Document:

Exhibit
4.7

    

    FEDERAL
AGRICULTURAL MORTGAGE CORPORATION

     

    AMENDED
AND RESTATED

    CERTIFICATE
OF DESIGNATION OF TERMS AND CONDITIONS

     

    of

     

    NON-VOTING
CUMULATIVE PREFERRED STOCK, SERIES C

     

    (par
value $1,000 per share)

     

    I, Jerome
G. Oslick, Corporate Secretary of the Federal Agricultural Mortgage Corporation,
a federally chartered instrumentality of the United States of America (the
“Corporation”),
do hereby certify that, pursuant to authority vested in the Board of Directors
of the Corporation (the “Board of Directors”)
by Section 8.4(e) of Title VIII of the Farm Credit Act of 1971, as
amended (12 U.S.C. §§2279aa-4(e)) (the “Act”), the Board of
Directors adopted resolutions on December 11, 2008 and August 6, 2009, which
resolutions are now, and at all times since such date have been, in full force
and effect, and that the President and Chief Financial Officer of the
Corporation, pursuant to the authority delegated to him by such resolutions,
approved the final terms of the issuance and sale of the preferred stock of the
Corporation designated below.

     

    The
Non-Voting Cumulative Preferred Stock, Series C, shall have the following
designation, powers, preferences, rights, privileges, qualifications,
limitations, restrictions, terms and conditions:

     

    1.       
    Designation, Par Value,
Number of Shares and Seniority.

     

    The class
of preferred stock of the Corporation created hereby (the “Preferred Stock”)
shall be designated “Non-Voting Cumulative Preferred Stock, Series C,” shall
have a par value of $1,000 per share (the “Par Value”) and a
liquidation preference per share equal to the Par Value (subject to adjustment
of such fixed dollar amount for any stock splits, stock dividends, combinations,
recapitalizations or similar transactions) plus Accumulated Dividends thereon
(the “Liquidation
Preference”), and shall consist of up to
100,000 shares.  The Preferred Stock shall, with respect to
dividend distributions and distributions upon a liquidation, dissolution or
winding up of the Corporation, rank (a) senior to (i) the Class A
Voting Common Stock, par value $1.00 per share, of the Corporation,
(ii) the Class B Voting Common Stock, par value $1.00 per share, of
the Corporation, (iii) the Class C Non-Voting Common Stock, par value
$1.00 per share, of the Corporation and (iv) any common stock of the Corporation
that may be issued after the date of this Certificate (the securities referred
to in sub-clauses (i) through (iv), collectively, the “Junior Stock”) and
(b) junior to (i) the Senior Cumulative Perpetual Preferred Stock, Series
B-1, par value $1,000 per share (the “Series B-1 Preferred
Stock”), of the Corporation, (ii) the Senior Cumulative Perpetual
Preferred Stock, Series B-2, par value $1,000 per share, of the Corporation and
(iii) the Senior Cumulative Perpetual Preferred Stock, Series B-3, par value
$1,000 per share, of the Corporation.

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    2.           Dividends.

     

    (a)           The
holders of outstanding shares of the Preferred Stock shall be entitled to
receive, ratably, when and as declared by the Board of Directors, or a duly
authorized committee thereof, out of funds legally available for dividend
payments, cash dividends which compound quarterly at the annual rate of
(i) 5% of the then-applicable Liquidation Preference per share of Preferred
Stock, from the period commencing on the applicable Issue Date and ending on the
December 31st following the fifth anniversary of the applicable Issue Date,
(ii) 7% of the then-applicable Liquidation Preference per share of
Preferred Stock from and after the period commencing on the January 1st
following the fifth anniversary of the applicable Issue Date and ending on the
December 31st following the tenth anniversary of the applicable Issue Date,
and (iii) 9% of the then-applicable Liquidation Preference per share of
Preferred Stock from and after the period commencing on the January 1st
following the tenth anniversary of the applicable Issue Date and so long as the
Preferred Stock remains outstanding.  Dividends on the Preferred Stock
shall accrue and cumulate from and including the applicable Issue Date whether
or not declared and shall be payable quarterly in arrears when and as declared
by the Board of Directors on each Dividend Payment Date, beginning on the first
Dividend Payment Date following the applicable Issue Date.  If a
Dividend Payment Date is not a Business Day, the related dividend shall be paid
on the next Business Day with the same force and effect as though paid on the
Dividend Payment Date, without any increase to account for the period from such
Dividend Payment Date through the date of actual payment.  The “Dividend Period”
relating to a Dividend Payment Date shall be the period from, but not including,
the preceding Dividend Payment Date (or from and including the applicable Issue
Date in the case of the first Dividend Payment Date) through and including the
related Dividend Payment Date.  Dividends on the Preferred Stock shall
be computed based on a 360-day year consisting of twelve 30-day months, and
dividends on the Preferred Stock for any period less than a year shall be
computed based on a 360-day year consisting of twelve 30-day months and the
actual number of days elapsed in the period for which such dividends were
payable.  Dividends shall be paid to holders of record of
outstanding shares of the Preferred Stock as they appear in the books and
records of the Corporation on the record date, not to be earlier than 45 days
nor later than 10 days preceding the applicable Dividend Payment Date, as
shall be fixed by the Board of Directors from time to time.

