PREFERRED STOCK EXCHANGE AGREEMENT
 
THIS PREFERRED STOCK EXCHANGE AGREEMENT (this “Agreement”), dated as of February
27, 2009, is by and among Paradigm Holdings, Inc., a Wyoming corporation (the
“Company”), and the persons listed on Schedule I hereto (each a “Stockholder,”
and, collectively, the “Stockholders”).
 
WHEREAS, Hale Capital Partners, LP and the other Purchasers (collectively, the
“Investors”) and the Company propose to enter into a Preferred Stock Purchase
Agreement dated as of February 27, 2009 (as the same may be amended or
supplemented, the “Purchase Agreement”) providing for the purchase by the
Investors of shares of Series A-1 Senior Preferred Stock, $0.01 par value per
share, of the Company (the “Series A-1 Preferred Stock”) and certain series of
warrants (the “Warrants”) to purchase Common Stock, $0.01 par value per share,
of the Company (the “Common Stock”) (the transactions contemplated by the
Purchase Agreement, including without limitation the issuance of securities
thereunder and the amendment or amendment and restatement of the Company’s
Articles of Incorporation, the “Transactions”);
 
WHEREAS, each Stockholder is the record and beneficial owner, or the trustee of
a trust whose beneficiaries are the beneficial owners, of such number of shares
of Series A Preferred Stock of the Company (the “Series A Preferred Stock”) set
forth opposite such Stockholder’s name on Schedule I hereto (such shares of
Series A Preferred Stock, the “Shares”).
 
WHEREAS, the Stockholders have agreed with the Company to exchange, at the
closing of the Transactions, the Series A Preferred Stock held by them for
shares of Common Stock at a price per share of Common Stock of $0.078 (the
“Issue Price”).
 
WHEREAS, as a condition to the execution and delivery of the Purchase Agreement,
the Investors have requested that the Stockholders enter into this Agreement;
and
 
WHEREAS, the Stockholders believe that the execution, delivery and performance
of the Purchase Agreement and the consummation of the Transactions is in the
best interests of the Company and its shareholders.
 
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the Stockholders agree as follows:
 
1.    Definitions.  In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings set forth in this Section
1:
 
“Affiliate” of a Person means any other Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the first Person.
 
“Common Stock Equivalents” means, collectively, Options and Convertible
Securities.
 

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“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.
 
“Eligible Stock” shall mean, for each Stockholder, at the time of an issuance of
additional shares of Common Stock or Convertible Securities, the lesser of (A)
the number of shares of Common Stock then held by such Stockholder and its
Affiliates (other than shares of Common Stock (i) issued to such Stockholder
pursuant to Section 4 below or (ii) purchased by such Stockholder on the open
market) or (B) the number of shares of Common Stock issued at the closing of the
Transactions to such Stockholder in exchange for Series A Preferred Stock.
 
“Excluded Stock” means the issuance of (i) Common Stock upon the conversion of
any Convertible Securities or Options outstanding as of the date of the Purchase
Agreement and set forth in Schedule 3.1(g) of the Purchase Agreement, pursuant
to the terms of such Convertible Securities or Options, as applicable, as of the
date of the Purchase Agreement, (ii) Common Stock as a dividend on the Common
Stock distributed pro rata to the holders thereof, (iii) Options (and the
issuance of Common Stock upon exercise thereof) or restricted stock of the
Company to employees, officers, directors or consultants of the Company pursuant
to the Management Pool, (iv) Options (and the issuance of Common Stock upon
exercise thereof) or restricted stock of the Company to employees, officers,
directors or consultants of the Company pursuant to a stock option plan,
restricted stock agreement or other incentive stock plan or pursuant to any
employee benefit plan, in each case as in effect on the Closing Date (as defined
in the Purchase Agreement) and specified in Schedule 3.1(g) of the Purchase
Agreement, (v) Options (and the issuance of Common Stock upon exercise thereof)
or restricted stock of the Company to employees, officers, directors or
consultants of the Company pursuant to a stock option plan, restricted stock
agreement or other incentive stock plan or pursuant to any employee benefit
plan, in each case, if not in effect on the Closing Date, as approved by the
Company’s Board of Directors and, so long as any threshold in clauses (x)
through (z) of Section 4.6(a) of the Purchase Agreement is met, as acceptable to
Hale Capital Partners, LP; provided that in the cases of clauses (iv) and (v),
in an aggregate amount not to exceed three percent (3%) of the outstanding
Common Stock on a fully diluted basis in any 12 month period, (vi) the
Underlying Shares (as defined in the Purchase Agreement), and (vii) Common Stock
or Common Stock Equivalents that does not result in any adjustment to the
exercise price or number of shares underlying the Warrants.
 
