THIRD LOAN MODIFICATION AGREEMENT

This Third Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of ______________________, 2009, by and among (a) SILICON VALLEY
BANK, a California corporation, with its principal place of business at 3003
Tasman Drive, Santa Clara, California 95054 and with a loan production office
located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts  02462 (“Bank”) and (b) PARADIGM HOLDINGS, INC., a Wyoming
corporation, with offices at 9715 Key West Avenue, Rockville, Maryland  20850
(“Holdings”), PARADIGM SOLUTIONS CORPORATION, a Maryland corporation, with
offices at 9715 Key West Avenue, Rockville, Maryland  20850 (“Solutions”),
CALDWELL TECHNOLOGY SOLUTIONS LLC, a Maryland limited liability company, with
offices at 17001 Science Drive, Suite 100, Bowie, Maryland 20715 (“Caldwell”)
and TRINITY INFORMATION MANAGEMENT SERVICES, a Nevada corporation, with offices
at 9715 Key West Avenue, Rockville, Maryland 20850 (“Trinity”) (hereinafter,
Holdings, Solutions, Caldwell and Trinity are jointly and severally,
individually and collectively, referred to as “Borrower”).

1.           DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of March 13, 2007,
evidenced by, among other documents, a certain Loan and Security Agreement
(working capital line of credit) dated as of March 13, 2007, among Borrower and
Bank, as amended by a certain First Loan Modification Agreement dated as of
August 11, 2008, and as further amend by a certain Second Loan Modification
Agreement dated as of March 18, 2009 (as amended, the “Loan
Agreement”).  Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Loan Agreement.

2.           DESCRIPTION OF COLLATERAL.  Repayment of the Obligations is secured
by (a) the Collateral as described in the Loan Agreement, (b) the Intellectual
Property Collateral as described in a certain Intellectual Property Security
Agreement dated as of March 13, 2007 between Bank and Holdings (the “Holdings IP
Security Agreement”), (c) the Intellectual Property Collateral as described in a
certain Intellectual Property Security Agreement dated as of March 13, 2007
between Bank and Solutions (the “Solutions IP Security Agreement”), (d) the
Intellectual Property Collateral as described in a certain Intellectual Property
Security Agreement dated as of July 5, 2007 between Bank and Caldwell (the
“Caldwell IP Security Agreement”), and (e) the Intellectual Property Collateral
as described in a certain Intellectual Property Security Agreement dated as of
September 5, 2007 between Bank and Trinity (the “Trinity IP Security Agreement”)
(together with any other collateral security granted to Bank, the  “Security
Documents”).  Hereinafter, the Security Documents, together with all other
documents evidencing or securing the Obligations shall be referred to as the
“Existing Loan Documents”.

3.           DESCRIPTION OF CHANGE IN TERMS.

 
A.
Modification to Loan Agreement.

 
1
The Loan Agreement shall be amended by deleting the following definition
appearing in Section 13.1 thereof:

“           “Maturity Date” is May 12, 2009.”

and inserting in lieu thereof the following:

“           “Maturity Date” is June 12, 2009.”

4.           FEES.  Borrower shall pay to Bank a modification fee equal to Four
Thousand Five Hundred Dollars ($4,500.00) which fee shall be due on the date
hereof and shall be deemed fully earned as of the date hereof.  Borrower shall
also reimburse Bank for all reasonable legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.
 
 
 

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5.           RATIFICATION OF IP SECURITY AGREEMENTS.

(a)           Holdings hereby ratifies, confirms and reaffirms, all and
singular, the terms and conditions of the Holdings IP Security Agreement and
acknowledges, confirms and agrees that the Holdings IP Security Agreement
contains an accurate and complete listing of all Intellectual Property
Collateral as defined therein.

(b)           Solutions hereby ratifies, confirms and reaffirms, all and
singular, the terms and conditions of the Solutions IP Security Agreement and
acknowledges, confirms and agrees that the Solutions IP Security Agreement
contains an accurate and complete listing of all Intellectual Property
Collateral as defined therein.

(c)           Caldwell hereby ratifies, confirms and reaffirms, all and
singular, the terms and conditions of the Caldwell IP Security Agreement and
acknowledges, confirms and agrees that the Caldwell IP Security Agreement
contains an accurate and complete listing of all Intellectual Property
Collateral as defined therein.

(d)           Trinity hereby ratifies, confirms and reaffirms, all and singular,
the terms and conditions of the Trinity IP Security Agreement and acknowledges,
confirms and agrees that the Trinity IP Security Agreement contains an accurate
and complete listing of all Intellectual Property Collateral as defined therein.

6.           RATIFICATIONS OF PERFECTION CERTIFICATES.

(a)           Holdings hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of March 13, 2007 between Holdings and Bank, and
acknowledges, confirms and agrees the disclosures and information Holdings
provided to Bank in the Perfection Certificate have not changed, as of the date
hereof.

(b)           Solutions hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of March 13, 2007 between Solutions and Bank, and
acknowledges, confirms and agrees the disclosures and information Solutions
provided to Bank in the Perfection Certificate have not changed, as of the date
hereof.

(c)           Caldwell hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of July 5, 2007 between Caldwell and Bank, and
acknowledges, confirms and agrees the disclosures and information Caldwell
provided to Bank in the Perfection Certificate have not changed, as of the date
hereof.

(d)           Trinity hereby ratifies, confirms and reaffirms, all and singular,
the terms and disclosures contained in a certain Perfection Certificate dated as
of September 5, 2007 between Trinity and Bank, and acknowledges, confirms and
agrees the disclosures and information Trinity provided to Bank in the
Perfection Certificate have not changed, as of the date hereof.

 
 

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7.           CONSISTENT CHANGES.  The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

8.           RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies,
confirms, and reaffirms all terms and conditions of all security or other
collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.

9.           NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees
that Borrower has no offsets, defenses, claims, or counterclaims against Bank
with respect to the Obligations, or otherwise, and that if Borrower now has, or
ever did have, any offsets, defenses, claims, or counterclaims against Bank,
whether known or unknown, at law or in equity, all of them are hereby expressly
WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

10.           CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified pursuant to this Loan Modification
Agreement, the terms of the Existing Loan Documents remain unchanged and in full
force and effect.  Bank’s agreement to modifications to the existing Obligations
pursuant to this  Loan Modification Agreement in no way shall obligate Bank to
make any future modifications to the Obligations.  Nothing in this Loan
Modification Agreement shall constitute a satisfaction of the Obligations.  It
is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by virtue of this Loan Modification
Agreement.

11.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.

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This Loan Modification Agreement is executed as of the date first written above.
 
BORROWER:
 
PARADIGM HOLDINGS, INC.         
   
BANK:
 
SILICON VALLEY BANK
                          By:
/s/ Richard Sawchak     
  By:
/s/
            Name:  Richard Sawchak        Name: 
 
   
 
   
 
  Title:    SVP and CFO     Title:                             PARADIGM
SOLUTIONS CORPORATION                     By:
/s/ Richard Sawchak     
                    Name:   Richard Sawchak                     Title:  SVP and
CFO                                 CALDWELL TECHNOLOGY SOLUTIONS LLC          
          By: 
/s/ Richard Sawchak     
                    Name:   Richard Sawchak                     Title:  SVP and
CFO                                 TRINITY INFORMATION MANAGEMENT SERVICES    
                By: 
/s/ Richard Sawchak     
                    Name:   Richard Sawchak                     Title:  SVP and
CFO        

 
 
 
 

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