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Exhibit 10.3

SVB Securities
 

SECURITIES ACCOUNT CONTROL AGREEMENT

Account Number(s)/Title(s):
     
Customer:
 
PARADIGM HOLDINGS. INC
 
Creditor
 
SILICON VALLEY BANK
 
Date:
 
May 6, 2011
 

This Securities Account Control Agreement entered into as of the above date
(this "Agreement") is by and among SVB Securities ("SVBS"), Penson Financial
Services, Inc. ("Penson" or "Clearing Broker"), the Customer identified above
("Customer"), and the Creditor identified above ("Creditor").

RECITALS

A.
Customer has established a securities account or securities accounts ("Account")
with SVBS pursuant to a SVB Securities Client Agreement (the "Client Agreement")
which Account is carried for SVBS by Penson. The account number and title for
the Account are identified above. SVBS acts as the introducing broker with
respect to the Account. Penson acts as SVBS's clearing broker with respect to
transactions in the Account and as carrying broker with respect to the Account,
as described in the NYSE Rule 382 letter (regarding the allocation of
responsibilities between SVBS and Clearing Broker) previously sent to Customer.
SVBS and Clearing Broker are securities intermediaries pursuant to Division 8 of
the California Uniform Commercial Code (the "CUCC"). Customer maintains in the
Account securities, financial assets, and other investment property as defined
under Divisions 8 and 9 of the CUCC (collectively, the "Securities").

B.
Pursuant to a security agreement or similar agreement (the "Security
Agreement"), Customer has granted to Creditor a security interest in certain
personal property of Customer, including without limitation (i) the Account;
(ii) the Securities, (iii) all dividends and distributions, whether payable in
cash, securities, or other property, in respect of the Securities, (iv) all of
Customer's rights with respect to the Securities and Account, and (iv) all
products, proceeds and revenues of and from any of the foregoing personal
property in sections (i) through (iv) (collectively, the "Collateral").

C.
SVBS, Clearing Broker, Customer and Creditor are entering into this Agreement to
perfect Creditor's security interest in the Collateral by means of control
pursuant to Division 8 of the CUCC.

AGREEMENT

The parties hereto hereby agree as follows:

1.
Defined Terms. All terms used in this Agreement which are defined in the CUCC
but are not otherwise defined herein shall have the meanings assigned to such
terms in the CUCC, as in effect as of the date of this Agreement. While in the
Account, all property credited to the Securities will be treated as financial
assets under Division 8 of the CUCC. By this Agreement, Customer provides
Creditor "control" over the Account for purposes of perfecting Creditor's
security interest in the Collateral pursuant to Divisions 8 and 9 of the CUCC.

2.
The Account. SVBS and Clearing Broker confirm that the Account, identified in
the books of SVBS and Clearing Broker in the name of Customer, has been
established with SVBS and is carried by Clearing Broker.

3.
Acknowledgement of Security Interest. SVBS and Clearing Broker hereby
acknowledge the security interest granted in the Collateral to Creditor by
Customer. Creditor hereby acknowledges the security interest granted in the
Collateral to SVBS and Clearing Broker by Customer pursuant to the Client
Agreement.

 
 

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SVB Securities
 

 
4.
Other Control Agreements.  SVBS represents and warrants that, other than any
account control agreement listed in this Section 4, SVBS and Clearing Broker
have executed no other account control agreement with any other party, and
neither SVBS nor Clearing Broker is presently obligated to accept any
entitlement order from any person other than the Customer with respect to the
Collateral. [The following is to be completed and initialed by SVBS.]

 
o
No other account control agreement has been executed.  __________

 
o
The following account control agreement(s) has (have) been executed.

 
 
 

 
 
[SVBS initial]

5.
Future Control Agreements. Customer covenants and agrees that it will not enter
an account control agreement with any other party without Creditor's prior
written consent. SVBS and Clearing Broker agree that they will not enter into a
control agreement with any other party with respect to the Account without
Creditor's prior written consent.

6.
Limitation on SVBS's and Clearing Broker's Rights in the Collateral. SVBS and
Clearing Broker will not attempt to assert control and do not claim and will not
accept any security or other interest in any part of the Collateral, and SVBS
and Clearing Broker will not exercise, enforce or attempt to enforce on their
own behalves any right of setoff against the Collateral, or otherwise charge or
deduct from the Collateral on SVBS's or Clearing Broker's behalves any amount
whatsoever, other than for: security interests, liens, encumbrances, claims or
rights of setoff for the payment of any amounts owed by Customer to SVBS and/or
Clearing Broker arising in connection with SVBS's and Clearing Broker's
customary fees and commissions pursuant to the Client Agreement or for the
payment for financial assets and securities purchased for the Account (the
"Account Claims"). Customer and Creditor hereby acknowledge that any security
interests, liens, encumbrances, claims or rights of setoff for the payment of
any amounts owed by Customer to SVBS and Clearing Broker arising in connection
with the Account Claims shall at all times be prior to the rights of Creditor in
the Collateral.