“Management Pool” means the management incentive plan of the Company to be
established as promptly as practicable after the Closing which shall provide for
the issuance of Options and/or restricted stock of the Company on terms
reasonable satisfactory to Hale Capital Partners, LP.
 
“New Securities” means Common Stock or Common Stock Equivalents; provided that
the term “New Securities” does not include Excluded Stock, shares of Common
Stock issued to such Stockholder pursuant to Section 4 below or the Series A-1
Preferred Stock and Warrants sold pursuant to the Purchase Agreement.
 
“Options” means any rights, warrants or options to, directly or indirectly,
subscribe for or purchase Common Stock or Convertible Securities.
 
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“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
 “Registrable Securities” means the shares of Common Stock issued to the
Stockholders pursuant to Section 2 of this Agreement.
 
“Registration Statement” means a registration statement under the Securities Act
of 1933, as amended (the “Securities Act”) which covers the Registrable
Securities.
 
“Specified Event” (i) the Securities and Exchange Commission issues any stop
order suspending the effectiveness of any Registration Statement or initiates
any proceedings for that purpose; (ii) the Company receives notice of any
suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or threat
of any proceeding for such purpose; or (iii) the financial statements included
in any Registration Statement become ineligible for inclusion therein or any
statement made in any Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference is
untrue in any material respect or any revision to a Registration Statement,
related prospectus or other document is required so that it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
 
2.      Exchange of Series A Preferred Stock.  At the closing of the
Transactions, each Stockholder agrees to exchange all Shares held by such
Stockholder for a number of shares of Common Stock equal to the product of
$1,000 and the number of Shares exchanged (the “Face Amount”) divided by the
Issue Price, rounded up to the nearest whole share.  Upon issuance, such shares
of Common Stock shall be validly issued, fully paid and non-assessable.  At the
closing of the Transactions, each Stockholder shall deliver all share
certificates evidencing all of said Stockholder’s Shares to the Company and
shall execute a stock power separate from the certificate transferring the
Stockholder’s Shares to the Company and, within two (2) business days following
the closing of the Transactions, the Company shall deliver to each Stockholder a
certificate in such Stockholder’s name representing the number of shares of
Common Stock issued to such Stockholder pursuant to this Section 2.
 
3.      Representations and Warranties of the Stockholders.  Each Stockholder
hereby, severally and not jointly, represents and warrants to the Company and
the Investors as follows:
 
