Document:

<PAGE>

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF FOR A PERIOD OF ONE
YEAR FOLLOWING THE ISSUANCE DATE (AS DEFINED HEREIN) EXCEPT AS PERMITTED BY NASD
RULE 2710(C)(7).

                             STOCK PURCHASE WARRANT

                  To Purchase 107,692 Shares of Common Stock of

                               SEDONA CORPORATION

THIS CERTIFIES that, for value received, Ladenburg Thalmann & Co. Inc. (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after January 24, 2001 (the "Issuance Date") and on
or prior to 5:00 P.M. (New York time) on January 24, 2004 (the "Termination
Date") but not thereafter, to subscribe for and purchase from Sedona
Corporation, a corporation incorporated in Pennsylvania (the "Company"), up to
107,692 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 $0.72. 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 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 Issuance Date, and before 5:00 P.M. (New York
time) 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 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 shall be entitled to receive a certificate for the number of
Warrant Shares so purchased. Certificates for shares purchased hereunder shall
be delivered to the Holder 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

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<PAGE>

exercised and such certificate or certificates shall be deemed to have been
issued, and the 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 Holder has paid to the Company an amount equal to
the Exercise Price plus all taxes required to be paid by the Holder pursuant to
Section 5, if any. 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 the Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

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

             "The securities represented by this certificate may not be sold,
             pledged, transferred, encumbered or otherwise disposed of for a
             period of one year from January 24, 2001 except as permitted by
             NASD Rule 2710(c)(7)."

The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they are
no longer subject to NASD Rule 2710(c)(7).

         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 the 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.

         5.  Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares 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 or in such name or
names as may be directed by the holder of this Warrant; provided, however, that
in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
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 the 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

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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 Warrant Shares 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 the 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.

         8.  No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder 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 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

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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 shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
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.

             (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 the 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 to the number of
Warrant Shares 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

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<PAGE>

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.

         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 the 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 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,

                                       5

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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 reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to the Holder at the last address of the Holder
appearing on the books of the Company and delivered in accordance with Section
16(c). To the extent that the notice required to be given to the Holder
hereunder is material, non-public information, then such Holder shall sign such
confidentiality agreement with the Company as it or its counsel may reasonably
require to protect against the premature disclosure of such event.

         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 trading
market upon which the Common Stock may be listed.

         The Company shall not by any action, including, without limitation,
amending its articles 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 the Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares 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 Warrant
Shares, 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.

         Upon the request of the Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to the Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.

         Before taking any action which would cause an adjustment reducing the
current Exercise Price below the then par value, if any, of the Warrant Shares,
the Company shall take any corporate action which may be necessary in order that
the Company may validly and legally issue fully paid and non-assessable Warrant
Shares at such adjusted Exercise Price.

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<PAGE>

         Before taking any action which would result in an adjustment in the
number of Warrant Shares 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 New York without regard to its conflict of law, principles or rules.

             (b) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the 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 the 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 the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

             (c) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered to:

                 Ladenburg Thalmann & Co. Inc.
                 590 Madison Avenue
                 New York, NY  10022
                 FAX: (212) 409-2169
                 Attention: Robert Kropp

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 the Holder.

             (d) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Holder hereof, shall give rise to any
liability of the Holder for the purchase price of any Warrant Shares or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

             (e) Successors and Assigns. Subject to applicable securities laws,
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 successors
and permitted assigns of the Holder. The provisions of this Warrant are intended

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to be for the benefit of all holders from time to time of this Warrant and shall
be enforceable by any such Holder.

             (f) Indemnification. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
failure by the Company to perform or observe in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Warrant;
provided, however, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have resulted from the
Holder's negligence, bad faith or willful misconduct in its capacity as a
stockholder or warrantholder of the Company.

             (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.

                            {Signature page follows}

                                       8

<PAGE>

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

                                    SEDONA CORPORATION

                                    By:/s/ William K. Williams
                                       ------------------------
                                           William K. Williams
                                           Vice President and
                                           Chief Financial Officer

<PAGE>

                               NOTICE OF EXERCISE

To: SEDONA CORPORATION                                        Dated:____________

         (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 specified below:

                                 Name of entity:________________________________
                                (name on certificate)

                                 Signed:________________________________________

                                 Name:__________________________________________
                                                          [Print]

                                 Title:_________________________________________

                                 Address:_______________________________________

                                         _______________________________________

                                         _______________________________________

<PAGE>

                                 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:

Name of Assignee                      Address                      No. of Shares
----------------                      -------                      -------------

Dated:___________________           Name of assignor: __________________________

                                    Signed:_____________________________________

                                    Name:_______________________________________
                                                         [Name]

                                    Title:______________________________________

                                   Address:_____________________________________

                                           _____________________________________

                                           _____________________________________

Signature Guarantee:

________________________

Name:___________________

Date:___________________

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.<PAGE>

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

                                February 1, 2001

FEDERAL EXPRESS

Dutchess Advisors, Ltd.
100 Mill Plain Rd., 3rd Fl.
Danbury, CT  06811

Attention: Michael A. Novielli

         Re:      Finder's Fee Arrangement

Ladies and Gentlemen:

         This letter agreement ("Agreement") will confirm the understanding
between Sedona Corporation, a Pennsylvania corporation (the "Company"), and
Dutchess Advisors, Ltd., a New York corporation ("Dutchess"), pursuant to which
the Company will retain Dutchess as its non-exclusive financial advisor
("Finder"), on the terms and subject to the conditions set forth herein, in
connection with a private placement of shares of the Company's common stock,
$0.001 par value per share ("Common Stock") and/or Class A preferred stock,
$2.00 par value per share ("Preferred Stock"). The Preferred Stock and the
Common Stock are sometimes referred to herein as the "Securities."

         The Company proposes, and the Finder agrees, that the Securities be
sold solely to investors that qualify as "accredited investors" as that term is
defined in Rule 501(a) under the Securities Act of 1933, as amended ("Act"),
pursuant to an exemption from the registration requirements of Section 5 of that
Act.

         1. Retention of Finder. The Company hereby appoints Dutchess as its
non-exclusive financial advisor in connection with the private placement of the
Securities and Dutchess hereby accepts such appointment and agrees to use its
best efforts to introduce accredited investors to the Company. In introducing
accredited investors to the Company, the Finder shall act solely as the agent
for the Company and not as principal.

                                      -1-

<PAGE>

         2. Offering Materials. Only the Company may transmit materials
describing the Company, the Securities and the transactions related thereto
(together with any amendments thereof or supplements or exhibits thereto, the
"Offering Materials") to accredited investors. The Company does not authorize
the Finder to transmit any Offering Materials to accredited investors.

         3. Representation, Warranties and Covenants of the Finder. The Finder
represents, warrants and covenants to the Company that, as of the date hereof
and as of the consummation of the sale of the Securities to any accredited
investors introduced to the Company by the Finder ("Closing Date"):

                  (a)  The Finder has full power and authority and legal right
to enter into this Agreement and to engage in the transactions contemplated
hereby; and

                  (b) The Finder did not seek accredited investors by means of
any form of general solicitation, general advertising, publicly disseminated
advertisements or sales literature.

         4. Indemnification. The Company agrees to indemnify the Finder against
all losses, claims, damages, liabilities or expenses insofar as such losses,
claims, damages, liabilities or expenses arise out of or relate to actions or
failures to act by the Company or otherwise arise out of or relate to the
Finder's engagement hereunder, provided, however, that the Company shall not be
liable to the extent that such losses, claims, damages, liabilities or expenses
are determined to have resulted primarily from the gross negligence or willful
misconduct of the Finder.

         5. Compensation of Finder. At the Closing Date of a sale of the
Securities to accredited investors introduced to the Company by the Finder, the
Company will pay to the Finder in consideration of its services hereunder an
amount based on the following fee schedule:

 -------------------------------------------------------------------------------
     Total Gross Proceeds from       Fee as a Percentage of Total Gross Proceeds
          Securities Sold
 -------------------------------------------------------------------------------

          up to $3 million                                 7%
  over $3 million up to $7 million                         5%
  over $7million up to $10 million                         3%
          over $10 million                                 2%

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

         Such fee shall be due and payable on each Closing Date by wire transfer
in immediately available funds to the account designated by the Finder.

         At each Closing Date, the Company also will issue five-year warrants to
purchase 5,000 shares of Common Stock to the Finder for every $1 million dollars
of the Securities sold to

                                      -2-

<PAGE>

accredited investors introduced to the Company by the Finder. The per share
exercise price of the warrants shall be equal to 120% of the highest per share
offering price at which the Securities are sold. The Company shall enter into a
registration rights agreement with the Finder at the Closing Date granting
piggyback registration rights with respect to the shares of Common Stock
issuable upon exercise of the warrants.

         6. Termination. This Agreement shall automatically terminate 180 days
from the date first written above. Notwithstanding the foregoing, the Company or
the Finder may terminate this Agreement, with or without cause, at any time upon
written notice to the other party. However, the actual termination date of this
Agreement notwithstanding, the Finder shall be entitled to receive its full and
complete remuneration pursuant to Section 5. of this Agreement, for the entire
term of the agreement executed between the Company and the accredited
investor(s).

         7. Notices. All communications hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by facsimile transmission,
telex or telegraph and confirmed by a similar mailed writing, if to the Company,
addressed to the Company at the address first stated in this Agreement,
Attention: William K. Williams, Chief Financial Officer, or to such other
address as the Company may designate in writing to the Finder and, if to the
Finder, addressed to , Dutchess Advisors, Ltd., 100 Mill Plain Rd., 3rd Floor,
Danbury, CT 06811; Attention: Michael A. Novielli, Managing Director, or such
other address as the Finder may designate in writing to the Company.

