EXHIBIT 10.2
EMPLOYMENT AGREEMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER
This EMPLOYMENT AGREEMENT is made on August 27, 2007, between
SteelCloud, Inc. ("SteelCloud") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Employee").
WHEREAS, SteelCloud desires to employ Employee as SteelCloud's
President and Chief Executive Officer upon a vacancy in that position, 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
commence as of the date that the position of President and Chief Executive
Officer becomes vacant, and shall continue from that date to a date which is a
period of three years from the date first above written, subject to the
termination rights of either party as set forth in sections 5 and 7 below. This
Agreement shall continue thereafter from year to year unless terminated by
either party pursuant to the terms of this Agreement. If the position of
President and Chief Executive Officer does not become vacant on or before
November 1, 2007, this Agreement is null and void.
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, termination (voluntary or
involuntary), 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.
1
3. SALARY / BENEFITS.
a. For his services, SteelCloud shall pay Employee a Base Salary of
$260,000 per year. 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 an
annual bonus of up to $100,000 per year if SteelCloud exceeds the Financial Plan
during a fiscal year in which Employee served as President and Chief Executive
Officer of SteelCloud. The precise amount of the Additional Salary shall be
determined in the reasonable discretion of the Board of Directors. SteelCloud's
Board of Directors may also grant Employee additional bonuses in its discretion
based on its evaluation of Employee's performance.
b. For purposes of calculating Employee's Additional Salary, if any,
the term "Financial Plan" shall mean that Plan to which SteelCloud and Employee
agree before the end of each of SteelCloud's fiscal years and applicable to the
next fiscal year, addressing, separately, revenue and 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, (2)
paid vacation and sick leave pursuant to the standard SteelCloud policies, and
(3) up to $500/month in an entertainment, local travel, and miscellaneous
business expense allowance, subject to presentation of documentation of
Employee's incurring of said expenses.
d. In addition, SteelCloud shall pay Employee a signing bonus in the
amount of $40,000, less federal, state, and local taxes and other required
withholdings, within 30 days after complete execution of this Agreement.
e. In addition, (i) Employee and SteelCloud shall enter into a separate
stock option agreement, pursuant to which Employee will be given an option for
100,000 SCLD shares, such option to vest at the rate of 33,333 and 1/3 shares
per year, subject to the terms of the separate stock option agreement; and (ii)
Employee and SteelCloud shall enter into a separate stock award agreement
pursuant to which SteelCloud shall issue to Employee 100,000 shares of
SteelCloud stock subject to trading and forfeiture restrictions, which shares
shall vest in the Employee and shall be eligible for removal of the restrictions
at the rate of 33,333 and 1/3 shares per year on each anniversary of this
Agreement. The agreement shall also provide that if the Employee ceases to be
employed by SteelCloud, Employee shall forfeit the unvested shares to
SteelCloud. The parties agree to negotiate in good faith the terms of these
agreements. SteelCloud's Board of Directors may also grant Employee additional
stock options and stock in its discretion based on its evaluation of Employee's
performance.
2
f. 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.
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.
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 thirty (30) 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. This
clause shall survive termination of this Agreement.
3
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.
b. In the event that SteelCloud underperforms on an annual basis
relative to the Financial Plan as defined in paragraph 3.b., the Board of
Directors may terminate Employee at any time after November 1, 2008, by paying
the lesser of (a) six months base salary, or (b) the balance of the base salary
for the remaining term of the contract.
c. If SteelCloud shall terminate the Employee for cause other than as
set forth in paragraph 7.b, 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 (including but not limited to misappropriation of SteelCloud
assets, competition with SteelCloud, total failure to perform assigned work, and
breach of fiduciary duty), (b) failure to comply with the instructions of the
Board of Directors, or (c) the failure of SteelCloud to meet the requirements of
the Financial Plan for three consecutive quarters.
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.
e. This clause shall survive termination of this Agreement.
8. POST EMPLOYMENT RESTRICTIONS.
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) who were SteelCloud's accounts or customers
while Employee was employed at SteelCloud; 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, servicing, or
sale of hardware or software that competes with SteelCloud branded appliances,
SteelCloud licensed software, or SteelCloud antivirus, intrusion protection, and
security services.
4
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.
d. This clause shall survive termination of this Agreement.
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. This clause shall survive termination of this Agreement.
10. ENFORCEMENT PROVISIONS.
a. 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.
c. This clause shall survive termination of this Agreement.
5
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:
Chairman of the Board
SteelCloud
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Employee, notice shall be directed to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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.
6
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.
IN WITNESS WHEREOF, each party to this Agreement has caused it to be
executed on the date indicated above.
/S/ VADM ▇.▇.▇▇▇▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------- -------------------
SteelCloud, Inc. by VADM ▇.▇.▇▇▇▇▇▇▇▇▇▇ Employee
its CHAIRMAN OF THE BOARD
7