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(a) Authority.  The Stockholder has all requisite power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.  The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Stockholder.  This Agreement has been duly executed and delivered by the
Stockholder and, assuming this Agreement constitutes a valid and binding
obligation of the other parties hereto, constitutes a valid and binding
obligation of the Stockholder enforceable against the Stockholder in accordance
with its terms.  Neither the execution, delivery or performance of this
Agreement by the Stockholder nor the consummation by the Stockholder of the
transactions contemplated hereby will (i) require any filing with, or permit,
authorization, consent or approval of, any federal, state, local or municipal
foreign or other government or subdivision, branch, department or agency thereof
or any governmental or quasi-governmental authority of any nature, including any
court or other tribunal, (a “Governmental Entity”), (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, or result in the creation of any pledge,
claim, lien, option, charge, encumbrance or security interest of any kind or
nature whatsoever (a “Lien”) upon any of the properties or assets of the
Stockholder under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, permit, concession, franchise, contract,
agreement or other instrument or obligation (a “Contract”) to which the
Stockholder is a party or by which the Stockholder or any of the Stockholder’s
properties or assets, including the Stockholder’s Shares, may be bound or (iii)
violate any judgment, order, writ, preliminary or permanent injunction or decree
or any statute, law, ordinance, rule or regulation of any Governmental Entity (a
“Law”) applicable to the Stockholder or any of the Stockholder’s properties or
assets, including the Stockholder’s Shares.
 
(b) The Shares.  Subject to the terms of this Agreement, the Series A Preferred
Stock and the certificates representing such Shares are now held by such
Stockholder, or by a nominee or custodian for the benefit of such
Stockholder.  The Stockholder has good and marketable title to such Shares, free
and clear of any Liens, proxies, voting trusts or agreements, understandings or
arrangements, except for any such Liens or proxies arising hereunder.  The
Stockholder owns of record or beneficially no Series A Preferred Stock other
than the Shares as set forth on Schedule I hereto.
 
(c) Purchase Agreement.  Each Stockholder understands and acknowledges that the
Investors are entering into the Purchase Agreement in reliance upon such
Stockholder’s execution and delivery of this Agreement.
 
(d) Investment Intent.  Such Stockholder is acquiring the Common Stock hereunder
for its own account for investment purposes only and not with a view to or for
distributing or reselling such securities or any part thereof.
 
(e) Stockholder Status.  Such Stockholder is and on the date of the closing of
the Transactions will be, an “accredited investor” as defined in Rule 501(a)
under the Securities Act.
 
(f) Experience of such Stockholder.  Such Stockholder, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Common Stock, and has so evaluated
the merits and risks of such investment.  Such Stockholder is able to bear the
economic risk of an investment in the Common Stock and is able to afford a
complete loss of such investment.
 
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(g) Access to Information.  Such Stockholder acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Common Stock and the merits and
risks of investing in the Common Stock; (ii) access to information about the
Company and its subsidiaries and their respective financial condition, results
of operations, business, properties and management sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information that is necessary to make an informed investment decision with
respect to the investment.
 
(h) General Solicitation.  Such Stockholder is not purchasing the Common Stock
as a result of any advertisement, article, notice or other communication
regarding the Common Stock published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
 
(i) Legend.  Such Stockholder understands and agrees that the certificates
evidencing the shares of Common Stock acquired hereunder  or any other
securities issued in respect of such shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall bear
the following legend (in addition to any legend required by applicable state
securities laws):
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.”
 
4.      Certain Adjustments.  Subject to Section 5, if at any time while at
least Nine Hundred Thirty (930) shares of the Company’s Series A-1 Preferred
Stock (as adjusted for any stock splits, stock combination or similar event with
respect to the Series A-1 Preferred Stock) the Company issues Common Stock or
Common Stock Equivalents for a consideration (net of any discounts, fees,
commissions and other expenses that are not customary) to the Company per share
less than the Issue Price (such lesser consideration per share, the “Reference
Price”), each of the Stockholders shall be entitled to receive, and the Company
shall issue, such additional shares of Common Stock to each Stockholder (upon
payment to the Company by such Stockholder of an amount per share equal to the
par value of such additional shares of Common Stock), equal to the excess of
(A) the quotient obtained by dividing the aggregate purchase price paid by such
Stockholder for the Eligible Stock then held by such Stockholder (determined by
reference to the Face Amount of Series A Preferred Stock exchanged for such
shares) divided by the Reference Price less (B) the number of shares of Eligible
Stock then held by such Stockholder.
 
