

                  Section 1. Registrable Securities. As used herein the term
"Registrable Securities" means the Securities until (i) the Registration
Statement has been declared effective by the Commission, and all Securities have
been disposed of pursuant to the Registration Statement, (ii) all Securities
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) all Securities have been otherwise transferred to
holders who may trade such Securities without restriction under the Securities
Act, and the Company has delivered a new certificate or other evidence of
ownership for such Securities not bearing a restrictive legend or (iv) such time
as, in the opinion of counsel to the Company, all Securities may be sold without
any time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be deemed to be made
in the definition of "Registrable Securities" as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Agreement.

                  Section 2. Restrictions on Transfer. The Investors acknowledge
and understand that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Securities Act. Each Investor understands that no
disposition or transfer of the Securities may be made by such Investor in the
absence of (i) an opinion of counsel, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act or (ii) such registration.

<PAGE>

                  With a view to making available to the Investors the benefits
of Rule 144 under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration, the Company agrees to:

                           (a) comply with the provisions of paragraph (c)(1) of
Rule 144; and

                           (b) file with the SEC in a timely manner all reports
and other documents required to be filed with the SEC pursuant to Section 13 or
15(d) under the Exchange Act by companies subject to either of such sections,
irrespective of whether the Company is then subject to such reporting
requirements.

                  Section 3. Registration Rights With Respect to the Securities.

                           (a) The Company agrees that it will prepare and file
with the SEC, within 45 days of the Closing Date a registration statement (on
Form S-3, or other appropriate registration statement form) under the Securities
Act (the "Registration Statement"), at the sole expense of the Company (except
as provided in Section 3(c) hereof), in respect of the Investors, so as to
permit a public offering and resale of the Securities under the Act by the
Investors as selling stockholders and not as underwriters.

                           (b) The Company will maintain the Registration
Statement filed under this Section 3 effective under the Securities Act until
the earlier of (i) the date that none of the Securities covered by such
Registration Statement are or may become issued and outstanding, (ii) the date
that all of the Securities have been sold pursuant to such Registration
Statement, (iii) the date the Company receives an opinion of counsel that the
Securities may be sold under the provisions of Rule 144 without limitation as to
volume, (iv) all Securities have been otherwise transferred to persons who may
trade such shares without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, (v) all Securities may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) or any
similar provision then in effect under the Securities Act in the opinion of
counsel to the Company, or (vi) two (2) years from the Effective Date (the
"Effectiveness Period").

                                       2

<PAGE>

                           (c) All fees, disbursements and out-of-pocket
expenses and costs incurred by the Company in connection with the preparation
and filing of the Registration Statement under subparagraph 3(a), and in
complying with applicable securities and Blue Sky laws (including, without
limitation, all attorney's fees of the Company), shall be borne by the Company.
Each Investor shall bear its own costs of underwriting and/or brokerage
discounts, fees and commissions, if any, applicable to the Securities being
registered and the fees and expenses of its counsel. Each Investor and its
counsel shall have a reasonable period, not to exceed five (5) Trading Days, to
review the proposed Registration Statement or any amendment thereto, including a
copy of the Company's proposed response to any staff comments, prior to filing
with the SEC, and the Company shall provide each Investor with copies of any
comment letters received from the SEC with respect thereto within two (2)
Trading Days of receipt thereof and shall communicate any oral advice from the
SEC as to whether or not the Registration Statement will be reviewed, and if so,
how extensively. The Company shall qualify any of the securities for sale in
such states as any Investor reasonably designates and shall furnish
indemnification in the manner provided in Section 6 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers, or which will
require the Company to qualify to do business in such state or require the
Company to file therein any general consent to service of process. The Company
at its expense will supply each Investor with copies of the applicable
Registration Statement and the prospectus included therein and other related
documents in such quantities as may be reasonably requested by each Investor.

                           (d) The Company shall not be required by this Section
3 to include any Investor's Securities in any Registration Statement which is to
be filed if, in the opinion of the Company, the proposed offering or other
transfer as to which such registration is requested is exempt from applicable
federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not "restricted securities", as
defined in Rule 144 under the Securities Act.

                           (f) No provision contained herein shall preclude the
Company from selling securities pursuant to any Registration Statement in which
it is required to include Securities pursuant to this Section 3.

