Exhibit
10.1

    


    EXECUTIVE
RETENTION AGREEMENT

    


    SteelCloud,
Inc. (“Company”) and Brian Hajost (“Hajost”) agree as follows, on the 31st day of
January 2009:

    


    
      	
               
      

            	
              1.

            	
              The
      Company hires Hajost for the position of President and Chief Executive
      Officer (CEO) of the company commencing as of January 16,
      2009.  Hajost accepts the
position.

            


    

    
      	
               
      

            	
              2.

            	
              The
      Company will pay Hajost a semi-monthly salary of $8,333.33, (which equates
      to $200,000 annually.)  This salary will be paid in semi-monthly
      pay periods, less federal deductions and authorized withholdings as
      required by law.

            


    

    
      	
               
      

            	
              3.

            	
              Hajost
      will receive one hundred fifty six thousand (156,000) shares of Company
      stock which will vest at the rate of thirteen thousand (13,000) shares
      each month, beginning on the last business day of February 2009 and
      continuing on the last business days of the next eleven months, so long as
      Hajost is employed by the Company on the last day of the
      month.  The Company will pay the taxes on this stock grant, and
      Hajost acknowledges that the payment of the taxes may be taxable income to
      Hajost.  Hajost acknowledges that the stock will be considered
      restricted shares subject to the requirements of the Securities Act of
      1933 and Virginia Blue Sky laws.  The restrictions on this grant
      will include all restrictions necessary to assure compliance with 26
      U.S.C. § 409A.

            


    

    
      	
               
      

            	
              4.

            	
              Hajost
      will be entitled to participate in Company-sponsored medical and dental
      benefit plans to be paid by the
Company.

            


    

    
      	
               
      

            	
              5.

            	
              The
      Company will provide Hajost a car allowance of $500 per month, to be
      included in gross wages.

            


    

    
      	
               
      

            	
              6.

            	
              The
      Company will enter into a separate stock option agreement with Hajost
      pursuant to which Hajost will be granted an option for 300,000 SteelCloud
      shares three days after the Company’s 2008 Form 10K is filed with a grant
      price equal to the closing stock price of the Company on the date of the
      grant.  Hajost must be an employee on the date of the grant or
      the Company’s obligations under this clause are terminated. The option
      will vest ratably over a period of three years from the grant date with a
      5 year exercise term. In the event that the Company terminates Hajost’s
      employment without cause, Hajost’s stock options’ vesting date will
      accelerate and his 300,000 incentive stock options will become fully
      vested at that date.  Hajost recognizes that he is ineligible
      for any other options under any other agreement express or implied, and
      that the new stock option agreement will be deemed the sole vehicle for
      any SteelCloud stock options.

            


    

    
      	
               
      

            	
              7.

            	
              Hajost
      understands that he is an employee at will and either he or the Company
      may terminate Hajost’s employment at any time with or without cause and
      with or without notice.  In the event that the Company
      terminates Hajost ‘s employment for cause, all obligations of the Company
      under this agreement shall terminate.  For the purposes of this
      clause, “cause” means (a) a deliberate violation of a Company rule
      reasonably designed to protect the legitimate business interests of the
      Company, (b) a willful act or omission of such a nature or so recurrent as
      to manifest a disregard of the Company’s interests and the duties and
      obligations Hajost owes to the Company, or (c) the Company’s failure to
      satisfy the requirements of the Company’s Financial Plan for two
      consecutive quarters.  For the purposes of this clause, the
      Company’s Financial Plan shall be the Plan adopted by the Board of
      Directors applicable to each fiscal year.  In the event that the
      Company terminates Hajost’s employment without cause (other than due to
      Hajost’s request), or Hajost terminates his employment for Good Reason,
      Hajost shall be entitled to severance as
  follows:

            


    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              a.

            	
              If
      the termination takes place within three months from the date of this
      agreement, the Company will pay Hajost severance of two months salary,
      payable semi-monthly on the Company’s regular salary payment dates for the
      two months following Hajost’s
termination.

            


    

    
      	
               
      

            	
              b.

