SEC Form 4

FORM 4		UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940	OMB APPROVAL OMB Number: 3235-0287 Estimated average burden hours per response: 0.5
	Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person* LAMONTAGNE PETER B (Last) (First) (Middle) 9715 KEY WEST AVENUE, THIRD FLOOR (Street) ROCKVILLE MD 20850 (City) (State) (Zip)	2. Issuer Name and Ticker or Trading Symbol Paradigm Holdings, Inc [ PDHO ]	5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X Director 10% Owner X Officer (give title below) Other (specify below) President & CEO
	3. Date of Earliest Transaction (Month/Day/Year) 02/15/2011
	4. If Amendment, Date of Original Filed (Month/Day/Year)	6. Individual or Joint/Group Filing (Check Applicable Line) X Form filed by One Reporting Person Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
			Code	V	Amount	(A) or (D)	Price

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
				Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares
Stock Appreciation Right	(1)	02/15/2011		A		1(2)(3)(4)(5)(6)(7)(8)(9)(10)		02/15/2011(2)(3)(4)(5)(6)(7)(8)(9)(10)	02/15/2017(11)	Common Stock	(2)(3)(4)(5)(6)(7)(8)(9)(10)	$0	1(2)(3)(4)(5)(6)(7)(8)(9)(10)	D

Explanation of Responses:

1. The exercise price (the "Exercise Price") of the Warrant (as defined below) with respect to the 1X Threshold Shares (as defined below), the 2X Threshold Shares (as defined below) and the 3X Threshold Shares (as defined below) is $0.081586 per share of Common Stock (as defined below) and with respect to the 4X Threshold Shares (as defined below) is $0.163172 per share of Common Stock.

2. The Stock Appreciation Right is in the form of a warrant (the "Warrant") that shall be exercised automatically upon the occurrence of a Liquidity Event (as defined in the Warrant), with respect to that number of shares that would equal 6.5% of the shares of common stock ("Common Stock"), par value $.01 per share of the Company that are outstanding as of the Liquidity Date (as defined in the Warrant) (the "Target Shareholding Percentage"), subject to the terms and conditions set forth in the Warrant.

3. The aggregate number of shares of Common Stock for which the Warrant shall be vested and automatically exercised on the Liquidity Date shall be equal to: (a) in the event the 1X Threshold (as defined below) has been achieved on or prior to the Liquidity Date, such number of shares of Common Stock equal to the product of (i) 50% and (ii) the Target Shareholding Percentage of the shares of Common Stock as of the Exercise Date (such number of shares, the "1X Threshold Shares") plus

4. (b) solely in the event the 2X Threshold (as defined below) has been achieved on or prior to the Liquidity Date, such number of shares of Common Stock equal to the product of (i) 16.65% and (ii) the Target Shareholding Percentage of the shares of Common Stock as of the Exercise Date (such number of shares, the "2X Threshold Shares"); plus

5. (c) solely in the event the 3X Threshold (as defined below) has been achieved on or prior to the Liquidity Date, such number of shares of Common Stock equal to the product of (i) 16.65% and (ii) the Target Shareholding Percentage of the shares of Common Stock as of the Exercise Date (such number of shares, the "3X Threshold Shares"); plus

6. (d) solely in the event the 4X Threshold (as defined below) has been achieved on or prior to the Liquidity Date, such number of shares of Common Stock equal to the product of (i) 16.7% and (ii) the Target Shareholding Percentage of the shares of Common Stock as of the Exercise Date (such number of shares, the "4X Threshold Shares").

7. If the 1X Threshold has not been achieved on or prior to the Liquidity Date, the Warrant shall automatically be cancelled effective as of the Liquidity Date, and thereafter the grantee shall not be entitled to any right, benefit or entitlement with respect to the Warrant.

8. For purposes of this description: (a) "1X Threshold" means the cumulative receipt by Investor (as defined in the Warrant) with respect to the aggregate Investor Investment (as defined in the Warrant) of an amount equal to the Investor Return (as defined in the Warrant), (b) "2X Threshold" means the cumulative receipt by Investor with respect to the aggregate Investor Investment of an amount equal to two (2) times the Investor Return,

9. (c) "3X Threshold" means the cumulative receipt by Investor with respect to the aggregate Investor Investment of an amount equal to three (3) times the Investor Return and (d) "4X Threshold" means the cumulative receipt by Investor with respect to the aggregate Investor Investment of an amount equal to four (4) times the Investor Return.

10. Generally, payment in respect of the Warrant if exercised on a Liquidity Date shall be made in a cash and shall equal an amount determined by multiplying (i) times (ii): (i) is the number of shares of Common Stock with respect to which the Warrant is being exercised; and (ii) is the excess of (A) the Fair Market Value (as defined in the Warrant) of one share of Common Stock on the date of exercise, over (B) the Exercise Price.

11. In the event of the Company terminates the grantee's employment, or the grantee's employment is terminated by reason of death or disability, within six months prior to the Liquidity Date, the Warrant will remain outstanding and eligible to vest until the Liquidity Date. Except as set forth in the immediately preceding sentence, in the event any other termination of employment for any reason, the Warrant shall automatically be cancelled and terminate and be of no further force or effect.

	/s/ Peter B. LaMontagne	02/16/2011
	** Signature of Reporting Person	Date
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