                           (g) If at any time or from time to time after the
effective date of any Registration Statement, the Company notifies the Investors
in writing of the existence of a Potential Material Event (as defined in Section
3(h) below), the Investors shall not offer or sell any Securities or engage in
any other transaction involving or relating to Securities, from the time of the
giving of notice with respect to a Potential Material Event until the Investors
receive written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event; provided, however, that the Company may not so suspend such
right to offer or sell any Securities for more than ninety (90) days in the
aggregate during any twelve month period during the period the Registration
Statement is required to be in effect. If a Potential Material Event shall occur
prior to the date a Registration Statement is required to be filed, then the
Company's obligation to file such Registration Statement shall be delayed for
not more than ninety (90) days.

                                       3

<PAGE>

                           (h) "Potential Material Event" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, if determined in good faith by the
Chief Executive Officer or the Board of Directors of the Company; or (ii) any
material engagement or activity by the Company which would, in the good faith
determination of the Chief Executive Officer or the Board of Directors of the
Company, be adversely affected by disclosure in a registration statement at such
time, which determination shall be accompanied by a good faith determination by
the Chief Executive Officer or the Board of Directors of the Company that the
applicable Registration Statement would be materially misleading absent the
inclusion of such information.

                           (i) In connection with any offering under this
Section 3 involving an underwriting, the Company shall not be required to
include any Registrable Securities in such underwriting unless the Investors
thereof accept the terms of the underwriting as agreed upon between the Company
and the underwriters selected by it. If, in the opinion of the managing
underwriter, the registration of all, or part of, the Registrable Securities
that the Investors have requested to be included would materially and adversely
affect such public offering, then the Company shall be required to include in
the underwriting only that number of Registrable Securities, if any, that the
managing underwriter in good faith believes may be sold without causing such
adverse effect. If the number of Registrable Securities to be included in the
underwriting in accordance with the foregoing is less than the total number of
shares that the Investors have requested to be included, the Investors who have
requested registration shall participate in the underwriting pro rata based upon
their total ownership of Registrable Securities. If any Investor would thus be
entitled to include more shares than such Investor requested to be registered,
the excess shall be allocated among other requesting Investors pro rata based
upon their total ownership of Registrable Securities.

                  Section 4. Cooperation with Company. The Investors will
cooperate with the Company in all respects in connection with this Agreement,
including timely supplying all information reasonably requested by the Company
(which shall include all information regarding each Investor and proposed manner
of sale of the Registrable Securities required to be disclosed in any
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Registrable
Securities and entering into and performing their obligations under any
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering. Nothing in this Agreement shall obligate the Investors to
consent to be named as underwriters in any Registration Statement. The
obligation of the Company to register the Registrable Securities shall be
absolute and unconditional as to those Securities which the SEC will permit to
be registered without naming the Investors as underwriters.

                                       4

<PAGE>

                  Section 5. Registration Procedures. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible, subject to the Investor's assistance and cooperation as reasonably
required with respect to each Registration Statement:

                           (a) (i) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such registration
statement whenever the Investors shall desire to sell or otherwise dispose of
the same (including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration statement
pursuant to Rule 415 promulgated under the Securities Act) and (ii) take all
lawful action such that each of (A) the Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (B) the prospectus forming part of the
Registration Statement, and any amendment or supplement thereto, does not at any
time during the Registration Period include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;

                           (b) (i) prior to the filing with the SEC of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Investors as required by Section 3(c) and reflect in such
documents all such comments as the Investors (and their respective counsel)
reasonably may propose respecting the Selling Shareholder and Plan of
Distribution sections (or equivalents) and (ii) furnish to the Investors such
numbers of copies of a prospectus including a preliminary prospectus or any
amendment or supplement to any prospectus, as applicable, in conformity with the
requirements of the Securities Act, and such other documents, as the Investors
may reasonably request in order to facilitate the public sale or other
disposition of the securities owned by the Investors;

                           (c) register and qualify the Registrable Securities
covered by the Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as the Investors shall reasonably request (subject to
the limitations set forth in Section 3(c) above), and do any and all other acts
and things which may be necessary or advisable to enable each Investor to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Investor;

                           (d) list such Registrable Securities on the Principal
Market, if the listing of such Registrable Securities is then permitted and
required under the rules of such Principal Market;

                                       5
<PAGE>

                           (e) notify the Investors at any time when a
prospectus relating thereto covered by the Registration Statement is required to
be delivered under the Securities Act, of the happening of any event of which it
has knowledge as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and the Company shall prepare and file a curative amendment under
Section 5(a) as quickly as commercially possible;

                           (f) as promptly as practicable after becoming aware
of such event, notify the Investors who hold Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of any stop order or other suspension of the effectiveness
of the Registration Statement at the earliest possible time and take all lawful
action to effect the withdrawal, recession or removal of such stop order or
other suspension;

                           (g) cooperate with the Investors to facilitate the
timely preparation and delivery of certificates for the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such denominations or
amounts, as the case may be, as the Investors reasonably may request and
registered in such names as the Investors may request; and, within three (3)
Trading Days after a Registration Statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Investors) an appropriate instruction
and, to the extent necessary, an opinion of such counsel;

                           (h) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor provided
in the prospectus which are customary for issuers to perform under the
circumstances;

                           (i) in the event of an underwritten offering,
promptly include or incorporate in a prospectus supplement or post-effective
amendment to the Registration Statement such information as the managers
reasonably agree should be included therein and to which the Company does not
reasonably object and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment; and

                           (j) maintain a transfer agent and registrar for its
Common Stock.