     

    (b)           The
holders of shares of Preferred Stock shall be entitled to receive the dividends
provided for in Section 2(a)
hereof in preference to and in priority over any dividends upon any series or
class of Junior Stock.  So long as any shares of Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any Junior Stock, or make any payment on account of, or pay into or
set funds aside for a sinking fund for, the repurchase, redemption or other
acquisition or retirement of any Junior Stock or any Options or Convertible
Securities exercisable or exchangeable for, or convertible into, any Junior
Stock (other than the repurchase, redemption or other acquisition or retirement
for value of Junior Stock solely in exchange for Junior Stock), during or in
respect of any Dividend Period unless all cumulative dividends on the Preferred
Stock determined in accordance herewith have been or contemporaneously are
declared and paid in full (or declared and a sum of cash sufficient for the
payment thereof is set apart or reserved for such payment) for all Dividend
Periods terminating on or prior to the date of payment of such amounts on
account of or for such Junior Stock or any Options or Convertible Securities
exercisable or exchangeable for, or convertible into, any Junior Stock. The
Corporation shall take all actions necessary or advisable under the Act or any
other applicable law to permit the payment of the dividends provided for in
Section 2(a)
hereof to the holders of shares of Preferred Stock.  Holders
of shares of Preferred Stock shall not be entitled to any dividend, whether
payable in cash, in kind or other property in excess of the full dividends
provided for in Section 2(a)
hereof.

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    (c)         Notwithstanding
any other provision of this Certificate, the Board of Directors, in its
discretion, may choose to pay dividends on the Preferred Stock without the
payment of any dividends on the Junior Stock or on any other outstanding class
or series of stock ranking junior to the Preferred Stock with respect to the
payment of dividends.

     

    3.           Redemption.

     

    (a)         Subject
to receipt of the prior written approval of the Farm Credit Administration, if
required, and the consent of at least two-thirds of the then-outstanding shares
of the Series B-1 Preferred Stock, if any, on the first anniversary of the
applicable Issue Date and on each subsequent Dividend Payment Date (each such
date, a “Redemption
Date”), the Corporation shall, in its sole discretion, be entitled to
redeem some or all of the issued and outstanding shares of Preferred Stock at a
price per share equal to the then-applicable Liquidation Preference on the
Redemption Date (the “Redemption Amount”)
on the Redemption Date.

     

    (b)         In
the event that the Corporation elects to redeem some or all issued and
outstanding shares of Preferred Stock on any Redemption Date, not less than 30
days prior to the Redemption Date pursuant to Section 3(a)
hereof, the Corporation shall send a written notice (the “Redemption Notice”)
by first class mail to each holder of record of shares of Preferred Stock at
such holder’s registered address stating (i) the Redemption Date,
(ii) the Redemption Amount that will be payable with respect to the shares
of Preferred Stock on the Redemption Date and (iii) the place at which such
holder’s certificate(s) representing shares of Preferred Stock must be presented
for cancellation upon such redemption.

