Attached files
| file | filename |
|---|---|
| EX-10.7 - Paradigm Holdings, Inc | v187133_ex10-7.htm |
| EX-10.3 - Paradigm Holdings, Inc | v187133_ex10-3.htm |
| EX-10.5 - Paradigm Holdings, Inc | v187133_ex10-5.htm |
| EX-10.1 - Paradigm Holdings, Inc | v187133_ex10-1.htm |
| EX-10.4 - Paradigm Holdings, Inc | v187133_ex10-4.htm |
| EX-10.2 - Paradigm Holdings, Inc | v187133_ex10-2.htm |
| EX-10.6 - Paradigm Holdings, Inc | v187133_ex10-6.htm |
| EX-99.1 - Paradigm Holdings, Inc | v187133_ex99-1.htm |
| EX-10.9 - Paradigm Holdings, Inc | v187133_ex10-9.htm |
| EX-10.8 - Paradigm Holdings, Inc | v187133_ex10-8.htm |
| EX-10.10 - Paradigm Holdings, Inc | v187133_ex10-10.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported)
May
26, 2010
PARADIGM HOLDINGS,
INC.
(Exact
name of registrant as specified in its charter)
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Wyoming
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000-09154
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83-0211506
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(State
or other jurisdiction of
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(Commission
File No.)
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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9715
Key West Avenue, 3rd Floor,
Rockville, Maryland
(Address
of principal executive offices)
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20850
(Zip
Code)
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(301)
468-1200
(Registrant’s
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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□
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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□
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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□
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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□
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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DISA
Contract
On April
8, 2010, the U.S. General Services Administration (the “GSA”) notified
Paradigm Solutions Corporation (“PSC”), the
wholly-owned subsidiary of Paradigm Holdings, Inc. (the “Company”), that PSC
had been awarded a contract by the GSA in connection with a project entitled
“St. Louis, MO 63120-1703, Building 103, Federal Center (MO0606AF), 4300
Goodfellow GS-07F-0238V/GS-P-06-10-GZ-0003 – DISA UPS and Electrical Upgrades
(B0904795) (the “GSA
Award”).”
The GSA
Award represents a prime contract to provide Uninterruptible Power Supply
(“UPS”) Systems
and electrical upgrades to the Defense Information Systems Agency (“DISA”). PSC
will be responsible for the upgrade and replacement of the existing electrical
distribution for the Defense Enterprise Computing Center in St. Louis,
Missouri.
As the
prime contractor, PSC will analyze the existing infrastructure in order to
design and implement a new system in accordance with DISA facility
standards. The primary function of the UPS system is to provide
electrical power to critical data center loads during utility outages. The
amount of the GSA Award is approximately $11,000,000 over a one-year period of
performance, while additional options could increase the value of the GSA Award
by over $1,000,000, if exercised by the GSA.
The GSA
Award was contingent on PSC providing certain performance/payment bonds to the
GSA (the “Performance
Bond”). The Performance Bond was executed on May 27, 2010 by
Fidelity and Deposit Company of Maryland in the amount of
$10,966,551.46. The Performance Bond premium was
$219,331.
The
foregoing description of the terms of the GSA Award is not complete and is
qualified in its entirety by reference to the GSA Award a copy of which is
attached as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated herein by reference.
Securities Purchase
Agreement and Notes
On May
26, 2010 (the “Closing
Date”), the Company entered into a Securities Purchase Agreement (the
“Securities Purchase
Agreement”) with Hale Capital Partners, LP (“Hale Capital”) and
EREF PARA, LLC (“EREF” and together
with Hale Capital, the “Purchasers”) and
consummated the issuance and sale of Senior Secured Subordinated Promissory
Notes with an aggregate principal amount of $4,000,000 (the “Notes”) to the
Purchasers, for an aggregate purchase price of $4,000,000, pursuant to such
agreement. In addition, the Company issued 3,428,571 shares (the
“Fee Shares”)
of the Company’s common stock, par value $0.01 per share (the “Common Stock”), to
the Purchasers, at a purchase price of $0.086 per share, in lieu of a cash
payment owed by the Company to the Purchasers with respect to the financing fee
in connection with the transactions contemplated by the Securities Purchase
Agreement. The Company used the net proceeds from the sale of the
Notes as security for the issuance of a letter of credit to secure the
Performance Bond.