         8. Confidentiality. The Finder agrees to use all non-public information
provided to it by or on behalf of the Company hereunder solely for the purpose
of providing the services which are the subject of this Agreement and to treat
confidentially all such information, provided, however, that nothing herein
shall prevent the Finder from disclosing any such information (i) pursuant to
law, regulation or legal process, including the order of any court or
administrative agency or in any pending legal or administrative proceeding, (ii)
upon the request or demand of any regulatory authority having jurisdiction over
the Finder or any of its affiliates, (iii) to the extent that such information
becomes publicly available other than by reason of disclosure by the Finder,
(iv) to the Finder's employees, legal counsel, independent auditors and other
experts or agents who need to know such information and are informed of the
confidential nature of such information or (v) to any of its affiliates as set
forth in Section 9.

                                      -3-

<PAGE>

         9. Miscellaneous.

                  (a) THIS AGREEMENT SHALL BE DEEMED MADE IN PENNSYLVANIA AND
SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD
TO ITS CONFLICT OF LAWS RULES.

                  (b) This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall constitute one
and the same instrument. The Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns, and
no other person shall have any right or obligation hereunder. This Agreement
supersedes all prior agreements and understandings of the parties hereto with
respect to the subject matter hereof and may only be amended, modified or
changed, or a provision hereof waived, by a written instrument signed by the
parties hereto. Paragraph headings herein are for convenience only and are not a
part of this Agreement. This Agreement is solely for the benefit of the Company
and the Finder and no other person shall acquire or have any rights under or by
virtue of this Agreement. This Agreement may not be assigned by either party
without the prior written consent of the other party.

                  (c) If any term, provision, covenant or restriction contained
in this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable or against public policy, the remainder of the terms,
provisions, covenants and restrictions contained herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. The
Company and the Finder shall endeavor in good faith negotiations to replace the
invalid, void or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, void or
unenforceable provisions.

                  (d) The Company acknowledges that the Finder has been retained
on a non-exclusive basis solely by the Company, and that the Company's
engagement of the Finder is not intended to confer rights upon any persons not a
party hereto (including shareholders, employees and creditors of the Company) as
against the Finder, its affiliates or their respective directors, officers,
agents and employees.

                  (e) The Company acknowledges that the Finder or an affiliate
may be providing financial advisory or other services to parties whose interests
may conflict with those of the Company. In accordance with their long-standing
policy to hold in confidence the affairs of their customers, however, neither
the Finder nor any of its affiliates will furnish confidential information
obtained from the Company or such other parties to any of its other customers.
Furthermore, neither the Finder nor any of its affiliates will make available to
the Company or such other parties confidential information that it has obtained
or may obtain from any other customer.

                                      -4-

<PAGE>

                  (f) Any payments to the Finder hereunder, whether pursuant to
Sections 4, 5 or otherwise, shall be in U.S. dollars and shall be free of all
withholding, stamp and other similar taxes and of all other governmental charges
of any nature whatsoever.

                  (g) EACH OF THE COMPANY AND THE FINDER HEREBY IRREVOCABLY
WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON
BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS
OF THE FINDER IN THE NEGOTIATIONS, PERFORMANCE OR ENFORCEMENT HEREOF.

                  (h) Each of the Company and the Finder irrevocably and
unconditionally submit to the exclusive jurisdiction of any state or federal
court sitting in the City of King of Prussia over any suit, action or proceeding
arising out of or relating to this Agreement. Each of the Company and the Finder
hereby agree that service of any process, summons, notice or document by
registered mail addressed to the Company or the Finder, as the case may be,
shall be effective service of process for any suit, action or proceeding brought
in any such court. Each of the Company and the Finder irrevocably and
unconditionally waive any objection to the laying of venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding has been brought in an inconvenient forum. Each of the
Company and the Finder agree that a final judgment in any such suit, action or
proceeding brought in any such court shall be conclusive and binding upon the
Company and the Finder and may be enforced in any other courts to whose
jurisdiction the Company or the Finder, as the case may be, is or may be subject
by suit upon judgment.

                                      -5-

<PAGE>

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to each of the undersigned a counterpart
hereof, whereupon this Agreement shall become a binding agreement between the
Finder and the Company. This Agreement shall supercede all other prior such
agreements between the Finder and Company. Upon execution of this Agreement by
both parties, all other prior such agreements shall be considered immediately
null and void.

                                            Very truly yours,

                                            SEDONA CORPORATION

                                            By: /s/ Marco A. Emrich
                                                --------------------------------
                                                    Marco A. Emrich, President

ACCEPTED AND AGREED TO
this 1st day of February, 2001

DUTCHESS ADVISORS, LTD.

By: /s/  Michael A. Novielli
    -----------------------
         Michael A. Novielli
         Managing Director

                                      -6-

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