THE RIGHTS OF THE HOLDER HEREOF ARE SUBORDINATE AND INFERIOR AND SUBJECT TO THE
RIGHTS OF CARDINAL BANK (LENDER) UNDER A DEBT SUBORDINATION AGREEMENT AMONG
LENDER, AVALON GLOBAL SOLUTIONS, INC. AND WIDEPOINT CORPORATION, WIDEPOINT
SOLUTIONS CORP., WIDEPOINT IL, INC., WIDEPOINT NBIL, INC., OPERATIONAL RESEARCH
CONSULTANTS, INC., ADVANCED RESEARCH CONCEPTS CORPORATION, PROTEXX TECHNOLOGY
CORPORATION, WIDEPOINT OHIO REAL ESTATE CORP., AND ISYS LLC DATED DECEMBER 30,
2011, AND TO THE RIGHTS OF ANY OTHER CURRENT OR FUTURE HOLDERS OF SENIOR
INDEBTEDNESS (AS DEFINED HEREIN).

$1,000,000.00
Hampton, Virginia
December 31, 2011

Subordinated Secured Promissory Note
 
FOR VALUE RECEIVED, the undersigned, WIDEPOINT SOLUTIONS CORP. (“Maker”), does
hereby promise to pay, with such payment being guaranteed by WIDEPOINT
CORPORATION (“Guarantor”), to the order of AVALON GLOBAL SOLUTIONS, INC.
(“Holder”), the principal amount of One Million and 00/100 U.S. Dollars
($1,000,000.00), together with simple interest computed on such principal amount
from the date hereof on the unpaid principal balance at the fixed annual rate of
three percent (3.0%) through the date of payment of this Note as provided in
Section 1 below.  Interest payable under this Note shall be computed on the
basis of a year of 365 days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which interest is payable.

1.    Payment Terms. The principal and interest amount outstanding under this
Note shall be paid by the Maker to the Holder in three (3) lump sum payments
with the first payment of Three Hundred Seventy-Two Thousand Forty-Five and
66/100 U.S. Dollars ($372,045.66) to be due and payable on April 15, 2013.  The
second payment of Three Hundred Fifty-Three Thousand Three Hundred Thirty-Three
and 33/100 U.S. Dollars ($353,333.33) shall be due and payable on April 15, 2014
and the third and final payment of Three Hundred Forty-Three Thousand Three
Hundred Thirty-Three and 34/100 U.S. Dollars ($343,333.34) shall be due and
payable on April 15, 2015.  All amounts due or payable at any time under this
Note shall be subject to withholding, adjustment and offset as provided in the
Purchase Agreement (as herein defined). The Maker shall make all such payments
to the order of the Holder via wire transfer of immediately available funds to
the following bank account of Holder: First Virginia Community Bank,
ABA/Routing: 056009505, Account: 206599 (or such other account or address as may
be designated in writing by Holder to Maker, which writing may be in the form of
electronic mail).
 
 
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2.    Right to Prepayment. This Note may be prepaid in whole or in part at any
time, without premium or penalty, with interest to the date of payment. If this
Note is prepaid, there is to be no discount from the obligation to pay the full
principal balance due at the time of prepayment.

3.    Fees and Expenses. Whenever an attorney is used to obtain payment under,
or to otherwise enforce, this Note or to enforce, declare, or adjudicate any
rights or obligations under this Note, whether by suit or by any other means
whatsoever, the costs and expenses thereof, including reasonable attorneys’ fees
and expenses, shall be payable by the non-prevailing party.