     

    (c)         On
or prior to the Redemption Date, the Corporation shall deposit cash equal to the
aggregate applicable Redemption Amount with a bank or trust corporation in good
standing and organized under the laws of the United States of America or any
jurisdiction thereof having aggregate capital and surplus in excess of
$1,000,000,000.  Such cash shall be deposited in a trust fund for the
benefit of the holders of shares of Preferred Stock.  The
Corporation shall issue to such bank or trust corporation irrevocable
instructions and authority to pay and/or transfer the allocable portion of the
applicable Redemption Amount for such shares of Preferred Stock to their
respective holders on or immediately after the applicable Redemption Date upon
receipt of the certificate(s) representing the shares of Preferred Stock to
be so redeemed.  Notwithstanding the deposit of funds, the Corporation
shall remain liable for the payment of the applicable Redemption Amount to the
extent such Redemption Amount is not paid as provided herein.  From
and after the applicable Redemption Date, unless there shall have been a default
in payment of the applicable Redemption Amount, all rights of the holders
of shares of Preferred Stock as holders of Preferred Stock (except the
right to receive the applicable Redemption Amount upon surrender of their
certificate(s)) shall cease and such shares shall not thereafter be
transferred on the transfer books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.  Until the applicable
Redemption Amount for each issued and outstanding share of Preferred Stock shall
have been paid in full, each such share of Preferred Stock not so redeemed shall
remain outstanding for all purposes and entitle the holder thereof to all the
rights and privileges provided herein, including, without limitation, the
accrual and payment of dividends and conversion rights, and, if unpaid prior to
the date such shares are redeemed, shall be included as part of the
applicable Redemption Amount.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

     

    (d)         If
any Redemption Date is not a Business Day, payment of the applicable Redemption
Amount may be made on the next Business Day with the same force and effect as if
made on the applicable Redemption Date, and no interest, additional dividends or
other sums will accrue on the amount payable from the Redemption Date to the
next Business Day.

     

    (e)         The
Corporation may not, whether by any amendment of Title VIII of the Act or
Bylaws, by any reclassification or other change to its capital stock, by any
merger, consolidation or other combination involving the Corporation, by any
sale, conveyance or other transfer of assets, by the liquidation, dissolution or
winding up of the Corporation, or by any other way, impair or restrict the
redemption of shares of Preferred Stock pursuant to this Section 3, or
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all provisions of this Section 3 and in
the taking of all such action as may be necessary or appropriate in order to
protect the redemption rights of the holders of shares of Preferred Stock
against impairment to the extent required hereunder.

     

    4.           Voting
Rights.

     

    Except as
required by applicable law, holders of shares of Preferred Stock shall not
have any voting powers, either general or special.

     

    5.           Liquidation Rights and
Preference.

     

    (a)           Upon
the occurrence of a liquidation, dissolution or winding up of the Corporation,
holders of the then-outstanding shares of Preferred Stock shall be entitled
to receive and be paid out of the assets of the Corporation available for
distribution, before any payment or distribution shall be made to any holder
of shares of Junior Stock (without duplication of any Redemption Amounts
paid pursuant to Section 3
hereof) and after all payments and distributions have been made to holders of
securities of the Corporation that rank senior to the Preferred Stock, an amount
in cash equal to the then-applicable Liquidation Preference on the date of such
liquidation, dissolution or winding up of the Corporation.  If upon a
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation available for distribution are insufficient to pay the holders of
Preferred Stock the full Liquidation Preference upon the occurrence of such an
event, then all of the assets of the Corporation available for distribution
shall be distributed to the holders of then-outstanding shares of Preferred
Stock ratably in proportion to the full respective amounts to which they are
entitled.

     

    (b)           Neither
the voluntary sale, conveyance, transfer, lease or exchange of all or
substantially all of the property or business of the Corporation, nor the
merger, consolidation or combination of the Corporation into or with any other
corporation or entity, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation for the purpose of this Section 5.  The
Corporation shall provide each holder of Preferred Stock notice no later than
five days after the Corporation or any of its subsidiaries becomes aware of any
fact, circumstance, event, change, violation, development, effect, condition or
occurrence which has given rise to, or could reasonably be expected to give rise
to, a liquidation, dissolution or winding up of the Corporation.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    6.      
     Additional Classes or
Series of Stock.

     

    The Board
of Directors shall have the right at any time in the future to authorize, create
and issue, by resolution or resolutions, one or more additional classes or
series of stock of the Corporation, and to determine and fix the distinguishing
characteristics and the relative rights, preferences, privileges and other terms
of the shares thereof.  Any such class or series of stock may
rank senior to, on a parity with or junior to the Preferred Stock as to
dividends, upon liquidation or otherwise.