-2-
The Notes
accrue interest at a rate of 6.00% per annum. The Notes mature on May
26, 2011 (the “Maturity
Date”). The Purchasers may require the Company to redeem all
or any portion of the Notes prior to the Maturity Date in connection with an
“Event of Default,” “Change of Control” or “Sale” (each as defined in the
Notes). From and after the incurrence of an “Event of Default” the interest rate
under the Notes automatically increases to 18.00%. The Notes also
contain, among other things, certain affirmative and negative covenants,
including, without limitation, limitations on indebtedness, liens and restricted
payments. If the Company fails to redeem the Notes to the extent
required pursuant to the terms of the Notes, then each holder of the Notes may
elect to convert such holder’s Notes into Common Stock at a conversion price
of $0.086.
Martin
Hale is a director of the Company and Chief Executive Officer of Hale Capital
and Chief Executive Officer and sole owner of Hale Fund Management, LLC, the
managing member of EREF.
The
foregoing description of the terms of the Securities Purchase Agreement and the
Notes is not complete and is qualified in its entirety by reference to the
Securities Purchase Agreement and the Notes copies of which are attached as
Exhibit 10.2 and Exhibit 10.3, respectively, to this Current Report on Form 8-K
and incorporated herein by reference.
Security Agreements and
Guaranty
As an
inducement for the Purchasers to acquire the Notes, the Company and each of its
subsidiaries (the “Subsidiaries”)
(Paradigm Holdings, Inc., a Nevada corporation (“Paradigm Nevada”),
PSC, Caldwell Technology Solutions LLC (“CTS”) and Trinity
Information Management Services (“TIMS”)) entered into
the following documents on May 26, 2010 with respect to the grant to the holders
of Notes of security interests in all assets of the Company and the Subsidiaries
(the “Collateral”):
(i) a
Security Agreement (the “Security
Agreement”),
(ii) a
Copyright Security Agreement (the “Copyright Security
Agreement”),
(iii) a
Trademark Security Agreement (the “Trademark Security
Agreement”) and
(iv) a
Patent Security Agreement (the “Patent Security
Agreement” and collectively with the Security Agreement, the Copyright
Security Agreement and the Trademark Security Agreement, the “Security
Agreements”).
The
Security Agreements provide that the Purchasers are to have, subject to
Permitted Liens (as defined in the Security Agreement), a first priority (or
second priority, to the extent the Collateral is subject to a Permitted Lien
with respect to the Senior Indebtedness (as defined in the Security Agreement))
security interest in the Collateral. The Security Agreements also
contain customary representations, warranties and covenants.
As a
further inducement for the Purchasers to acquire the Notes, on May 26, 2010 each
of the Subsidiaries entered into a Guaranty (the “Guaranty”) in favor
of the Purchasers pursuant to which, among other things, the Subsidiaries
guaranteed to the Purchasers the due and punctual satisfaction in full of the
“Guaranteed Obligations” (as defined in the Guaranty).
-3-
The
foregoing description of the terms of the Security Agreements and the Guaranty
is not complete and is qualified in its entirety by reference to the Security
Agreements and the Guaranty copies of which are attached as Exhibit 10.4,
Exhibit 10.5, Exhibit 10.6, Exhibit 10.7 and Exhibit 10.8, respectively, to this
Current Report on Form 8-K and incorporated herein by reference.