7.
Agreement for Control.

(a)
SVBS and Clearing Broker (upon instructions from SVBS) will comply with all
entitlement orders (including requests to withdraw Collateral from the Account)
originated by Customer with respect to the Collateral, or any portion of the
Collateral, without further consent by Creditor until such time as SVBS receives
from Creditor (in accordance with Section 12 below) a written notice to SVBS
that Creditor is thereby exercising exclusive control over the Account (a
"Notice of Exclusive Control"). The Notice of Exclusive Control must be in the
form set forth in Exhibit A hereto. SVBS and Clearing Broker have no obligation
whatsoever to confirm that Creditor is entitled to send a Notice of Exclusive
Control in connection with the Account or that the Creditor's representative who
signs any Notice of Exclusive Control is authorized to do so. SVBS and Clearing
Broker (upon instruction from SVBS) will, upon SVBS's receipt of such Notice of
Exclusive Control, proceed in accordance with the remainder of this Section 7
even if Creditor's instructions are contrary to any instructions or demands that
Customer may give to SVBS or Clearing Broker. After SVBS receives a Notice of
Exclusive Control and has had reasonable opportunity to comply with it, but no
later than two (2) Business Days ("Business Days" means days which SVBS is open
to the public for business and are measured in 24 hour increments) after receipt
of the Notice of Exclusive Control (in accordance with Section 12 below), the
parties agree that SVBS and Clearing Broker (upon instructions from SVBS) will:
(i) cease complying with entitlement orders or other directions concerning the
Account and Collateral that are originated by Customer or its representatives
until such time as SVBS receives a written notice from Creditor rescinding the
Notice of Exclusive Control: and (ii) comply with the entitlement orders and
instructions provided to SVBS by Creditor without further consent of Customer
and without investigating: the reason for any action taken by Creditor; the
amount of any obligations of Customer to Creditor; the validity of any of
Creditor's agreements with Customer; or the existence of any defaults under such
agreements.

 
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SVB Securities
 

 
(b)
Notwithstanding the foregoing, Creditor agrees that upon receipt of Creditor's
Notice of Exclusive Control, SVBS and Clearing Broker may take all steps
necessary to satisfy or settle any Account Claims, may respond as required
pursuant to the terms of any other account control agreement listed in Section 4
hereof with respect to which SVBS believes it previously received a notice of
exclusive control or similar notice, and may respond as required by law to any
court or government order, writ or other legal process received by SVBS or
Clearing Broker. Creditor also agrees that, before SVBS's receipt of Creditor's
Notice of Exclusive Control, SVBS and Clearing Broker may be required to and may
respond to (i) notices of exclusive control or similar notices sent to SVBS by
other parties (but only to the extent that other account control agreements to
which such notices of exclusive control or other similar notices relate are
listed in Section 4 hereof or have been subsequently consented to in accordance
with Section 5 hereof) and (ii) a writ or other similar legal process served on
SVBS or Clearing Broker in connection with the Account and Collateral. SVBS
agrees to use good faith efforts to promptly notify Creditor if any other party
delivers to SVBS a notice of exclusive control. SVBS and Clearing Broker agree
to use good faith efforts to promptly notify Creditor if any party other than
Creditor or SVBS asserts a claim against the Collateral by means of a writ or
other similar legal process, but failure to provide such notice does not
constitute a breach of this Agreement. Customer expressly agrees that SVBS,
Clearing Broker and Creditor may act in accordance with the terms of this
Section 7.

8.
Customer Waiver and Authorization, Customer hereby waives any rights that
Customer may have under the Client Agreement to the extent such rights are
inconsistent with the provisions of this Agreement, and hereby authorizes SVBS
and Clearing Broker to comply with all instructions and entitlement orders
delivered by Creditor to SVBS in accordance with the terms of this Agreement.

9.
Amendments to and Termination of Client Agreement. SVBS, Clearing Broker and
Customer shall not amend, supplement or otherwise modify the Client Agreement
insofar as it pertains to the Collateral without prior written notice to
Creditor. Customer may not terminate the Client Agreement insofar as it pertains
to the Collateral without consent of Creditor. SVBS and Clearing Broker agree to
use good faith efforts to notify Creditor if SVBS or Clearing Broker terminate
the Client Agreement, but SVBS's or Clearing Broker's failure to notify Creditor
shall not be a breach of this Agreement.