                                       6

<PAGE>

                  Section 6.  Indemnification.

                           (a) To the maximum extent permitted by law, the
Company agrees to indemnify and hold harmless each Investor, each underwriter of
such Investor's Registrable Shares and each person, if any, who controls such
Investor or underwriter within the meaning of the Securities Act (each a
"Distributing Investor") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses), to which the Distributing Investor may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, or any related final prospectus or
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent, and
only to the extent, that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
Distributing Investor, its counsel, affiliates or any underwriter, specifically
for use in the preparation thereof.

                           (b) To the maximum extent permitted by law, each
Investor, severally and not jointly, agrees that it will indemnify and hold
harmless the Company, each officer and director of the Company, each underwriter
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses) to which the Company, any such
underwriter or any such officer, director or controlling person of the Company
or any such underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
or any related final prospectus or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by such Investor, its counsel or affiliates, specifically for use
in the preparation thereof. Notwithstanding anything to the contrary contained
herein, each Investor shall not be liable under this Section 6(b) for any amount
that exceeds the gross proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement. This indemnity
agreement will be in addition to any liability which the Investors may otherwise
have and is not a limitation on any other indemnity obligation of the Investors
to the Company.

                                       7
<PAGE>

                           (c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 6, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve the indemnifying party from
any liability which it may have to any indemnified party except to the extent
the failure of the indemnified party to provide such written notification
actually prejudices the ability of the indemnifying party to defend such action.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party unless (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by its counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party or any other
indemnified party (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). No settlement of any action
against an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld so long
as such settlement includes a full release of claims against the indemnified
party, and no indemnified party shall consent to entry of any judgment or settle
any claim or litigation without the prior written consent of the Indemnifying
Party.

                                       8

<PAGE>

                  Section 7. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Investor shall contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), in either such case (after contribution from
others) on the basis of relative fault as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the applicable
Distributing Investor on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Investor agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

                  Notwithstanding any other provision of this Section 7, in no
event shall any Investor be required to undertake liability to any person under
this Section 7 for any amounts in excess of the dollar amount of the gross
proceeds received by such Investor from the sale of such Investor's Registrable
Securities pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act.

                  Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be delivered as provided
in the Purchase Agreement.

                  Section 9. Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may be amended and the Company
may take action herein prohibited, or omit to perform any act herein required to
be performed by it, if, but only if, the Company has obtained the written
consent of holders of at least a majority of the Registrable Securities then in
existence.

                                       9
<PAGE>

                  Section 10. Assignment. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. The rights granted the Investors under this
Agreement may be assigned as permitted by the Purchase Agreement.

                  Section 11. Additional Covenants of the Company. The Company
agrees that at such time as it otherwise meets the requirements for the use of
Securities Act Registration Statement on Form S-3 for the purpose of registering
the Registrable Securities, it shall file all reports and information required
to be filed by it with the SEC in a timely manner and take all such other action
so as to maintain such eligibility for the use of such form.

                  Section 12. No Registration of Warrants. The registration
rights contained herein apply only to the Company's Common Stock, and the
Company shall never be obligated to register the Warrants.

                  Section 13. Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.

                  Section 14. Remedies; Severability. The remedies provided in
this Agreement are cumulative and not exclusive of any remedies provided by law.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.

                  Section 15. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

                                       10

<PAGE>

                  Section 16. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the choice of law or conflicts of law provisions thereof. 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
Agreement 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 the Purchase Agreement 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 Agreement
or the transaction contemplated hereby 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.

                                       11

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and year first
above written.

                      SEDONA Corporation

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

                      By:
                         ----------------------------------------------
                         Name:
                         Title:

                      By:
                         ----------------------------------------------
                         Name:
                         Title:

                      By:
                         ----------------------------------------------
                         Name:
                         Title:

                      By:
                         ----------------------------------------------
                         Name:
                         Title:

                      By:
                         ----------------------------------------------
                         Name:
                         Title:

                                       12

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