EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made on June 7, 2006 between SteelCloud,
Inc. ("SteelCloud") and Xxxxx Xxxx ("Employee").
WHEREAS, SteelCloud desires to employ Employee as SteelCloud's
President and Chief Executive Officer and Employee desires to accept such
employment from SteelCloud; and
WHEREAS the parties desire to record the arrangements made for such
employment; NOW, THEREFORE, the parties agree as follows:
1. TERM OF EMPLOYMENT. Employee's employment with SteelCloud shall
continue from the date first above written through June 30, 2009, subject to the
termination rights of either party as set forth in sections 5 or 7 below. This
Agreement shall continue thereafter from year to year unless terminated by
either party pursuant to the terms of this Agreement.
2. DUTIES AND POSITION. Employee shall be the President and Chief
Executive Officer of SteelCloud, and shall exert his best efforts to provide day
to day executive management in furtherance of SteelCloud's business, which shall
include, but not be limited to, all aspects of the operating of the business,
development and cultivation of business relationships and opportunities,
marketing, advertising, promotion, hiring, firing and supervision of all
employees, office management, and fulfilling all administrative functions in the
operation of SteelCloud's business. Employee shall report directly to
SteelCloud's Board of Directors. The parties contemplate that Employee shall
work not less than full time, and shall be available seven days a week, as
needed, throughout the period of this Agreement.
3. SALARY / BENEFITS.
a. For his services, SteelCloud shall pay Employee a Base
Salary as follows: Fiscal Year 2006 $200,000 (prorated through October
31, 2006, including credit for amounts paid by SteelCloud through the
date of this Agreement.)
Fiscal Year 2007 $237,500
Fiscal Year 2008 $237,500
Fiscal Year 2009 $237,500
The Employee's base salary shall be payable pro rata on the regular payroll days
of the company, less federal, state, and local taxes and other required
withholdings. The Base Salary is subject to section 5 of this Agreement. In
addition, as Additional Salary, SteelCloud shall pay Employee a bonus as
follows:
Fiscal Year 2006 $20,833 (payable in equal monthly
increments on the last business day of each month between the date of
this agreement and October 31, 2006)
Fiscal Year 2007 Up to $37,500 if Employee meets the
Financial Plan, and up to $100,000 if Employee exceeds Financial Plan
Fiscal Year 2008 Up to $37,500 if Employee meets the
Financial Plan, and up to $100,000 if Employee exceeds Financial Plan
Fiscal Year 2009 Up to $37,500 if Employee meets the
Financial Plan, and up to $100,000 if Employee exceeds Financial Plan
The precise amount of the Additional Salary in fiscal years 2007,2008 and 2009
shall be determined in the reasonable discretion of the Board of Directors.
b. For purposes of calculating Employee's Additional Salary,
if any, the term "Financial Plan" shall mean that Plan to which SteelCloud's
Board of Directors and Employee agree at least 90 days before the end of each of
SteelCloud's fiscal years and applicable to the next fiscal year, addressing the
following criteria separately for each fiscal quarter: revenue, profits, If the
parties cannot agree on a Financial Plan, then SteelCloud's Board of Directors
may unilaterally adopt the plan it reasonably believes is appropriate for
SteelCloud.
c. In addition to the salary set forth above, SteelCloud shall
provide to Employee the following employee benefits: (1) paid family coverage
health and dental insurance under the standard SteelCloud policies for said
insurance and (2) paid vacation and sick leave pursuant to the standard
SteelCloud policies.
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d. In addition, upon presentation of satisfactory
documentation, Employee shall be reimbursed those out of pocket expenses
reasonably incurred in the performance of his duties. SteelCloud reserves the
right to refuse reimbursement of expenditures which were not pre-approved and
which SteelCloud finds are not appropriate.
e. In addition to the foregoing, SteelCloud shall offer
Employee stock options subject to a stock option agreement to be entered into by
the parties, allowing the exercise of the option for 100,000 shares of
SteelCloud stock (SCLD) over a three (3) year period beginning on the date the
stock option agreement is executed.
5. SteelCloud shall takes all steps available to it to seek to
have its Board of Directors appoint employee to a now-vacant seat on the Board,
pursuant to Article III, section 4 of SteelCloud's bylaws.