4.    Events of Default. Each of the following shall constitute an event of
default (“Event of Default”) hereunder:

(a)         If Maker or Guarantor fails to pay any installment of interest or
principal on this Note when due hereunder which failure continues for a period
of ten (10) days after Maker and Guarantor’s receipt of written notice from the
Holder. Receipt shall be deemed to have occurred if written notice is personally
delivered to and signed for on behalf of the Maker and Guarantor or delivered
certified first class mail, postage prepaid, return receipt requested, to the
addresses and representatives identified in Section 14.3 of the Purchase
Agreement;

(b)         If Maker or Guarantor shall admit in writing its inability to pay
its debts as they become due, file a petition in bankruptcy or make a petition
to take advantage of any insolvency act; make an assignment for the benefit of
creditors, commence a proceeding for the appointment of a receiver, trustee,
liquidator or conservator of all or any substantial part of its property; file a
petition or answer seeking reorganization or similar relief under the Federal
bankruptcy laws or any similar law or statute governing the relative rights of
debtors and creditors; and

(c)         If any of the creditors of Maker or Guarantor shall file a petition
in bankruptcy against Maker or Guarantor or for reorganization of Maker or
Guarantor pursuant to the Federal bankruptcy laws or similar law or statute, and
if such petition shall not be discharged or dismissed within sixty (60) calendar
days after the date on which such petition was filed.

In the event of the happening of any Event of Default, then the unpaid principal
of this Note, and interest thereon until payment, shall forthwith become
absolute and due and payable without any notice or demand whatsoever.

This Note (a) may not be changed, waived, discharged, or terminated except by an
instrument in writing signed by each of the Maker, Guarantor and Holder, and (b)
shall inure to the benefit of and be enforceable by the Holder and the Holder’s
heirs, executors, administrators, and personal representatives.
 
 
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This Note shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia applicable to agreements made and to be performed
entirely within such state.

5.    Subordination Provisions.

(a)         Subordination of Liabilities.  Maker and Guarantor, for themselves,
their successors and assigns, covenant and agree, and Holder, by Holder’s
acceptance of this Note, likewise covenants and agrees, that the payment of the
principal of, interest on, and all other amounts owing in respect of, this Note
(the “Subordinated Indebtedness”), and the obligations related to the security
provided pursuant to Section 6, is hereby expressly subordinated, to the extent
and in the manner set forth below, to the prior payment in full in cash of all
Senior Indebtedness (as defined in Section 5(g) hereof). The provisions of this
Section 5 shall constitute a continuing offer to all persons or other entities
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such holders are made obligees hereunder the same as if
their names were written herein as such, and they and/or each of them may
proceed to enforce such provisions.

(b)         Maker or Guarantor Not to Make Payments with Respect to Subordinated
Indebtedness in Certain Circumstances.

(i)      Upon the maturity of any Senior Indebtedness (including interest
thereon or fees or any other amounts owing in respect thereof), whether at
stated maturity, by acceleration or otherwise, all Obligations (as defined in
Section 5(g) hereof) owing in respect of the Senior Indebtedness shall first be
paid in full in cash, before any payment, whether in cash, property, securities
or otherwise, is made on account of the Subordinated Indebtedness.
 