10.
Termination of this Agreement. Creditor may terminate this Agreement by giving
SVBS and Customer written notice of termination; provided that, by giving such
notice. Creditor hereby acknowledges that it will thereby be confirming that, as
of the termination date, it will no longer have a perfected security interest in
the Collateral to the extent such perfection is by control via this Agreement,
although Creditor may continue to have a perfected security interest in the
Collateral by other means. SVBS and Clearing Broker may terminate this Agreement
by giving Creditor and Customer 30 days' prior written notice of termination
(unless a shorter notice period is mandated by applicable law). Customer may
only terminate this Agreement with the written consent of Creditor; provided
that, by giving such notice with Creditor's written consent, both Customer and
Creditor acknowledge that they will thereby be confirming that, as of the
termination date. Creditor will no longer have a perfected security interest in
the Collateral to the extent such perfection is by control via this Agreement,
although Creditor may continue to have a perfected security interest in the
Collateral by other means.

11.
Delivery of Account Statements. SVBS and Clearing Broker are hereby authorized
by Customer and agree to send to Creditor at its address for notices set forth
below Creditor's signature block at the end of this Agreement, concurrently with
the sending thereof to Customer, duplicate copies of any and all monthly
statements or reports issued or sent to Customer with respect to the Account.
Until this Agreement is terminated, Customer authorizes SVBS and Clearing Broker
to disclose to Creditor at Creditor's request any information concerning the
Account and the Securities therein, including but not limited to the identity of
any other party with which Customer, SVBS, and Clearing Broker have executed
account control agreements or similar agreements with respect to the Account.

 
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12.
Notices.

(a)
Any notice, other than a Notice of Exclusive Control, or other communication
provided for or allowed hereunder shall be in writing and shall be considered to
have been validly given (i) when actually received by the recipient at the
address or facsimile number, if delivered personally (whether by messenger, air
courier service or otherwise) or sent by facsimile to the address or facsimile
number identified below the signature of the applicable party's signature below
and addressed to the addressee identified below the signature of the applicable
party's signature below; or (ii) 72 hours after being deposited in the United
States mail, registered or certified, postage prepaid, return receipt requested,
if sent to the address and addressee as set forth below the signature of the
applicable party hereto. The addresses and facsimile numbers to which notices or
other communications are to be given (including, without limitation, statements
delivered pursuant to Section 11 above and a Notice of Exclusive Control
delivered pursuant to Section 7 above) may be changed from time to time by
notice served as provided herein.

(b)
A Notice of Exclusive Control shall be in writing, must be in the form set forth
in Exhibit A hereto, must be delivered to the address listed below SVBS's
signature block at the end of this Agreement (subject to the last sentence of
Section 12(a) above), must be delivered to SVBS via hand delivery, messenger,
overnight delivery or facsimile and shall be considered to have been validly
given when actually received, except that a facsimile will be considered to have
been validly given only when acknowledged in writing by SVBS (SVBS agrees that
it will use its good faith effort to promptly acknowledge receipt of such
facsimile). If Creditor does not deliver the Notice of Exclusive Control as set
forth in this Section 12 or to the address listed below SVBS's signature block
at the end of this Agreement (subject to the last sentence of Section 12(a)
above), Creditor (i) acknowledges that SVBS may not be able to respond to a
Notice of Exclusive Control pursuant to Section 7 above, and (ii) agrees that
neither SVBS nor Clearing Broker will be held liable for any failure to respond
to a Notice of Exclusive Control.

13.
Unpaid Account Claims. Before Creditor exercises exclusive control over the
Account, SVBS and/or Clearing Broker may, in the ordinary course of business,
debit from the Account any unpaid Account Claims. After Creditor exercises
exclusive control over the Account, if (a) funds are not available in the
Account to pay SVBS and/or Clearing Broker for any Account Claims, and (b)
Customer fails to pay such Account Claims within fifteen (15) Business Days of
SVBS's and/or Clearing Broker's written demand therefor, Creditor will pay to
SVBS and/or Clearing Broker, within ten (10) Business Days of a written demand
by SVBS and/or Clearing Broker, any amounts owed for an Account Claim and that
is not paid in full by Customer up to the amount of the proceeds received by
Creditor from the Account; provided that SVBS and/or Clearing Broker must make a
demand from Creditor within 180 days of termination of this Agreement and
provided further that, with respect to Account Claims consisting of obligations
of Customer to pay for financial assets and securities purchased for the
Account, Creditor shall be obligated to pay such Account Claims only to the
extent that such purchased financial assets or securities (or the identifiable
cash proceeds thereof) were delivered to Creditor pursuant to Section 7(a)
following delivery of a Notice of Exclusive Control.

