THIS NOTE AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES STATUTES
OR REGULATIONS, AND MAY NOT BE TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION
STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH RESPECT THERETO, (ii) A WRITTEN
OPINION FROM COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER REASONABLY
ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED OR (iii) A “NO ACTION” LETTER OR ITS THEN EQUIVALENT
HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER OR SALE.
 
STEELCLOUD, INC.

PROMISSORY NOTE

$1,100,000
July 2, 2010

STEELCLOUD, INC., a Virginia corporation (the “Company”), for value received,
hereby promises to pay to the order of CLIPPER INVESTORS LLC, an Illinois
limited liability company (the “Holder”), or its registered assigns, the
principal amount of One Million One Hundred Thousand Dollars ($1,100,000) on
July 2, 2013, with interest computed and payable as set forth in the Note
Purchase Agreement (defined below); provided that in no event shall the amount
payable as interest on this Note exceed the highest lawful rate permissible
under any law applicable hereto.  Payments of principal, premium, if any, and
interest hereon shall be made in lawful money of the United States of America by
the method and at the address for such purpose specified in the Note Purchase
Agreement, and such payments shall be overdue for purposes hereof if not made on
the scheduled date of payment therefor, without giving effect to any applicable
grace period.
 
This Note is issued pursuant to that certain Note Purchase Agreement dated July
2, 2010 (the “Note Purchase Agreement”) between the Company and the Holder, and
the Holder or its registered assigns are entitled to the benefits of the Note
Purchase Agreement and the other documents referred to in the Note Purchase
Agreement, including without limitation, the Security Agreement and the
Registration Rights Agreement, and may enforce the agreements contained therein
and exercise the remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the terms thereof.  Capitalized terms used
herein without definition have the meanings ascribed to them in the Note
Purchase Agreement.
 
1.           General.
 
1.1.           Assignment.  This Note and all rights hereunder are transferable,
in whole or in part, at the office or agency of the Company by the Holder or its
agent or attorney upon surrender of this Note together with the Assignment Form
attached hereto as Exhibit A, properly endorsed.
 

 
 

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1.2.           Certain Waivers.  The parties hereto hereby waive presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Note.
 
1.3.           Governing Law.  This Note shall be construed in accordance with
and governed by the domestic substantive laws of the State of Illinois without
giving effect to any choice of law or conflicts of law provision or rule that
would cause the application of domestic substantive laws of any other
jurisdiction.
 
1.4.           Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in
accordance with the Note Purchase Agreement.
 
1.5.           Replacement.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Note and, in
the case of any such loss, theft or destruction of this Note, upon receipt of an
indemnity reasonably satisfactory to the Company or, in the case of any such
mutilation, upon the surrender and cancellation of this Note, the Company, at
its expense, shall execute and deliver, in lieu thereof, a new Note of like
tenor and dated the date of such lost, stolen, destroyed or mutilated Note, and
following such execution and delivery this Note shall not be deemed to be an
outstanding Note.
 
1.6.           Amendment.  Any term of this Note may be amended only with the
written consent of the Company and the Holder.
 
[signature page follows]

 
2

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IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.

 
STEELCLOUD, INC.
       
By:
/s/ Brian H. Hajost
 
Name:
Brian H. Hajost
 
Title:
President & CEO

 
 

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EXHIBIT A

ASSIGNMENT FORM
 
(To assign the foregoing Note, execute
this form and supply the required information.)
 
FOR VALUE RECEIVED, the foregoing Note and all rights evidenced thereby are
hereby assigned to

_______________________________________________________________________ whose
address is
 
________________________________________________________________________________

________________________________________________________________________________
 
Dated:  ______________, _______        
 

 
Holder’s Name:
                 
Signature of Holder
       
or Authorized Signatory:
                 
Title (if applicable):
                 
Holder’s Address:
     

 
Signature
Guaranteed:  ______________________________________________________________
 
NOTE:  The signature to this Assignment Form must correspond with the name as it
appears on the face of the Note, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Note.

 
 

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