 
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(ii)     The Maker and Guarantor may not, directly or indirectly, make any
payment of any Subordinated Indebtedness and may not acquire any Subordinated
Indebtedness for cash or property until all Senior Indebtedness has been paid in
full in cash if any default or event of default under the Credit Agreement (as
defined in Section 5(g) hereof) or any other issue of Senior Indebtedness is
then in existence or would result therefrom. The Holder hereby agrees that, so
long as any such default or event of default in respect of any issue of Senior
Indebtedness exists, Holder will not sue for, or otherwise take any action to
enforce the Maker’s or Guarantor’s obligations to pay, amounts owing in respect
of this Note or to enforce any rights in the Collateral (as defined in Section
6). The Holder understands and agrees that to the extent that Section 5(b)(i) or
this Section 5(b)(ii) prohibits the payment of any Subordinated Indebtedness,
such unpaid amount shall not constitute a payment default under this Note and
the Holder may not sue for, or otherwise take action to enforce the Maker’s or
Guarantor’s obligation to pay such amount, provided that such unpaid amount
shall remain an obligation of the Maker or Guarantor to the Holder pursuant to
the terms of this Note.  Notwithstanding the foregoing, in the event that any
default or event of default shall exist under the Senior Indebtedness
then-outstanding solely as a result of Holder declaring an Event of Default
under this Note, Holder shall provide written notice of such Event of Default to
the holders of the then-existing Senior Indebtedness (“Holder Notice”), which
Holder Notice shall include, at a minimum, (a) a detailed description of such
Event of Default, (b) a statement by Holder that Holder intends to exercise its
rights under this Section 5(b)(ii) and that action is required by the holders of
the Senior Indebtedness in order to prevent Holder from exercising its rights
under this Section 5(b)(ii), (c) a copy of this Note, (d) a notice address for
Holder and (e) the date on which the Holder Notice Period (as defined below)
shall terminate.  If, during the period commencing with the date of delivery of
the Holder Notice to each holder of Senior Indebtedness and terminating ninety
(90) days thereafter (“Holder Notice Period”), each holder of Senior
Indebtedness then-outstanding (or their duly authorized representative) shall
either (i) deliver to Holder a signed writing waiving its rights to declare a
default or event of default under the Senior Indebtedness as a result of the
Event of Default which is the subject of the Holder Notice or (ii) fail to
deliver to Holder a signed writing indicating that such holder intends to
exercise its rights under the Senior Indebtedness with respect to such default
or event of default, then Holder may pursue any and all remedies it may have
under this Note.  The Holder Notice shall be delivered to each holder of Senior
Indebtedness (or their duly authorized representative) by certified mail, return
receipt requested.

(iii)    In the event that notwithstanding  the provisions of the preceding
Section 5(b)(i) or Section 5(b)(ii), the Maker or Guarantor (or any person on
behalf of the Maker or Guarantor) shall make any payment on account of the
Subordinated Indebtedness at a time when payment is not permitted by Section
5(b)(i) or Section 5(b)(ii), such payment shall be held by the Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness or their representative or the trustee under the
indenture or other agreement pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear (including by giving effect to any intercreditor or subordination
arrangements among such holders), for application pro rata to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with the terms of such Senior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.

(c)         Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Maker or Guarantor. Upon any
distribution of assets of the Maker or Guarantor or upon dissolution, winding
up, liquidation or reorganization of the Maker or Guarantor (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for the
benefit of creditors or otherwise):
 
 
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(i)      the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash of all Senior Indebtedness (including, without
limitation, post-petition interest at the rate provided in the documentation
with respect to the Senior Indebtedness, whether or not such post-petition
interest is an allowed claim against the debtor in any bankruptcy or similar
proceeding) before the Holder is entitled to receive any payment of any kind or
character on account of the Subordinated Indebtedness;

(ii)     any payment or distributions of assets of the Maker or Guarantor of any
kind or character, whether in cash, property or securities to which the Holder
would be entitled except for the provisions of this Section 5, shall be paid by
the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or trustees under any
indenture under which any instruments evidencing any such Senior Indebtedness
may have been issued as their respective interests may appear (including by
giving effect to any intercreditor or subordination arrangements among such
holders), to the extent necessary to make payment in full in cash of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and

(iii)    in the event that, notwithstanding the foregoing provisions of this
Section 5(c), any payment or distribution of assets of the Maker or Guarantor of
any kind or character, whether in cash, property or securities, shall be
received by the Holder on account of Subordinated Indebtedness before all Senior
Indebtedness is paid in full in cash, such payment or distribution shall be
received and held in trust for and shall be paid over to the holders of the
Senior Indebtedness remaining unpaid or unprovided for or their representative
or representatives, or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have been
issued, as their respective interests may appear (including by giving effect to
any intercreditor or subordination arrangements among such holders) for
application to the payment of such Senior Indebtedness until all such Senior
Indebtedness shall have been paid in full in cash, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.