Consent and Amendment to
Preferred Stock Purchase Agreement
On May
26, 2010, the Company and the Purchasers entered into the Consent and Amendment
(the “Consent and
Amendment”) to the Preferred Stock Purchase Agreement, dated February 27,
2009, by and among the Company and the Purchasers (the “Preferred Stock
Agreement”), to, among other things:
(i) grant
registration rights to the Purchasers with respect to the Fee Shares
;
(ii)
restrict the exercisability of the Class A Warrants and Class B Warrants (the
“Warrants”)
held by the Purchasers until the earlier to occur of (x) August 31, 2010 and (y)
the consummation of the merger of the Company with and into Paradigm
Nevada;
(iii)
limit the Company’s obligation to reserve shares with respect to the Warrants
during such period;
(iv)
exclude the Notes and Fee Shares from certain participation rights granted to
the purchasers of securities under to the Preferred Stock Agreement ;
and
(v) amend
the Company’s existing right to repurchase Series A-1 Senior Preferred Stock for
no additional consideration following the occurrence of certain events as
provided in the Stock Purchase Agreement to exclude certain “Excluded Shares”
(as defined in the Consent and Amendment) from such provision.
The
foregoing description of the terms of the Consent and Amendment is not complete
and is qualified in its entirety by reference to the Consent and Amendment, a
copy of which is attached as Exhibit 10.9 to this Current Report on Form
8-K and incorporated herein by reference.
General Agreement of
Indemnity
In
connection with the issuance of the Performance Bond, on May 25, 2010, each of
PSC, CTS, TIMS and Paradigm Nevada (the “Indemnitors”) entered
into a General Agreement of Indemnity (the “Indemnity Agreement”)
in favor of Zurich American Insurance Company and its subsidiaries (the “Surety”). The
Indemnity Agreement, among other things, provides for the indemnification of the
Surety by the Indemnitors in connection with the Performance Bond and related
matters and grants the Surety a security interest in certain assets of the
Indemnitors.
-4-
The
foregoing description of the terms of the Indemnity Agreement is not complete
and is qualified in its entirety by reference to the Indemnity Agreement, a copy
of which is attached as Exhibit 10.10 to this Current Report on Form 8-K
and incorporated herein by reference.
Subordination
Agreement
As a
condition to the consent of Silicon Valley Bank to the transactions contemplated
by the Securities Purchase Agreement, on May 26, 2010, the Purchasers and
Silicon Valley Bank entered into a Subordination Agreement (the “Subordination
Agreement”) pursuant to which the Purchasers subordinated certain rights
with respect to the Notes to certain outstanding indebtedness owed by the
Company and the Subsidiaries to Silicon Valley Bank. The Company and
the Subsidiaries approved the terms of the Subordination
Agreement. The foregoing description of the terms of the
Subordination Agreement is not complete and is qualified in its entirety by
reference to the Subordination Agreement attached as Exhibit 16 to the Schedule
13D/A filed by the Purchasers with the Securities and Exchange Commission on
June 2, 2010.
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Item
2.03.
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Creation
of a Direct Financial Obligation or an Obligation under an Off- Balance
Sheet Arrangement of a Registrant.
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The
information set forth in Item 1.01 above is hereby incorporated by reference in
this Item 2.03.
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Item
3.02.
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Unregistered
Sales of Equity Securities.
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On May
26, 2010, the Company sold the Notes to the Purchasers for an aggregate purchase
price of $4,000,000. The Company issued the Fee Shares to the
Purchasers at a purchase price of $0.086 per share, in lieu of a cash payment
owed by the Company to the Purchasers with respect to the financing fee in
connection with the transactions contemplated by the Securities Purchase
Agreement. Exemption from registration under the Securities Act of
1933, as amended (the “Securities Act”), was
based on Regulation D promulgated under Section 4(2) of the Securities
Act. The information set forth in Item 1.01 above is hereby
incorporated by reference in this Item 3.02.
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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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Each of
Peter LaMontagne, Richard Sawchak and Robert Boakai, who are the Company’s
President and Chief Executive Officer, Senior Vice President and Chief Financial
Officer and Vice President, Enterprise Solution, respectively, entered into
Suspension of Exercise Agreements with the Company pursuant to which they agreed
to not exercise options to purchase 500,000 shares, 200,000 shares and 50,000
shares of Common Stock, respectively, until after the date of the
Merger.