            	
              If
      the termination takes place between three months and six months from the
      date of this agreement, the Company will pay Hajost severance of three
      months salary, payable semi-monthly on the Company’s regular salary
      payment dates for the three months following Hajost’s
      termination.  Notwithstanding the foregoing, if deemed necessary
      to comply with 26 U.S.C. § 409A, all severance pay due under this
      subparagraph must be paid no later than 2 1⁄2 months after the end of the
      year in which the termination of employment occurs, and the Company may
      unilaterally amend the payment schedule for the severance due under this
      subparagraph to comply with this payment
term.

            


    

    
      	
               
      

            	
              c.

            	
              If
      the termination takes place between six months and one year from the date
      of this agreement, the Company will pay Hajost severance of six months
      salary, payable semi-monthly on the Company’s regular salary payment dates
      for the six months following Hajost’s
      termination.   Notwithstanding the foregoing, if deemed
      necessary to comply with 26 U.S.C. § 409A, all severance pay due under
      this subparagraph must be paid no later than 2 1⁄2 months after the end of
      the year in which the termination of employment occurs, and the Company
      may unilaterally amend the payment schedule for the severance due under
      this subparagraph to comply with this payment
  term.

            


    

    
      	
               
      

            	
              d.

            	
              If
      the termination takes place after the first year anniversary of this
      agreement, the Company will pay Hajost a severance of 12 months salary,
      payable semi-monthly on the regular salary payment dates for the twelve
      months following Hajost’s termination.  Notwithstanding the
      foregoing, if deemed necessary to comply with 26 U.S.C. § 409A, all
      severance pay due under this subparagraph must be paid no later than 2 1⁄2
      months after the end of the year in which the termination of employment
      occurs, and the Company may unilaterally amend the payment schedule for
      the severance due under this subparagraph to comply with this payment
      term.

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    The
severance payments described in this paragraph 7 are intended to be and will be
applied in such a manner as to be exempt 26 U.S.C. § 409A under the exemption
found in Regulation Section 1.409A-(b)(9)(iii) for separation pay plans (i.e.,
the so-called ‘two times’ pay exemption).  For purposes of this
paragraph 7, Good Reason means the occurrence of any of the following events,
without the express written consent of Hajost: a material diminution of his base
compensation;  a material diminution of his authority, duties or
responsibilities;  a material diminution of the budget over which he
retains authority;  a material change in the geographic location of
his job; or  any other action or inaction by the Company that
constitutes a material breach by the Company of this
agreement.  Furthermore, notwithstanding the foregoing, the occurrence
of any Good Reason event shall cease to be an event constituting Good Reason if
Hajost fails to provide the Company with notice of the occurrence of any of the
foregoing within the ninety (90)-day period immediately following the date on
which Hajost first becomes aware (or reasonably should have become aware) of the
occurrence of such event.  The Company shall have thirty (30) days from the
receipt of such notice to cure or remedy the event described as constituting
Good Reason.   Hajost’s termination for Good Reason must occur within
the six month period following the occurrence of the event constituting good
reason. 

     

    
      	
               
      

            	
              8.

            	
              If  (a)
      the majority of the Company’s stock or a substantial portion of the
      Company’s assets are acquired, (b) the acquisition closes while Hajost is
      employed by the Company, and (c) Hajost’s employment with the Company is
      terminated without cause (other than due to Hajost’s request) within 30
      days of the acquisition, Hajost will be entitled to severance pay equal to
      the lesser of (a) 24 months salary based on Hajost’s annual rate of pay
      for the calendar year before the calendar year of termination from
      service, or (b) two times the IRS limit for qualified plans provided for
      in 26 U.S.C. § 401(a)(17) for the calendar year of termination of
      service.  This severance will be payable in monthly installments
      pro rata ending on  the
      last day of the second calendar year following the year in which Hajost is
      terminated, but there will be no payment during the first six months
      following termination, and the first payment will include six months of
      the severance pay, and the severance pay thereafter will be paid in
      monthly installments.  For the purposes of this clause, “cause”
      is defined as it is defined in paragraph 7
      above.  Notwithstanding the foregoing, the Company may
      unilaterally amend this Agreement and pay any severance pay due under this
      paragraph immediately following Hajost’s termination of employment, but no
      later than the 15th
      day of the third month following Hajost’s termination of employment, if
      the Company deems it to be necessary to comply with 26 U.S.C. § 409A and
      the exemption found in Regulation Section 1.409A-(b)(4) for short-term
      deferrals.  The obligation to pay Hajost under this paragraph
      shall be in lieu of any obligation to pay Hajost under paragraph 7 of this
      Agreement, and payment under this paragraph shall constitute compliance by
      the Company with any obligations under this paragraph and paragraph 7 of
      this Agreement.