(d)         Subrogation. Subject to the prior payment in full in cash of all
Senior Indebtedness, the Holder shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of the
Maker or Guarantor applicable to the Senior Indebtedness until all amounts owing
on this Note shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of the Senior Indebtedness by or on
behalf of the Maker or Guarantor or by or on behalf of the Holder by virtue of
this Section 5 which otherwise would have been made to the Holder shall, as
between the Maker or Guarantor and its creditors other than the holders of
Senior Indebtedness, and the Holder, be deemed to be payment by the Maker or
Guarantor to or on account of the Senior Indebtedness, it being understood that
the provisions of this Section 5 are and are intended solely for the purpose of
defining the relative rights of the Holder, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
 
 
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(e)         Obligation of the Maker Unconditional.  Nothing contained in this
Section 5 or in this Note is intended to or shall impair, as between the Maker
and Guarantor, on one hand, and the Holder, on the other hand, the obligations
of the Maker and Guarantor, which are absolute and unconditional, to pay to the
Holder the principal of and interest on this Note as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holder and creditors of the Maker or
Guarantor other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Holder from exercising all remedies otherwise
permitted by applicable law upon an event of default under this Note, subject to
the provisions of this Section 5 and the rights, if any, under this Section 5 of
the holders of Senior Indebtedness in respect of cash, property, or securities
of the Maker or Guarantor received upon the exercise of any such remedy. Upon
any distribution of assets of the Maker or Guarantor referred to in this Section
5, the Holder shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Holder, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Maker or Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Section 5.

(f)          Subordination Rights Not Impaired by Acts or Omissions of Maker,
Guarantor or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Maker or Guarantor or by any act or failure to act in
good faith by any such holder, or by any noncompliance by the Maker or Guarantor
with the terms and provisions of this Note, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with. The holders of the
Senior Indebtedness may, without in any way affecting the obligations of the
Holder with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew, increase or otherwise alter, any Senior
Indebtedness or amend, modify or supplement any agreement or instrument
governing or evidencing such Senior Indebtedness or any other document referred
to therein, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the Holder.  In the event
that any Collateral is released by any holder of Senior Indebtedness with a
prior interest in such Collateral, the security interest of the Holder shall be
deemed to be automatically released and the Holder will provide any requested
evidence of such release within 10 days of receipt of a written request.

 
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(g)         Senior Indebtedness. The term “Senior Indebtedness” shall mean all
Obligations (as defined below) (i) of the Maker or Guarantor under, or in
respect of, (x) the Commercial Loan Agreement, dated as of December 30, 2011 (as
amended, modified, supplemented, extended, restated, refinanced, replaced or
refunded from time to time, the “Credit Agreement”), by and among Maker,
Guarantor and the various lenders from time to time party thereto, including but
not limited to Cardinal Bank, and any renewal, extension, restatement,
refinancing or refunding thereof, and (y) each other Loan Document (as defined
in the Credit Agreement) to which the Maker or Guarantor is a party, and (ii) of
the Maker or Guarantor under, or in respect of, any and all existing or future
debt for borrowed money, including, without limitation, any Obligations
evidenced by notes, debentures, bonds or other securities sold by Maker or
Guarantor, either prior to the date of this Note or in the future, for
money.  As used herein, the term “Obligation” shall mean any principal,
interest, premium, penalties, fees, expenses, indemnities and other liabilities
and obligations (including guaranties of the foregoing liabilities and
obligations) payable under the documentation governing any Senior Indebtedness
(including post-petition interest at the rate provided in the documentation with
respect to such Senior Indebtedness, whether or not such interest is an allowed
claim against the debtor in any bankruptcy or similar proceeding).  Holder
hereby agrees to execute and deliver to any existing or future holder of Senior
Indebtedness, within ten (10) days of receiving a written request therefor, any
additional subordination agreements or other evidence of subordination which may
be required by such holders of Senior Indebtedness.

(h)         Retirement of Senior Indebtedness. Notwithstanding anything
contained in this Note to the contrary, the term “Senior Indebtedness” shall
also include and mean any new or future debt or other Obligation incurred by the
Maker or Guarantor to pay off or otherwise replace the Senior Indebtedness that
existed as of the date of this Note.

