FIRST AMENDED AND RESTATED EXCHANGE AGREEMENT
FIRST
AMENDED AND RESTATED
THIS
FIRST AMENDED AND RESTATED EXCHANGE AGREEMENT (this “Agreement”) is executed as
of September 10, 2010, intending to be effective as of July 2, 2010 (the
“Effective Date”) by and among CALEDONIA CAPITAL CORPORATION, a Delaware
corporation (“Caledonia”) and STEELCLOUD, INC., a Virginia corporation (the
“Company”).
WHEREAS, the parties hereto
previously entered into that certain Exchange Agreement dated as of July 2, 2010
(the “Exchange Agreement”); and
WHEREAS, the Exchange
Agreement contained certain inaccuracies that the parties now desire to correct;
and
WHEREAS,
the Company has authorized 750,000 shares of Series A Preferred Stock (the
“Series A Preferred”) for issuance; and
WHEREAS,
Caledonia desires to convert the Caledonia Shares (as defined below), into
90,000 shares of the Series A Preferred and a Note in the principal amount of
$70,000 (the “Note”); and
WHEREAS,
Caledonia and the Company desire to enter into this Agreement to provide the
terms and conditions upon which the Caledonia Shares will be exchanged for
shares of the Series A Preferred and the Note.
NOW
THEREFORE, in exchange for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Caledonia and the Company agree as
follows:
1. Exchange. As of the Effective
Date, Caledonia hereby elects to exchange 2,500,000 shares of the common stock
of the Company, $0.001 par value per share (the “Common Stock”) held by
Caledonia (the “Caledonia Shares”) into 90,000 shares of the Series A Preferred
and the Note.
2. Representations, Warranties and
Covenants
(a) The Company. The
Company hereby makes the following representations, warranties and covenants in
favor Caledonia:
(i) Authorized Shares. The shares
of the Series A Preferred identified in Section 1 of this Agreement constitute
duly authorized shares of the capital stock of the Company the issuance of which
to Caledonia has been duly authorized by the board of directors of the
Company.
(ii) Validly Issued. Upon issuance
of the shares of the Series A Preferred identified in Section 1 of this
Agreement and receipt by the Company of the certificates representing Caledonia
Shares properly endorsed and accompanied by all instruments necessary to effect
the transfer of such shares of the Common Stock to the Company (collectively,
the “Certificates”), such shares of the Series A Preferred shall be validly
issued and outstanding, fully paid, nonassessable and free and clear of all
liens and encumbrances arising through the actions of the Company or its
directors, officers, employees or agents.
(iii) Issuance of Series A
Preferred. Upon the Company's receipt of the Certificates and the duly
executed counterparts of this Agreement, the Company shall issue the shares of
the Series A Preferred specified in Section 1 of this Agreement to the party
identified in Section 1 of this Agreement as electing to receive such
shares.
(iv) Authorization. The Company
has full power and authority to enter into this Agreement, and this Agreement,
when executed and delivered, will constitute a valid and legally binding
obligation of the Company. The individual signing this Agreement on behalf of
the Company is duly authorized to execute this Agreement for and on behalf of
the Company. All organizational action required to be taken to authorize (i) the
execution and delivery of this Agreement by the undersigned individual for and
on behalf of the Company, and (ii) the performance by the Company of its
obligations hereunder has been taken.
(b) Caledonia. Caledonia
hereby makes the following representations, warranties and covenants in favor of
the Company:
(i) Title to Shares. Caledonia is
the owner of record of the Caledonia Shares and owns such shares of the Common
Stock free and clear of all liens, claims and encumbrances.
(ii) Authorization. Caledonia has
full power and authority to enter into this Agreement, and this Agreement, when
executed and delivered, will constitute a valid and legally binding obligation
of Caledonia. The individual signing this Agreement on behalf of Caledonia is
duly authorized to execute this Agreement for and on behalf of Caledonia. All
organizational action required to be taken to authorize (i) the execution and
delivery of this Agreement by the undersigned individual for and on behalf of
Caledonia, and (ii) the performance by Caledonia of its obligations hereunder
has been taken.
(iii) Purchase Entirely For Own
Account. This Agreement is made with Caledonia in reliance upon its
representation to the Company, which, by Caledonia’s execution of this
Agreement, it hereby confirms, that the shares of Series A Preferred to be
received by Caledonia and any securities issuable upon conversion thereof (such
shares of the Series A Preferred and securities issuable upon conversion thereof
being, collectively, the “Securities”) are being and will be acquired for
investment for Caledonia’s own account, not as nominee or agent, and not with a
view to the resale or distribution of any part thereof in violation
of the Securities Act, and that neither Caledonia nor any of its officers,
members, managers or representatives with the authority, responsibility or power
to make a decision with regard to the purchase or sale of the Securities or any
portion thereof (collectively, “Caledonia’s Representatives”) has any present
intention of selling, granting any participation in or otherwise distributing
the same in violation of the Securities Act. Caledonia and Caledonia’s
Representatives are familiar with the phrase “acquired for investment and not
with a view to distribution” as it relates to the Securities Act of 1933, as
amended (the “Securities Act”) and state securities laws and the special meaning
given to such term by the Securities and Exchange Commission (the “SEC”). By
executing this Agreement, Caledonia further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect
to any of the Securities.