4. EMPLOYEE TO DEVOTE FULL TIME TO COMPANY.
a. Employee will exert his best efforts, energies and
attention on a full time basis to the business of SteelCloud. During this
employment, Employee will not engage in any other non-passive business activity,
regardless of whether such activity is pursued for profit, gain, or other
pecuniary advantage.
b. Employee agrees that he will not compete, directly or
indirectly, with the business of SteelCloud during the period of his employment
relationship with SteelCloud. Employee understands that the term "not compete"
as used in this paragraph shall mean that he shall not own, manage, operate,
consult with, or be employed by, a business similar to or competitive with the
present business of SteelCloud or such other business activity in which
SteelCloud may engage during the term of his employment relationship with
SteelCloud. He understands that the "present business of SteelCloud" as used in
this paragraph shall mean any business related directly or indirectly to the
design, development, distribution, or sale of hardware or software. "Own" does
not include an ownership interest in the securities of a publicly traded company
which is an interest less than 1% of the outstanding publicly traded shares of
the company.
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5. DISABILITY/ILLNESS. If Employee is unable to perform his duties (as
described in paragraph number 2, as a result of illness and such illness
continues for more than sixty consecutive (60) days, SteelCloud may terminate
Employee's employment, and/or modify this Agreement with regard to Employee's
compensation and duties.
6. CONFIDENTIALITY/PROPRIETARY INFORMATION. Employee acknowledges that
during the course of his employment relationship with SteelCloud, there may be
disclosed to him certain trade secrets, methodology, or other proprietary data
of SteelCloud and others with which SteelCloud has contractual relationships
(hereinafter "Confidential Information"); said Confidential Information
consisting of, but not limited to: customer lists, pricing data, SteelCloud's
financial information, technical information, and marketing, production, or
merchandising systems or plans. Employee agrees that he shall not during, or at
any time after the termination of, his employment relationship with SteelCloud,
use for himself or others, or disclose or divulge to others, including but not
limited to future employers or other businesses with which he may have a
contractual relationship, any Confidential Information. Should Employee reveal
or threaten to reveal any of this information, SteelCloud shall be entitled to
an injunction restraining Employee from disclosing same, or from rendering any
services to any entity to whom said information has been or is threatened to be
disclosed. The right to secure an injunction is not exclusive, and SteelCloud
may pursue any other remedies it has against Employee for a breach or threatened
breach of this condition, including the recovery of damages from Employee.
7. TERMINATION OF AGREEMENT.
a. If SteelCloud shall terminate Employee without cause,
SteelCloud shall pay Employee severance equal his base salary through the
balance of the term. SteelCloud may pay this severance, at its option, in a lump
sum, or in installments no less often than SteelCloud's regular salary payment
schedule.
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b. In the event that SteelCloud underperforms relative to the
Financial Plan as defined in paragraph 3.b., the Board of Directors may
terminate Employee at any time after June 7, 2007 by paying the lesser of (a)
one year base salary, or (b) the balance of the base salary for the remaining
term of the contract. Underperforms means either (i) two consecutive quarters in
which the Financial Plan is missed by a margin of at least 15 percent of planned
revenue or 10% of planned net income or (ii) the annual plan is missed by a
margin of 15% percent of planned annual revenue or 10% of planned net income.
c. If SteelCloud shall terminate the Employee for cause other
than underperforming relative to the Financial Plan, Employee shall have no
right to receive any notice or severance pay. "For cause" as used in this
paragraph shall mean: (a) a deliberate and willful disregard of standards of
behavior which SteelCloud has a right to expect. The standards of behavior which
SteelCloud has a right to expect shall include, but shall not be limited to, the
following: (i) commits a crime, (ii) convicted of a felony (iii) fails to comply
with instructions of the Board of Directors (iv) habitual abuse of drugs and/or
alcohol (v) deliberately participating in conduct that xxxxx or injures
SteelCloud including: misappropriation of SteelCloud assets, competition with
SteelCloud, total failure to perform assigned work, and breach of fiduciary
duty.
d. Employee agrees that, immediately upon the termination of
his relationship with SteelCloud, regardless of the reason, he shall return to
SteelCloud all Confidential Information and also all other documents and
property of SteelCloud, including, but not necessarily limited to: data
descriptions, reports, manuals, correspondence, customer lists, computers, and
all other materials and all copies thereof relating in any way to SteelCloud's
business, or in any way obtained by him during the course of his employment
relationship with SteelCloud. Employee further agrees that he shall not retain
copies, notes or abstracts of the foregoing.
8. RESTRICTION ON POST EMPLOYMENT.
a. For a period of two (2) years after the termination of
Employee's employment, notwithstanding the cause or reason for termination,
Employee shall not compete, directly or indirectly, with SteelCloud. Employee
understands that the term "not compete" as used in this paragraph shall mean
that he shall not (i) own, manage, operate, consult with, or be employed by, a
competing business in the United States; (ii) solicit or assist in the
solicitation of any of SteelCloud's accounts or customer(s); or (iii) encourage
any of SteelCloud's other employees to cease their employment with SteelCloud.
