EMPLOYMENT AND SEPARATION AGREEMENT
Exhibit 10.1
EMPLOYMENT AND SEPARATION AGREEMENT
This EMPLOYMENT AND SEPARATION
AGREEMENT (“Agreement”) is made on September 18, 2006 between
SteelCloud, Inc. (“SteelCloud”) and Xxxxxx Xxxxxxxx (“Employee”).
WHEREAS, SteelCloud desires to employ Employee as SteelCloud’s Chief Operating 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 for a period of one year, subject to the termination rights of either party as
set forth in sections 5 or 7 below. This Agreement shall continue thereafter from month to month
unless terminated by either party pursuant to the terms of this Agreement.
2. DUTIES AND POSITION. Employee shall be the Chief Operating Officer of SteelCloud, and shall
exert his best efforts to provide day to day operational 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 Xxxxx Xxxx, SteelCloud’s Chief Executive Officer. 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 Salary of $175,000.00 per year, payable
pro rata on the regular payroll days of the company, less federal, state, and local taxes and other
required withholdings. The Salary is subject to change at the discretion of SteelCloud’s Board of
Directors.
b. 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.
c. 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 inappropriate.
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d. In addition to the foregoing, Employee and SteelCloud shall enter into (i) a separate stock
option agreement, pursuant to which Employee will be given an option for 100,000 SCLD shares, such
option to vest over a period of 4 years, subject to the terms of the separate stock option
agreement; and (ii) a separate bonus agreement, pursuant to which Employee shall be entitled to a
bonus, not to exceed $25,000 per year, subject to the terms of the bonus agreement. The parties
agree to negotiate in good faith the terms of these agreements.
4. EMPLOYEE TO DEVOTE FULL TIME TO COMPANY. 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, or regardless of whether such activity is
competitive with SteelCloud.
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 (60) days, SteelCloud may terminate Employee’s employment, and/or otherwise 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. Employee and SteelCloud recognize that Employee is an employee at
will and that this Agreement and Employee’s employment may be terminated by either party at any
time, with or without cause, provided that any such termination is in accordance with the terms
contained below.
a. If SteelCloud shall terminate Employee without cause effective prior to the first
anniversary of this Agreement, SteelCloud shall pay Employee severance equal to the balance of his
annual Salary not paid because of the termination effective prior to the anniversary date.
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 from the effective date of termination until the
pay period covering the first anniversary of this Agreement.
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b. If the Employee shall terminate his employment, Employee shall give SteelCloud sixty (60)
days notice. During this period, Employee shall perform such functions as required by the Company
and shall be paid his Salary. Notwithstanding the foregoing, should there be a Change in Control
of SteelCloud effective prior to the first anniversary of this Agreement, which Employee reasonably
determines to impact negatively his position at SteelCloud, Employee may terminate this Agreement
immediately and, if he does terminate, he shall be entitled to severance pay equal to his annual
Salary of $175,000. 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 over the course of a
year. A “Change in Control” shall be deemed to have occurred should there be a dissolution or
liquidation of SteelCloud or a partial liquidation involving 50% or more of the assets of the
company, a reorganization of the company in which another entity is the survivor, a merger or
reorganization of the company under which more than 50% of SteelCloud’s common stock outstanding
prior to the merger or reorganization is converted into cash or into a security of another entity,
a sale of more than 50% of the company’s assets, or a similar event that the Board of Directors
determines, in its discretion, materially alters the structure of the company or its ownership.
c. If SteelCloud shall terminate the Employee for cause, Employee shall have no right to
receive any notice. “For cause” as used in this paragraph shall mean Employee’s deliberate violation of a company rule reasonably designed to protect the legitimate
business interests of SteelCloud, or when Employee’s acts or omissions are of such a nature or so
recurrent as to manifest a willful disregard of those interests and the duties and obligations he
owes to SteelCloud.
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 (which, if
applicable, shall be the last day of any notice period set forth in sections 7(a) or 7(b) above),
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; (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 a 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).
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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.
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.
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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:
If to the Company, notice shall be directed to:
Xx. Xxxxx Xxxx
Chief Executive Officer
SteelCloud
00000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xx. Xxxxx Xxxx
Chief Executive Officer
SteelCloud
00000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
If to Employee, notice shall be directed to
Xxx Xxxxxxxx
Xxx Xxxxxxxx
or to such other address as either party may designate from time to time by written notice to
the other party.
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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.
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/ Xxxxxxx X. Xxxx | /s/ Xxxxxx Xxxxxxxx | ||||
| SteelCloud, Inc. by: | Xxxxxxx X. Xxxx | Xxxxxx Xxxxxxxx | |||
| its Chief Executive Officer | |||||
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