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(iv)
Reliance Upon Caledonia’s
Representations and Warranties. Caledonia and Caledonia’s Representatives
understand that the Securities are not, and upon issuance of any of the
Securities on conversion of shares of the Series A Preferred, at the time of
issuance may not be, registered under the Securities Act on the ground that the
sale provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act, and that the Company's
reliance on such exemption is predicated on Caledonia’s representations and
warranties set forth herein. Caledonia and Caledonia’s Representatives realize
that the basis for the exemption may not be present if, notwithstanding such
representations and warranties, Caledonia or any of Caledonia's Representatives
has in mind merely acquiring the Securities or any portion thereof for a fixed
or determinable period in the future, or for a market rise, or for sale if the
market does not rise. Neither Caledonia nor any of Caledonia’s Representatives
has any such intention. Furthermore, Caledonia hereby covenants to indemnify the
Company for and hold the Company harmless from all losses, costs, damages,
liabilities and expenses arising out of or in connection with any breach or
inaccuracy of any representation, warranty or covenant made by Caledonia in this
Agreement.
(v) Receipt of Information.
Caledonia and Caledonia's Representatives have received all the information they
consider necessary or appropriate for deciding whether to exchange the Caledonia
Shares into 90,000 shares of Series A Preferred and the Note. Caledonia further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the Series A Preferred
and the business, properties, prospects and financial condition of the Company
and to obtain additional information necessary to verify the accuracy of any
information furnished to it. In making the decision to enter
into this Agreement, Caledonia and Caledonia’s Representatives have relied
solely upon their review of this Agreement, the Articles of Amendment to the
Company's Articles of Incorporation designating the terms and conditions of the
Series A Preferred, the form of the Note, and independent investigations made by
such Caledonia or Caledonia's Representatives. Caledonia further represents and
affirms that none of the following information has ever been represented,
guaranteed or warranted to it or any of its officers, members, managers or
representatives, expressly or by implication, by any person: (1) the
approximate or exact length of time that Caledonia will be required to remain a
shareholder of the Company, (2) the percentage of profit and/or amount of or
type of consideration, profit or loss to be realized, if any, as a result of its
entry into this Agreement; or (3) the possibility that the past performance or
experience on the part of the Company or any affiliate, officer, director,
employee or agent of the Company, might in any way indicate or predict the
results of ownership of the Securities or the potential success of the Company's
operations.
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(vi) Accredited Investor.
Caledonia is an Accredited Investor, as such term is defined in Regulation D
promulgated under the Securities Act.
(vii) Restricted Securities.
Caledonia and each of Caledonia’s Representatives understand that none of the
Securities, the Note, nor any portion thereof may be sold, transferred or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Securities or the Note (or such portion thereof) or an
available exemption from registration under the Securities Act, the Securities
and each portion thereof must be held indefinitely. Caledonia and each of
Caledonia's Representatives is aware that none of the Securities, the Note, nor
any portion thereof may be sold pursuant to Rule 144 promulgated under the
Securities Act unless all of the conditions of that Rule are met.
(viii) Legends. To the extent
applicable, each certificate or other document evidencing any of the Securities
or the Note shall be endorsed with the legends substantially in the form set
forth below:
The
following legend under the Securities Act:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS STEELCLOUD,
INC. (THE “COMPANY”) HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
Also the
Company shall endorse such certificates with each legend imposed or required by
the Company's Articles of Incorporation, the Company's Bylaws or applicable
state securities laws.
3. Governing Law. This Agreement
shall be governed by the laws of the State of Virginia, without reference to the
choice of laws rules of such state.
4. Attorneys' Fees. In the event
any party hereto fails to perform any of its obligations under this Agreement or
the transactions contemplated hereby or in the event a dispute arises concerning
the meaning or interpretation of any provision of this Agreement, the defaulting
party or the party not prevailing in such dispute, as the case may be, shall pay
any and all reasonable costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including court costs and
reasonable attorneys' fees.
5. Successors and Assigns. This
Agreement shall be binding upon each party hereto and its respective successors
and assigns.
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6. Severability. If any term of
provision of this Agreement or any application thereof shall be held invalid or
unenforceable, the remainder of this Agreement and any other application of such
term or provision shall not be affected thereby.
7. Entire Agreement. This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof, and may not be changed or modified except by an agreement
in writing signed by the parties hereto. The Company and Caledonia hereby agree
that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the subject matter hereof are merged into and revoked
by this Agreement.
8. Interpretation.
All provisions of this Agreement shall be interpreted according to their fair
meaning and shall not be strictly construed against any party.
9. Counterparts; Facsimile
Signature. This Agreement may be executed in one or more counterparts,
each of which shall be an original, but all of which, taken together, shall
constitute one agreement. An original signature or copy thereof transmitted by
facsimile shall constitute an original signature for purposes of this
Agreement.
[Signatures
are set forth on the following page.]
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IN WITNESS WHEREOF, the undersigned
have executed this Agreement as of the Effective
Date.
COMPANY
SteelCloud,
Inc.
By: /s/ Xxxxx X.
Xxxxxx
Name:
Xxxxx X. Xxxxxx
Title:
President & CEO
CALEDONIA
Caledonia
Capital Corporation
By: /s/ Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X. Xxxxxxx
Title:
President
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