Employee understands that the term "competing business" as used in this
paragraph means any business engaged in the design, development, distribution,
or sale of hardware or software that competes with SteelCloud branded appliances
(including antivirus, intrusion protection, and security appliances), or the
providing of any services that compete with the Company's consulting service
offerings.
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b. Employee agrees that SteelCloud may notify any future or
prospective employer or third party business with which Employee may contract of
the existence of this agreement. Employee agrees that the foregoing
post-employment restrictions are reasonable given the national scope of
SteelCloud's products and services.
c. As an additional and cumulative remedy to any other remedy
available to SteelCloud, the covenants contained in this Agreement shall be
enforceable by specific performance and by preliminary and permanent injunctive
relief and if any court of record shall finally adjudicate that the constraints
provided for herein are too broad as to the area, activity, time covered, or any
other matter, then said area, activity, time covered, or any other matter may be
reduced to whatever extent the court deems reasonable and the covenants may be
enforced as to such reduced area, activity, time, or other matter.
9. ASSISTANCE IN LITIGATION. Employee shall, upon reasonable notice,
furnish such information and proper assistance to SteelCloud as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after his employment. In the event that
Employee fails to assist SteelCloud, it shall reimburse SteelCloud all legal
fees, court costs and damages resulting in whole or in part from this failure to
assist.
10. ENFORCEMENT PROVISIONS.
a. Each party agrees that, if it breaches any of the terms of
this agreement, it shall pay the other party the costs that party may incur in
enforcing this agreement or seeking damages for his breach, including reasonable
attorney's fees. In the event that either party is required to seek legal
assistance to obtain compliance with this Agreement or to enforce the provisions
of this Agreement, the second party shall pay to the first party in addition to
all the sums that it may be called on to pay, all the first party's costs and
expenses, including, but not limited to, attorneys' fees actually incurred by
that party regardless of whether court action is initiated.
b. Any legal action brought to enforce any claim or right
arising from the provisions of this agreement shall be brought in the court of
appropriate jurisdiction in the County of Fairfax in the Commonwealth of
Virginia and the law of the Commonwealth of Virginia shall govern. If any of the
provisions of this Agreement shall contravene, or be invalid under, the laws of
the Commonwealth of Virginia, such contravention or invalidity shall not
invalidate the entire Agreement, but it shall be construed as if not containing
the particular provision or provisions held to be invalid, and the rights and
obligations of the parties shall be construed and enforced accordingly.
11. NOTICES. Any notice or communication required or permitted by the
terms of this Agreement shall be deemed received when hand delivered to the
person to whom the notice is directed, or when otherwise received by that person
as demonstrated by any mail, facsimile, or commercial courier receipt:
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If to the Company, notice shall be directed to:
Board of Directors, Compensation Committee Chairman
SteelCloud
00000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
If to Employee, notice shall be directed to
Xxxxx Xxxx
00000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
or to such other address as either party may designate from
time to time by written notice to the other party.
12. MISCELLANEOUS PROVISIONS.
a. This Agreement sets forth all of the parties' promises,
agreements, conditions, warranties and representations, oral or written, express
or implied, among them with respect to the terms of employment, and there are no
promises, agreements, conditions, warranties or representations, oral or
written, express or implied, among them with respect to the terms of employment
other than as set forth herein.
b. This Agreement supercedes any prior agreements between
Employee and SteelCloud or any predecessors of Employee and SteelCloud.
c. Any modification of this Agreement or additional obligation
assumed by either party in connection with this Agreement shall be binding only
if placed in writing and signed by each party or an authorized representative of
each party.
d. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties and their respective successors, heirs, and personal
representatives.
e. This Agreement shall not be assignable by Employee.
f. The failure of either party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement, or
the waiver of any breach of any of the terms and conditions of his Agreement,
shall not be construed as thereafter waiving any such terms and conditions, but
the same shall continue and remain in full force and effect as if no such
forbearance or waiver had occurred.
g. The parties hereto stipulate and agree that the rule of
construction to the effect that any ambiguities are to be or may be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement to favor.
IN WITNESS WHEREOF, each party to this Agreement has caused it to be
executed on the date indicated above.
/S/ XXXXX XXXXX /S/ XXXXXXX X. XXXX
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SteelCloud, Inc. by Employee
its
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