     

    7.      
     Information
Rights.

     

    Upon the
reasonable request of any holder of shares of Preferred Stock, the
Corporation shall, and shall cause its representatives to, provide such
information (including, without limitation, periodic financial statements and
budgets) to the extent necessary for any such holder to satisfy any applicable
tax or regulatory requirements.

     

    8.       
    Amendments.

     

    Notwithstanding
anything to the contrary herein, the Corporation, upon approval of at least
two-thirds of the then-outstanding shares of Preferred Stock, may amend,
alter, supplement or repeal any provision of this Certificate pursuant to the
following terms and conditions:

     

    (a)         The
annual dividend rate, the Redemption Amount or the Liquidation Preference of the
Preferred Stock shall not be reduced without the unanimous consent of the
holders of all shares of Preferred Stock.

     

    (b)      
  Holders of the Preferred Stock shall be entitled to one vote per
share on matters on which their consent is required pursuant to this Section 8.  Consents
shall be effective when duly executed and delivered to the
Corporation.  In connection with any meeting of such holders, the
Board of Directors shall fix a record date, neither earlier than 60 days
nor later than 10 days prior to the date of such meeting, and holders of
record of shares of the Preferred Stock on such record date shall be
entitled to notice of and to vote at any such meeting and any
adjournment.  The Board of Directors, or such person or persons as it
may designate, may establish reasonable rules and procedures as to the
solicitation of the consent of holders of the Preferred Stock at any such
meeting or otherwise, which rules and procedures shall conform to the
requirements of any national securities exchange on which the Preferred Stock
may be listed at such time.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

     

    
      9.      
     Notices.

    

    

    Any
notice, demand or other communication that by any provision of this Certificate
is required or permitted to be given or served to or upon the Corporation shall
be given or served in writing addressed (unless and until another address shall
be published by the Corporation) to the Federal Agricultural Mortgage
Corporation, 1133 Twenty-First Street, N.W., Suite 600, Washington, D.C.
20036, Attention:  Vice President – General Counsel and
Secretary.  Such notice, demand or other communication to or upon the
Corporation shall be deemed to have been sufficiently given or made only upon
actual receipt of a writing by the Corporation.  Any notice, demand or
other communication that by any provision of this Certificate is required or
permitted to be given or served by the Corporation hereunder may be given or
served by being deposited first class, postage prepaid, in the United States
mail addressed (a) to the holder as such holder’s name and address may
appear at such time in the books and records of the Corporation or (b) if
to a person or entity other than a holder of record of the Preferred Stock, to
such person or entity at such address as it appears to the Corporation to be
appropriate at such time. Such notice, demand or other communication shall be
deemed to have been sufficiently given or made, for all purposes, upon
mailing.

     

    10.          Definitions.

     

    As used
herein, the following terms shall have the following meanings:

     

    (a)          “Accumulated
Dividends” means, with respect to each share of Preferred Stock, as of
any date, an amount computed at the annual dividend rate for Preferred Stock,
from the applicable Issue Date to and including the date to which such dividends
are to be accrued (whether or not such dividends have been declared), less the
aggregate amount of all dividends previously paid on such share (subject to
adjustment of such dollar amount for any stock splits, stock dividends,
combinations, recapitalizations or similar transactions).

     

    (b)         “Act” shall have the
meaning set forth in the recitals.

     

    (c)         “Board of Directors”
shall have the meaning set forth in the recitals.

     

    (d)         “Business Day” means
any day other than a Saturday, Sunday or a day on which banks are required or
authorized to close in New York, New York.

     

    (e)         “Bylaws” means the
By-Laws of the Corporation.

     

    (f)      
   “Certificate” means
this Amended and Restated Certificate of Designation of Terms and Conditions of
Non-Voting Cumulative Preferred Stock, Series C.

     

    (g)           “Convertible
Securities” means any bonds, debentures, notes or other evidence of
indebtedness, capital stock or other securities directly or indirectly
convertible into, or exercisable or exchangeable for, common stock of the
Corporation.

     

    (h)         “Corporation” shall
have the meaning ascribed to such term in the recitals.

     

    (i)          “Dividend Payment
Date” means March 31, June 30, September 30 and
December 31 of each year.

     

    (j)          “Dividend Period”
shall have the meaning ascribed to such term in Section 2(a)
hereof.