14.
Indemnification and Hold Harmless of SVBS and Clearing Broker by Customer and
Creditor.

(a)
Customer hereby agrees to indemnify and hold harmless SVBS and Clearing Broker,
and their respective affiliates and their respective directors, officers, agents
and employees (each, an "Indemnified Person") against any and all claims, causes
of action, liabilities, lawsuits, demands and damages (each, a "Claim"),
including without limitation, any and all court costs and reasonable attorneys'
fees, asserted by Creditor or any other party, in any way related to or arising
out of or in connection with this Agreement or any action taken or not taken
pursuant hereto, including any Claims arising as a result of SVBS's and Clearing
Broker's adherence (or alleged failure of adherence) to the foregoing
instructions including, without limitation. Claims that allegedly result from
SVBS's and/or Clearing Broker's ceasing, based on this Agreement, to permit
withdrawals of or from the Collateral or resulting from SVBS's and/or Clearing
Broker's paying over or delivering all or any part of the Collateral pursuant to
the directions of Creditor; provided that no Indemnified Person shall be
entitled to be indemnified to the extent that such Claims arise from the
Indemnified Person's own gross negligence or willful misconduct.

 
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(b)
To the extent that an Indemnified Person is not promptly indemnified by
Customer, Creditor hereby agrees to indemnify and hold harmless such Indemnified
Person against any and all Claims, including without limitation, any and all
court costs and reasonable attorneys' fees, asserted by Customer or any other
party, arising directly out of SVBS's and/or Clearing Broker's adherence to
Creditor's instructions in its Notice of Exclusive Control, including, without
limitation, any Claim that arises directly out of SVBS's and/or Clearing
Broker's ceasing, based on this Agreement, to permit withdrawals of or from the
Collateral or resulting from SVBS's and/or Clearing Broker's paying over or
delivering all or any part of the Collateral pursuant to Creditor's instructions
in its Notice of Exclusive Control; provided that no Indemnified Person shall be
entitled to be indemnified to the extent that such Claims arise from the
Indemnified Person's own gross negligence or willful misconduct. Creditor agrees
that it will not hold Indemnified Persons liable for any Claim arising out of or
relating to any Indemnified Person's performance or failure of performance under
this Agreement other than those Claims that result directly from the acts or
omissions of the Indemnified Person which are deemed gross negligence or willful
misconduct by a civil court or other similar judicial body.

(c)
Customer and Creditor agree that (i) SVBS and/or Clearing Broker shall not be
liable for delays or errors occurring by reason of circumstances beyond the
control of SVBS and/or Clearing Broker, including, without limitation, acts of
civil, military, or banking authorities, national emergencies, market disorder,
labor difficulties, fire, flood or other catastrophes, acts of God, terrorism,
insurrection, war, riots, failure of transportation or equipment, or failure of
vendors, communication or power supply; (ii) Clearing Broker shall have no
responsibility or liability under this Agreement to any party for any acts or
omissions by SVBS, its officers, employees, or agents; and (iii) SVBS shall have
uo responsibility or liability under this Agreement to any party for any acts or
omissions by Clearing Broker, its officers, employees, or agents.

15.
Responsibility of SVBS, Clearing Broker and Creditor. This Agreement does not
create any obligation or duty on the part of SVBS, Clearing Broker or Creditor
other than those expressly set forth herein.

16.
No Waiver. Any forbearance or failure or delay by SVBS, Clearing Broker or
Creditor in exercising any right hereunder shall not be deemed a waiver thereof
and any single or partial exercise of any right shall not preclude the further
exercise thereof.

17.
Amendments. This Agreement and all exhibits attached hereto may be amended only
in writing signed by all parties hereto.

18.
Governing Law. Notwithstanding the terms of any other agreement, the parties
hereto agree that this Agreement shall be governed under and in accordance with
the laws of the State of California.

19.
Jury Trial Waiver. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES EACH
WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, OR ANY CONTEMPLATED TRANSACTION, INCLUDING
CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL
INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED
THIS WAIVER WITH ITS COUNSEL.

21.
Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR
ANYWHERE ELSE, CUSTOMER AND CREDITOR EACH WAIVE AND AGREE THAT EACH SHALL NOT
SEEK FROM SVBS, CLEARING BROKER OR CREDITOR UNDER ANY THEORY OF LIABILITY
(INCLUDING WITHOUT LIMITATION ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.