            


    

    
      	
               
      

            	
              9.

            	
              The
      Company will appoint Hajost to the Board of Directors of the
      Company.

            


    

     

    
      
         

      

      
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              10.

            	
              During
      the term of Hajost’s employment with the Company and for 2 years after
      termination of Hajost’s employment, regardless of the reason for the
      termination, Hajost agrees that he will not compete, directly or
      indirectly, with the business of the Company.  Hajost
      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 which competes or may compete with the present business of
      the Company and such other business activity in which the Company may
      engage during Hajost’s employment.  “Own” does not include an
      ownership interest in the securities of a publicly traded company which is
      an interest less than 3 % of the outstanding publicly traded shares of the
      company.

            


    

    
      	
               
      

            	
              11.

            	
              Hajost
      acknowledges that during the course of his employment relationship with
      the Company, there may be disclosed to him certain trade secrets,
      methodologies, or other proprietary data of the Company and others with
      which the Company has contractual relationships (hereinafter “Confidential
      Information”); said Confidential Information consisting of, but not
      limited to: customer lists, pricing data, the Company’s financial
      information, technical information, and marketing, production, or
      merchandising systems or plans.  Hajost agrees that he shall not
      during, or at any time after the termination of, his employment
      relationship with the Company, regardless of the reason for the
      termination, use for himself or others, or disclose or divulge to others,
      including but not limited to future employers or other businesses with
      which Hajost  may have a contractual relationship, any
      Confidential Information.

            


    

    
      	
               
      

            	
              12.

            	
              Should
      Hajost breach or threaten to breach his duties under paragraphs 10 or 11
      above, the Company shall be entitled to an injunction restraining him from
      such breaches. The right to secure an injunction is not exclusive, and the
      Company may pursue any other remedies it has against Hajost for a breach
      or threatened breach of paragraphs 10 and 11, including the recovery of
      damages from Hajost.

            


    

    
      	
               
      

            	
              13.

            	
              This
      agreement is contingent upon Hajost’s submission of satisfactory proof of
      his identity and his legal authorization to work in the United
      States.  As a condition of employment, Hajost will be required
      to complete the Employment Eligibility Verification (I-9) and submit a
      copy of the appropriate documents to show that Hajost is eligible to work
      in the United States.  If Hajost fails to submit this proof
      within three days of his initial employment date, federal law prohibits
      the Company from hiring Hajost.

            


    

    
      	
               
      

            	
              14.

            	
              Hajost
      acknowledges that this agreement, along with the final form of any
      referenced documents, represents the entire agreement between him and the
      Company and that no verbal or written agreements, promises or
      representations that are not specifically stated in this agreement, are or
      will be binding upon the Company.

            


    

    
      	
               
      

            	
              15.

            	
              Hajost
      acknowledges that the Company has made no representations regarding the
      tax consequences to Hajost regarding this Agreement or any of its
      provisions.  The Company reserves the unilateral right to amend
      this Agreement if necessary to comply with applicable law or amendments
      thereto, including but not limited to 26 U.S.C. § 409A.  If (and
      for as long as) Hajost is determined to be a "specified employee" (as
      defined under 26 U.S.C. § 409A), any payments to be made to Hajost upon a
      separation from service may not be made before the date that is six months
      after his separation from service (or death, if earlier), unless otherwise
      permitted pursuant to 26 U.S.C. § 409A.  To the extent that
      Hajost is subject to the six-month delay rule referenced in the preceding
      sentence, all payments that would have been made to him during the six
      months following his separation from service that are not otherwise exempt
      from Code Section 409A, if any, will be accumulated and paid to him during
      the seventh months following his separation from service, and any
      remaining payments due will be made in their ordinary course as described
      in this Agreement.

            


    

    


    
      
         

      

      
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    STEELCLOUD,
INC.

    


    By: /s/ E.A.
Burkhalter                                          


    Vice
Admiral E. A. Burkhalter, Jr., USN (Ret.)

    Chairman
of the Board of Directors

    Dated:
February 5, 2009

    


    


    Agreed
and Accepted:

    


    /s/ Brian
Hajost                                                      


    Brian
Hajost

    Dated:
February 5, 2009

     

    
      
         

      

      
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