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    (k)          “Issue Date” means,
with respect to each share of Preferred Stock, the date of the issuance of such
share of Preferred Stock.  Unless otherwise agreed between Farmer Mac
and a holder of Preferred Stock, the Issue Date with respect to the shares
evidenced by any stock certificate shall be the date of that
certificate.

     

    (l)    
      “Junior Stock” shall
have the meaning ascribed to such term in Section 1
hereof.

     

    (m)          “Liquidation
Preference” shall have the meaning ascribed to such term in Section 1
hereof.

     

    (n)          “Options” means any
rights, options, warrants or similar securities to subscribe or exchange for,
purchase or otherwise acquire common stock of the Corporation or Convertible
Securities.

     

    (o)          “Par Value” shall have
the meaning ascribed to such term in Section 1 hereof.

     

    (p)          “Person” means any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, governmental entity or other entity of any kind or
nature.

     

    (q)          “Preferred Stock”
shall have the meaning ascribed to such term in Section 1
hereof.

     

    (r)          “Redemption Amount”
shall have the meaning ascribed to such term in Section 3(a)
hereof.

     

    (s)     
    “Redemption Date”
shall have the meaning ascribed to such term in Section 3(a)
hereof.

     

    (t)          “Redemption Notice”
shall have the meaning ascribed to such term in Section 3(b)
hereof.

     

    (u)          “Series B-1 Preferred
Stock” shall have the meaning ascribed to such term in Section 1
hereof.

     

    11.          Miscellaneous.

     

    (a)           The
Corporation and any agent of the Corporation may deem and treat the holder of a
share or shares of Preferred Stock, as shown in the Corporation’s books and
records, as the absolute owner of such share or shares of Preferred Stock for
the purpose of receiving payment of dividends and redemption proceeds in respect
of such share or shares of Preferred Stock and for all other purposes
whatsoever, and neither the Corporation nor any agent of the Corporation shall
be affected by any notice to the contrary. All payments made to or upon the
order of any such person shall be valid and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge liabilities for moneys payable by the
Corporation on or with respect to any such share or shares of Preferred
Stock.

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    (b)     
    The shares of the Preferred Stock, when duly issued,
shall be fully paid and non-assessable.

     

    (c)      
   The Preferred Stock shall be issued and shall be transferable
on the books of the Corporation, only in whole shares, it being intended that no
fractional interests in shares of Preferred Stock shall be created or recognized
by the Corporation.

     

    (d)     
    For purposes of this Certificate, the term the
“Corporation” shall mean the Federal Agricultural Mortgage Corporation and any
successor thereto by operation of law or by reason of a merger, consolidation or
combination.

     

    (e)          This
Certificate and the respective rights and obligations of the Corporation and the
holders of the Preferred Stock with respect to such Preferred Stock shall be
construed in accordance with and governed by the laws of the United States,
provided that the law of the District of Columbia shall serve as the federal
rule of decision in all instances except where such law is inconsistent with the
Corporation’s enabling legislation, its public purposes or any provision of this
Certificate.

     

    (f)          RECEIPT
AND ACCEPTANCE OF A SHARE OR SHARES OF THE PREFERRED STOCK BY OR ON BEHALF OF A
HOLDER SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE HOLDER (AND ALL
OTHERS HAVING BENEFICIAL OWNERSHIP OF SUCH SHARE OR SHARES) OF ALL OF THE TERMS
AND PROVISIONS OF THIS CERTIFICATE.  NO SIGNATURE OR OTHER FURTHER
MANIFESTATION OF ASSENT TO THE TERMS AND PROVISIONS OF THIS CERTIFICATE SHALL BE
NECESSARY FOR ITS OPERATION OR EFFECT AS BETWEEN THE CORPORATION AND THE HOLDER
(AND ALL SUCH OTHERS).

     

    (g)         Shares
of Preferred Stock which have been redeemed, repurchased or otherwise cancelled
shall be retired and have the status of authorized and unissued shares of
Preferred Stock, without designation as to series until such shares are
once more designated as a part of a particular series by the Board of
Directors.

     

    (h)         If
any right, power, preference, privilege or limitation of the Preferred Stock set
forth herein (as the same may be amended from time to time), is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other rights, powers, preferences, privileges and limitations set
forth herein (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, power, preference, privilege or limitation
shall, nevertheless, remain in full force and effect, and no right, power,
preference, privilege or limitation herein set forth shall be deemed dependent
upon any other such right, power, preference, privilege or
limitation.