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5.    Certain Exceptions.  The provisions of Section 4 above shall be subject to
the following limitations:
 
(a) Section 4 shall not apply to any issuance of Excluded Stock; and
 
(b) Section 4 shall not apply to the issuance of Common Stock or Common Stock
Equivalents with respect to any Stockholder if such Stockholder has been offered
the opportunity to purchase its pro rata share (based upon the number of shares
of Eligible Stock then held by each Stockholder in proportion to the total
shares of Common Stock of the Company then outstanding (assuming full conversion
and exercise of all outstanding Common Stock Equivalents)) of such Common Stock
or Common Stock Equivalents (at the same price as other purchasers of such
securities) and such Stockholder has not purchased such pro rata share of such
securities.  For the avoidance of doubt, the election by a Stockholder to
purchase or not purchase its pro rata share of Common Stock or Common Stock
Equivalents pursuant to this Section 5(b) shall not preclude another Stockholder
from electing to purchase or not purchase its pro rata share of Common Stock or
Common Stock Equivalents pursuant to this Section 5(b).
 
6.    Certain Mechanics of Adjustments.  For purposes of any issuances of shares
of Common Stock to a Stockholder under Section 4, the following provisions shall
be applicable:
 
(a) In connection with any issuance of any Common Stock Equivalents, (x) the
maximum number of shares of Common Stock potentially issuable at any time upon
conversion, exercise or exchange of such Common Stock Equivalents (the “Deemed
Number”) shall be deemed to be outstanding upon issuance of such Common Stock
Equivalents, and (y) the price per share applicable to such Common Stock
Equivalents shall be deemed to equal the minimum dollar value of consideration
payable to the Company to purchase such Common Stock Equivalents and to convert,
exercise or exchange them into Common Stock, divided by the Deemed Number.
 
(b) In the case of the issuance of Common Stock Equivalents for cash, the amount
of the consideration received by the Company shall be deemed to be the aggregate
amount of cash received by the Company or payable to the Company to purchase
such Common Stock Equivalents and to convert, exercise or exchange them into
Common Stock.
 
(c) In the case of the issuance of Common Stock Equivalents for a consideration
in whole or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Company’s Board of Directors,
irrespective of any accounting treatment.
 
(d) All shares to be issued pursuant to Section 4, upon issuance, shall be
validly issued, fully-paid and non-assessable and free of any preemptive or
similar rights.
 
7.    Further Assurances.  Each Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as the
Company or the Investors may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement.
 
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8.      Termination.  This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the termination of the Purchase
Agreement prior to the closing of the Transactions.  Notwithstanding the
foregoing, this Agreement shall terminate and have no further force or effect if
the closing of the sale of Series A-1 Preferred Stock and Warrants to the
Investors pursuant to the Purchase Agreement is not consummated on or before
March 1, 2009.
 