 
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SVB Securities
 

 
22.
Attorneys' Fees, Costs and Expenses. In any action or proceeding between
Customer and SVBS, between Customer and Clearing Broker, between Creditor and
SVBS, or between Creditor and Clearing Broker, arising out of this Agreement,
the prevailing party will be entitled to recover its reasonable attorneys' fees
and other costs and expenses incurred, in addition to any other relief to which
it may be entitled, whether or not a lawsuit is filed.

23.
No Conflict. To the extent that the terms or conditions of this Agreement are
inconsistent with the Client Agreement or any other document, instrument or
agreement among SVBS, Clearing Broker and Customer, the terms and conditions of
this Agreement shall prevail.

24.
Successors. The terms of this Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and to each party's respective successors
or heirs and personal representatives. The parties may assign this Agreement and
any rights under the Agreement only if that party's successor or assign assume
all obligations under this Agreement. Customer may not assign its rights or
obligations hereunder without the prior written consent of Creditor, SVBS, and
Clearing Broker.

25.
Counterparts. This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, are one Agreement.

26.
Integra/ion Provision. This Agreement constitutes the entire agreement among the
parties with respect to Creditor's control over the Collateral and matters
specifically set forth herein, and all prior communications, whether verbal or
written, between any of the parties hereto with respect to the subject matter
hereof shall be of no further effect or evidentiary value.

27.
Survival. Section 13 through this Section 27, inclusive, shall survive the
termination of this Agreement.

[Signature page follows.]

 
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SVB Securities
 

 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

 
CUSTOMER:
   
PARADIGM HOLDINGS, INC.
   
By
 
/s/ Peter B. LaMontagne
   
Name:
 
Peter B. LaMontagne
   
Title:
 
President & CEO
             
Address for Notices:
 
9715 Key West Avenue, 3rd Floor
       
Rockville, MD 20850
       
ATTN: CFO
   
Telephone:
 
301-468-1200
   
Facsimile
 
240-235-4380
           
CREDITOR
   
SILICON VALLEY BANK
   
By
       
Name:
       
Title:
                 
Address for Notices:
                           
Telephone:
       
Facsimile
               
SVBS:
   
SVB SECURITIES
   
By
       
Name:
       
Title:
  Operations Manager              
Address for Notices:
           
SVB Securities
       
3003 Tasman Drive
       
Mail Sort HG250
       
Santa Clara, CA 95054
       
Attn: Operations Manager
       
Telephone: 800.303.7371
       
Facsimile: 408.496.2407
                     
CLEARING BROKER:
   
PENSON FINANCIAL SERVICES, INC.
   
By
       
Name:
       
Title:
   

 
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SVB Securities
 

 
EXHIBIT A - NOTICE OF EXCLUSIVE CONTROL

To:
 
SVB Securities ("SVBS")
   
From:
     
("Creditor")
Re:
     
("Customer")
Date:
       

Pursuant to the Securities Account Control Agreement dated ("Agreement") entered
among SVBS,

Clearing Broker, Customer and Creditor, Creditor hereby notifies SVBS of
Creditor's exercise of Creditor's rights under the Agreement and directs SVBS to
cease complying with trading instructions or any entitlement orders originated
by Customer or its agents.

Creditor understands and agrees that SVBS and Clearing Broker shall have no duty
or obligation whatsoever of any kind or character to determine the validity of
Creditor's exercise of its rights under the Agreement or the certification
above, to determine if SVBS and/or Clearing Broker is/are obligated to take
further instructions from Customer, or to determine whether Creditor has a right
to all or part of the Collateral. Creditor hereby agrees to indemnify and hold
harmless SVBS and Clearing Broker, their respective affiliates, and their
respective directors, officers, employees and agents pursuant to the terms of
Section 14 of the Agreement.

Creditor agrees that upon receipt of Creditor's Notice of Exclusive Control,
SVBS and Clearing Broker may exercise their rights and remedies as permitted
under the Agreement.

Creditor hereby certifies that the person executing this Notice of Exclusive
Control is an officer, representative or agent of Creditor authorized to act on
the behalf of Creditor and to make the representations and agreements contained
in this Notice of Exclusive Control.

 
CREDITOR:
                   
By:
       
Title:
               
ACKNOWLEDGED BY:
   
SVB SECURITIES
 
(for facsimile only)
                   
By:
       
Name:
       
Title:
       
Date:
       
Time:
   

 
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