     

    (i)         The
headings of the various subdivisions hereof are for convenience of reference
only and shall not affect the interpretation of any of the provisions
hereof.

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

     

    IN
WITNESS WHEREOF, this Amended and Restated Certificate of Designation of Terms
and Conditions of Non-Voting Cumulative Preferred Stock, Series C, is
executed on behalf of the Corporation by its President and Chief Executive
Officer and attested by its Corporate Secretary as of the 7th day of August
2009.

     

    
      
        
          
            	 
      	
                    FEDERAL
      AGRICULTURAL 

                    MORTGAGE
      CORPORATION

                  
	 	 
	 
      	
                    By:

                  	
                    /s/ Michael A. Gerber

                  
	 
      	 
      	
                    Name:

                  	
                    Michael
      A. Gerber

                  
	 
      	 
      	
                    Title:

                  	
                    President
      and

                  
	 
      	 
      	 
      	
                    Chief
      Executive Officer

                  

          

        

      

    

    Attest:

     

    
      
        
          
            	
                    By:

                  	
                    /s/ Jerome G. Oslick

                  	 
	 
      	
                    Name:

                  	
                    Jerome
      G. Oslick

                  	 
	 
      	
                    Title:

                  	
                    Corporate
      Secretary

                  	 

          

        

      

    

    

    
      
        
           

        

        
          9LINE OF CREDIT AND SECURITY
AGREEMENT

    

    This Line
of Credit and Security Agreement (the "Agreement") is effective as of the 3rd day of
November 2009 by and between Caledonia Capital Corporation, a Delaware
corporation (the “Lender”), and SteelCloud, Inc., a Virginia corporation (the
"Borrower"), who mutually agree as follows:

    

    1.           Lender
agrees that from time to time during the term of this Agreement, provided, no
default shall have occurred hereunder or under the “Revolving Line of Credit
Promissory Note” (defined below), it shall at its sole discretion lend to
Borrower sums which, in the aggregate principal amount outstanding at any one
time, shall not exceed One Hundred Fifty Thousand Dollars ($150,000), exclusive
of accrued interest (the "Credit").

    

    (a)          The
Credit shall be a revolving credit and Borrower may, subject to the provisions
of this Agreement, request advances, repay and reborrow amounts during the
continuation of the Credit, subject to the applicable provisions of this
Agreement. Each such revolving credit loan made hereunder (an "Advance") shall
have a scheduled maturity date of the earlier of (i) March 31, 2010, or (ii) the
date that the Borrower shall have raised a total of $1,000,000 in New Equity
Capital from one or more investors (“Scheduled Maturity Date”).  For
the purposes of this clause, New Equity Capital shall be defined as capital
invested in the equity of the Borrower accompanied by the issuance by the
Borrower of shares of stock which were not trading in the public markets prior
to the date of the execution of this Line of Credit Agreement.  Each
Advance shall be included on the Schedule A contained in the "Revolving Line of
Credit Promissory Note" referred to in paragraph 1(c) below and which is made a
part hereof.

     

    (b)          This
Agreement shall terminate on the Scheduled Maturity Date. Notwithstanding
the
above, if any Advances made hereunder are still outstanding on the Scheduled
Maturity Date, this Agreement shall continue in full force and effect with
respect to such Advances until such Advances are repaid.

     

    (c)           The
obligation of Borrower to repay the aggregate unpaid principal amount of the
Advances and interest thereon shall be evidenced by a single promissory note of
Borrower containing a clause stating that such note is subject to the provisions
of this Agreement (the "Revolving Line of Credit Promissory
Note").  The Revolving Line of Credit Promissory Note shall be in
substantially in the form attached hereto as Exhibit A, with any blanks
appropriately completed, payable to the order of the Lender in a face amount
equal to the Credit, bearing interest as set forth in paragraph 1(d)
hereof.  The Revolving Line of Credit Promissory Note shall be dated,
and shall be delivered to Lender, on the date of the execution and delivery of
this Agreement by Borrower. Lender shall, and is hereby authorized by Borrower
to, endorse on the schedule contained on the Revolving Line of Credit Promissory
Note, or on a continuation of such schedule attached thereto and made a part
thereof and hereof, appropriate notations regarding the Advances evidenced by
the Revolving Line of Credit Promissory Note as specifically provided therein;
provided, however, that the failure to make, or error in making, any such
notation shall not limit or otherwise affect the obligations of Borrower
hereunder or under the Revolving Line of Credit Promissory Note to repay all
Advances with interest thereon.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    (d)          The
unpaid principal amount of an Advance shall bear interest prior to its Scheduled
Maturity Date at fifteen percent (15%) per year.  Principal and
interest shall be payable pursuant to the terms of the Revolving Line of Credit
Promissory Note.