-5-
| Item 9.01. |
Financial
Statements and Exhibits.
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(a)
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Not
applicable
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(b)
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Not
applicable
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(c)
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Not
applicable
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(d)
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Exhibits.
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Exhibit
10.1
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Contract
Number GS-07F-0238V issued by the General Services
Administration
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Exhibit
10.2
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Securities
Purchase Agreement dated May 26, 2010 among Paradigm Holdings, Inc., Hale
Capital Partners, LP and the other purchasers identified on the signature
pages thereto
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Exhibit
10.3
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Form
of Senior Secured Subordinated Promissory Note
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Exhibit
10.4
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Security
Agreement dated as of May 26, 2010 among the grantors listed on the
signature pages thereto and the secured parties listed on the signature
pages thereto
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Exhibit
10.5
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Copyright
Security Agreement dated as of May 26, 2010 by the Grantors(as defined
therein) in favor of the Secured Parties (as defined in the Security
Agreement)
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Exhibit
10.6
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Patent
Security Agreement dated as of May 26, 2010 by the Grantors (as defined
therein) in favor of the Secured Parties
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Exhibit
10.7
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Trademark
Security Agreement dated as of May 26, 2010 by the Grantors(as defined
therein) in favor of the Secured Parties
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Exhibit
10.8
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Guaranty
dated as of May 26, 2010 entered into by each of the Subsidiaries in favor
of the Purchasers
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Exhibit
10.9
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Consent
and Amendment dated as of May 26, 2010 among the Company and the
Purchasers
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Exhibit
10.10
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General
Agreement of Indemnity made by Paradigm SolutionsCorporation, Caldwell
Technology Solutions LLC, Trinity Information Management Services and
Paradigm Holdings, Inc., a Nevada corporation, in favor of Zurich American
Insurance Company and its subsidiaries
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Exhibit
99.1
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Press
Release dated June 2, 2010
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-6-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| PARADIGM HOLDINGS, INC. | ||
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By:
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/s/Peter
B.
LaMontagne
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Peter
B. LaMontagne
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President
and Chief Executive Officer
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Date:
June 2, 2010
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-7-
EXHIBIT INDEX
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Exhibit
No.
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Description
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Exhibit
10.1
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Contract
Number GS-07F-0238V issued by the General Services
Administration
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Exhibit
10.2
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Securities
Purchase Agreement dated May 26, 2010 among Paradigm Holdings, Inc., Hale
Capital Partners, LP and the other purchasers identified on the signature
pages thereto
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Exhibit
10.3
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Form
of Senior Secured Subordinated Promissory Note
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Exhibit
10.4
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Security
Agreement dated as of May 26, 2010 among the grantors listed on the
signature pages thereto and the secured parties listed on the signature
pages thereto
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Exhibit
10.5
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Copyright
Security Agreement dated as of May 26, 2010 by the Grantors (as defined
therein) in favor of the Secured Parties (as defined in the Security
Agreement)
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Exhibit
10.6
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Patent
Security Agreement dated as of May 26, 2010 by the Grantors (as defined
therein) in favor of the Secured Parties
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Exhibit
10.7
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Trademark
Security Agreement dated as of May 26, 2010 by the Grantors (as defined
therein) in favor of the Secured Parties
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Exhibit
10.8
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Guaranty
dated as of May 26, 2010 entered into by each of the Subsidiaries in favor
of the Purchasers
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Exhibit
10.9
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Consent
and Amendment dated as of May 26, 2010 among the Company and the
Purchasers
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Exhibit
10.10
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General
Agreement of Indemnity made by Paradigm Solutions Corporation, Caldwell
Technology Solutions LLC, Trinity Information Management Services and
Paradigm Holdings, Inc., a Nevada corporation, in favor of Zurich American
Insurance Company and its subsidiaries
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Exhibit
99.1
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Press
Release dated June 2, 2010
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-8-