9.      Piggyback Registration.
 
(a)       Until all Registrable Securities held by the Stockholders have been
sold or may be sold without any restrictions pursuant to Rule 144 promulgated
under the Securities Act, if (but without any obligation to do so) the Company
proposes to register any of its Common Stock under the Securities Act in
connection with the public offering of such securities by the Company solely for
cash (other than a registration on Form S-8 (or similar or successor form)
relating solely to the sale of securities to participants in a Company stock
plan or to other compensatory arrangements to the extent includable on Form S-8
(or similar or successor form), or a registration on Form S-4 (or similar or
successor form)), the Company shall, at such time, promptly give each
Stockholder that then holds Registrable Securities written notice of such
registration.  Upon the written request of any such Stockholders received by the
Company within ten (10) business days after mailing of such notice by the
Company in accordance with this Section 9(a) (the “Electing Holders”), the
Company shall (subject to, among other things, limitations imposed by the
Securities and Exchange Commission or federal securities laws and regulations)
use its commercially reasonable efforts to include in such registration all of
such Registrable Securities that are specified in such request; provided, that
in no event shall the aggregate number of such Registrable Securities included
in any Registration Statement exceed twenty percent (20%) of the total number of
securities included in such Registration Statement on behalf of all selling
stockholders (the “Limitation Amount”).  Subject to the terms of this Agreement
(including without limitation the cutback provisions in Section 9(b)), the
Limitation Amount shall be allocated in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities requested to be included in
such registration by the Electing Holders.  Notwithstanding the foregoing, the
Company shall not be required to register any Registrable Securities that are
eligible for resale pursuant to Rule 144 promulgated under the Securities Act or
that are the subject of a then effective Registration Statement.  If the
registration involves an underwritten offering to the public, all Electing
Holders must sell their Registrable Securities to the underwriters selected by
the Company on the same terms and conditions as apply to the Company or other
selling stockholders.  If, at any time after giving notice of the Company’s
intention to register any securities pursuant to this Section 9(a) and prior to
the effective date of the Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company shall give written notice to all holders of Registrable
Securities and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration.  The Company shall
have no obligation to make any offering of its securities, or to complete an
offering of its securities that it proposes to make.
 
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(b) If such registration involves an underwritten offering to the public, if the
managing underwriter of the underwritten offering shall inform the Company by
letter of the underwriter’s opinion that the number of Registrable Securities
requested to be included in such registration would, in its opinion, materially
adversely affect such offering, including the price at which such securities can
be sold, and the Company has so advised the Electing Holders in writing, then
the Company shall include in such registration, to the extent of the number that
the Company is so advised can be sold in (or during the time of) such offering,
(i) first, all securities proposed by the Company to be sold for its own
account, then (ii) such securities requested by the Purchasers (as defined in
the Purchase Agreement) to be included in such registration as required by the
terms of the Purchase Agreement and then (iii) such Registrable Securities
requested to be included by Electing Holders, allocated pro rata among such
Electing Holders in proportion, as nearly as practicable, to the respective
amounts of such securities requested to be included in such registration.

(c)           Each Electing Holder agrees that, upon receipt of any notice from
the Company of the happening of a Specified Event such Electing Holder will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement covering such Registrable Securities until such Electing
Holder’s receipt of copies of a supplemented or amended prospectus (which the
Company shall promptly prepare following the happening of a Specified Event) or
receipt of notice that no supplement or amendment is required.

(d)           Each Electing Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
or an exemption therefrom in connection with sales of Registrable Securities
pursuant to the Registration Statement.

(e)           Each Electing Holder shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration referred to in this Section 9.

10. New Securities.  Each Stockholder shall be offered the opportunity to
purchase its pro rata share (based upon the number of shares of Eligible Stock
then held by each Stockholder in proportion to the total shares of Common Stock
of the Company then outstanding (assuming full conversion and exercise of all
outstanding Common Stock Equivalents)) of New Securities (at the same price as
other purchasers of such securities) which the Company may, from time to time,
propose to sell and issue after the date of this Agreement.
 
11. Voting Agreement.  At any meeting of stockholders of the Company called to
vote upon the Proposal (as defined in the Purchase Agreement) or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Proposal or
which is necessary to consummate the Transactions or for the Company to perform
its obligations under the Purchase Agreement or the Certificate of Designations
(as defined in the Purchase Agreement) is sought, each Stockholder shall,
including by executing a written consent if requested by the Company, vote (or
cause to be voted) such Stockholder’s shares of Common Stock in favor the
Proposal.  For the period from the date hereof until the date approval of the
Proposal is obtained, no Stockholder shall directly or indirectly sell or
transfer any shares of Common Stock to any Person unless such Person executes
and delivers to the Company a written agreement pursuant to which such Person
will be bound by and obligated to comply with the terms and provisions of this
section.
 
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12. General.
 