     

    2.           As
a condition subsequent to each Advance hereunder, Borrower will, within 10
business days of the Advance, issue to Lender warrants (the “Warrants”) to
purchase 2.5 shares of the Company’s common stock, $0.001 par value (the “Common
Stock”) for every dollar of such Advance.  Each warrant entitles the Lender
to purchase 2.5 shares of SteelCloud, Inc., Common Stock for every dollar of
each Advance and shall be exercisable at any time and from time to time at the
stated price described below.  The purchase price for each share of Common
Stock to be purchased under the Warrants will be $0.25 per share.  In no
event shall the Warrants be exercisable for more than 19.99% of the aggregate
Common Stock issued and outstanding at any time or more than 19.99% of the
voting power outstanding before the issuance of such Warrants.  The
terms of the Warrants shall be as set forth in the form attached hereto as
Exhibit B.   Failure of Borrower to issue a Warrant within 10
business days after an Advance, as required above, shall constitute an Event of
Default hereunder.

     

    3.       As
collateral security for the Credit and any and all other liabilities and
obligations of the Borrower to Lender hereunder and/or any documents evidencing
or securing the Credit (collectively the “Loan Documents”), whether now existing
or hereafter created or arising, direct or indirect, matured or unmatured, and
whether absolute or contingent, joint, several or joint and several, and no
matter how the same may be evidenced or shall arise (hereinafter collectively
referred to as the "Obligations"), Borrower does hereby pledge and assign, unto
Lender, and does hereby grant unto Lender a security interest pursuant to the
Uniform Commercial Code as enacted in the Commonwealth of Virginia (the "UCC")
in and to the collateral (the "Collateral") listed below in subparagraphs A
through D together with all present and future substitutions, replacements and
accessories thereto and all present and future proceeds and products thereof, in
any form whatsoever.

    

    A.           Furniture, Fixtures,
Equipment and Supplies.

    

    (i)  All
furniture, fixtures, equipment and supplies of Borrower of every type and
description, now owned and hereafter acquired and wherever located, including,
without limitation, all machinery, vehicles and other rolling stock, furniture,
tools, dies, leasehold improvements, fixtures, and materials and supplies
relating to any of the foregoing; (ii) all present and future documents of title
relating to any of the foregoing; (iii) all present and future rights, claims
and causes of action of Borrower in connection with the purchase of (or
contracts for the purchase of), or warranties relating to, or letters of credit
(and the proceeds thereof) issued or assigned for the benefit of Borrower
relating to, or damages to, goods held or to be held by Borrower as equipment;
(iv) all present and future warranties, manuals and other written materials (and
packaging thereof or relating thereto) relating to any of the foregoing; and (v)
all present and future general intangibles of Borrower in any way relating to
any of the foregoing, including, without limitation, all intellectual property
associated with, used or useable in
connection with, or necessary for the manufacture, operation, sale or lease of,
any of the foregoing.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    B.            Receivables.

    