6.    Security.  To secure payment of its obligations under this Note, Maker
hereby grants to Holder a security interest in all of the property described
below in which Maker has an interest as of the date hereof (collectively, the
“Collateral”): (a) all equipment, fixtures, and inventory; (b) all accounts,
contract rights, documents, chattel paper, instruments, and general intangibles;
(c) all financial assets, investment property, securities, security
entitlements, securities accounts, commodity contracts, and commodity accounts;
(d) all commercial tort claims; (e) all deposit accounts; and (f) all
letter-of-credit rights.  Maker acknowledges that Holder may file financing
statements describing such Collateral in any jurisdictions deemed advisable by
Holder.  Holder acknowledges that its rights to the Collateral are subject to
the subordination provisions set forth in this Note and in any applicable
subordination agreement.

7.    Mandatory Prepayment.  Subject to the subordination provisions set forth
in this Note and in any applicable subordination agreement, in the event that
Maker shall, subsequent to the date of this Note, issue Senior Indebtedness as
described in Section 5(g)(ii) above, Maker shall, promptly upon receipt of the
proceeds of such issuance, make a mandatory prepayment of the then-outstanding
principal amount under this Note plus accrued but unpaid interest under the Note
as of the date of issuance of such Senior Indebtedness.
 
 
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8.    Assignment. This Note shall be binding upon the Maker, Guarantor and their
successors and assigns, including, without limitation, any person, firm or
corporation which may acquire substantially all of the Maker’s or Guarantor’s
assets or business or with or into which the Maker or Guarantor may be
liquidated, consolidated, merged or otherwise combined.

9.    NOTE SUBJECT TO PURCHASE AGREEMENT AND DEBT SUBORDINATION AGREEMENT. THE
INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBJECT TO THE TERMS OF (i) THAT CERTAIN
ASSET PURCHASE AGREEMENT, DATED AS OF DECEMBER 30, 2011, BY AND AMONG GUARANTOR,
MAKER, HOLDER, MICHAEL MANSOURI, JOSEPH CHOPEK, DAVID RUSSIE, MARK GOETTLING,
MARSHALL WEINGARDEN AND STEVEN ROTTINGHAUS (the “Purchase Agreement”) AND (ii)
THAT CERTAIN DEBT SUBORDINATION AGREEMENT, DATED AS OF DECEMBER 30, 2011, BY AND
AMONG MAKER, GUARANTOR, WIDEPOINT IL, INC., WIDEPOINT NBIL, INC., ADVANCED
RESPONSE CONCEPTS CORPORATION, PROTEXX TECHNOLOGY CORPORATION, OPERATIONAL
RESEARCH CONSULTANTS, INC., ISYS LLC, WIDEPOINT OHIO REAL ESTATE CORP., HOLDER
AND CARDINAL BANK (the “Debt Subordination Agreement”).

10.  Counterparts. This Note may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same Note.  This Note, to the extent signed and delivered
by means of a facsimile machine or other electronic transmission (including .pdf
files), shall be treated in all manner and respects and for all purposes as an
original instrument and shall be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in person.

[THE NEXT PAGE IS THE SIGNATURE PAGE]
 
 
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IN WITNESS WHEREOF, Maker and Guarantor have caused this Note to be executed by
each of its duly authorized officers.

     
MAKER:
       
Attest:
 
WIDEPOINT SOLUTIONS CORP.
         
By:
   
By:
   
James T. McCubbin
   
Steve L. Komar
 
Secretary
   
President
               
GUARANTOR:
       
Attest:
 
WIDEPOINT CORPORATION
         
By:
   
By:
   
James T. McCubbin
   
Steve L. Komar
 
Secretary
   
Chief Executive Officer

[Signature Page to $1,000,000 Subordinated Secured Promissory Note]
 
 
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