(a) Counterparts.  This Agreement may be executed in two (2) or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
 
(b) Entire Agreement; Third-Party Beneficiaries.  Each party hereby acknowledges
that no other party or any other person or entity has made any promises,
warranties, understandings or representations whatsoever, express or implied,
not contained in this Agreement and acknowledges that it has not executed this
Agreement in reliance upon any such promises, representations, understandings or
warranties not contained herein and that this Agreement supersedes all prior
agreements and understandings between the parties with respect thereto.  Each
Investor shall be a third party beneficiary of the rights and benefits of this
Agreement.  This Agreement is not intended to confer upon any person other than
the parties hereto and the Investors any rights or remedies hereunder.
 
(c) Governing Law.  This Agreement shall be governed and construed in accordance
with the laws of the State of New York without regard to any applicable
conflicts of law.
 
(d) Titles and Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
(e) Notices.  All notices and other communications required or permitted
hereunder shall be in writing.  Notices shall be delivered personally, via
recognized overnight courier (such as Federal Express, DHL or Airborne Express)
or via certified or registered mail.  Notices may be delivered via facsimile or
e-mail, provided that by no later than two days thereafter such notice is
confirmed in writing and sent via one of the methods described in the previous
sentence.  Notices shall be addressed to the address of each Stockholder as is
set forth on the books and records of the Company, or at such other address or
facsimile number as such Stockholder shall have furnished in writing to the
other parties hereto.  All notices shall be effective upon receipt.
 
(f) Severability  Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.
 
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(g) Delays or Omissions.  No delay or omission to exercise  any right, power or
remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or
remedy of such nonbreaching or nondefaulting party nor shall it be construed to
be a waiver of any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.
 
(h) Facsimile Signatures.  Any signature page delivered by a fax machine shall
be binding to the same extent as an original signature page, with regard to any
agreement subject to the terms hereof or any amendment thereto.
 
(i) Amendment and Waiver.  This Agreement may be amended by the parties hereto
by execution of an instrument in writing signed by the Company and on behalf of
the Stockholders holding a majority of Shares held by all of the Stockholders
and the written consent of any third party beneficiary hereto.  Any such
amendment signed by the Stockholders holding a majority of Shares held by all of
the Stockholders shall bind all of the Stockholders.  Any action, extension or
waiver by any party of any provision hereto shall be valid only if set forth in
an instrument in writing signed by the Company and on behalf of Stockholders
holding a majority of Shares held by all of the Stockholders.
 
(j) Enforcement.  The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United
States.  This being in addition to any other remedy to which they are entitled
at law or in equity.  In addition, each of the parties hereto waives any right
to trial by jury with respect to any claim or proceeding related to or arising
out of this Agreement or any of the transactions contemplated hereby.
 
[Signature page follows.]
 
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IN WITNESS WHEREOF, each party hereto has signed this Agreement as of the date
first written above.
 

 
COMPANY:
         
PARADIGM HOLDINGS, INC.
         
By:
/s/Peter LaMontagne
 
Name:  Peter LaMontagne
 
Title:  President and Chief Executive Officer
         
STOCKHOLDERS:
         
FTC EMERGING MARKETS
         
By:
/s/Guillermo Clamens
     
Name:
President/CEO
     
Title:
G. Clamens
         
JOHN MOORE & ANNEDENISE MOORE JT TEN
         
By:
/s/John Moore
     
By:
/s/Annedenise Moore
         
PETER LAMONTAGNE
         
/s/Peter LaMontagne

 
 
Signature Page to Preferred Stock Exchange Agreement
 

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RICHARD SAWCHAK
         
/s/Richard Sawchak

Signature Page to Preferred Stock Exchange Agreement
 

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Schedule I

Stockholder
   
Series A Preferred Stock
 
FTC Emerging Markets
    1,000  
John Moore and Annedenise Moore JT TEN
    500  
Peter LaMontagne
    100  
Richard Sawchak
    100            
Total
    1,700  

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