    (i) All
of Borrower's present and future accounts, contract rights, receivables,
promissory notes and other instruments, chattel paper and general intangibles,
including all intellectual property; (ii) all present and future customer lists
of Borrower; (iii) all present and future tax refunds of Borrower and all
present and future rights of Borrower to refunds or returns of prepaid expenses,
including unearned insurance premiums; (iv) all present and future judgments,
orders, awards and decrees in favor of Borrower and causes of action in favor of
Borrower; (v) all present and future claims, rights of indemnification and other
rights of Borrower under or in connection with any contracts or agreements to
which Borrower is or becomes a party or third party beneficiary, including
letters of credit (and the proceeds thereof) issued or assigned for the benefit
of Borrower; (vi) all goods previously or hereafter returned, repossessed or
stopped in transit, the sale, lease or other disposition of which contributed to
the creation of any account, instrument or chattel paper of Borrower; (vii) all
present and future rights of Borrower as an unpaid seller of goods, including
rights of stoppage in transit or reclamation; (viii) all rights which Borrower
may now or at any time hereafter have, by law or agreement, against any account
debtor or other obligor of Borrower and all rights, liens and security interests
which Borrower may now or at any time hereafter have, by law or agreement,
against any property of any account debtor or other obligor of Borrower; (ix)
all present and future interests and rights of Borrower, including rights to the
payment of money, under or in connection with all present and future leases and
subleases of real or personal property to which Borrower is a party, as lessor,
sublessor, lessee or sublessee; (x) all other present and future contingent and
noncontingent rights of Borrower to the payment of money for any reason
whatsoever, whether arising in contract, tort or otherwise; (xi) any and all
payments on account of the “Earnout Amount” hereafter paid or payable to
Borrower pursuant to the terms of that certain Asset Purchase Agreement dated
July 10, 2009 (the “Purchase Agreement”) between Borrower as seller and NCS
Technologies, Inc., a Virginia corporation, as buyer; and  (xii) all
deposit accounts now or hereafter maintained or established by, for or on behalf
of Borrower with any bank or other person, and all balances of funds now or
hereafter on deposit in all such accounts, including, without limitation, all
checking accounts, collection accounts, lockbox accounts, disbursement accounts
and concentration accounts; and (xii) all present and future cash of
Borrower.

    

    C.            Intangibles.

    

    All
general intangibles, whether now owned or hereafter acquired by Borrower,
including without limitation, choses in action, causes of action, corporate and
business books and records, deposit accounts, inventions, designs, patents,
patent applications, trademarks, trade names, service marks, service names,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, computer programs, all claims under
guarantees, security interests or other security held by or granted to Borrower,
all rights to indemnification, all leasehold rights and interests of Borrower
and all other intangible property of every kind and nature.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    D.            Inventory.

    

    (i)  All
inventory of Borrower of every type and description, now owned and hereafter
acquired and wherever located, including, without limitation, raw materials,
work in progress, finished goods, goods returned or repossessed, and goods held
for demonstrations, marketing or similar purposes; (ii) all present and future
materials and supplies of Borrower used, useable or consumed in the course of
Borrower's business, whether relating to the manufacture, assembly,
installation, repair, packaging, packing or shipment of goods by Borrower, or
relating to advertising or any other aspect of Borrower's business; (iii) all
present and future property of Borrower, in, on or with which any of the
foregoing is stored or maintained; (iv) all present and future warranties,
manuals and other written materials (and packaging thereof or relating thereto)
relating to any of the foregoing; (v) all present and future documents of title
relating to any of the foregoing; (vi) all present and future customer lists of
Borrower; (vii) all present and future rights of Borrower in connection with
goods consigned to or by Borrower; (viii) all present and future rights of
Borrower as an unpaid seller of goods, including rights of stoppage in transit
and reclamation; (ix) all present and future rights, claims and causes of action
of Borrower in connection with purchases of (or contracts for the purchase of),
or warranties relating to, or letters of credit (and the proceeds thereof)
issued or assigned for the benefit of Borrower relating to, or damages to, goods
held or to be held by Borrower as inventory; and (x) all the present and future
general intangibles of Borrower in any way relating to any of the foregoing,
including, without limitation, all intellectual property associated with, used
or useable in connection with, or necessary for the manufacture, operation, sale
or lease of, any of the foregoing.

     

    At any
time and from time to time, upon the written request of Lender, and at the sole
and reasonable expense of the Borrower, Borrower shall promptly and duly give,
execute, deliver such further instruments and documents and take such further
actions as the Lender may reasonably request for the purposes of obtaining,
creating, perfecting, validating or preserving the full benefits of this
Agreement and of the rights and powers granted under this Agreement, including
filing UCC Financing Statements. Borrower hereby authorizes Lender to file any
such financing statement or continuation statement without the signature of
Borrower to the extent permitted by law.

     

    Borrower
hereby represents, warrants and covenants that (i) Borrower is the sole owner of
all legal and equitable rights, title and interest in and to the Collateral
(subject, however only to the lien of this Agreement), and has the lawful right
to grant the pledge of the Collateral pursuant to this Agreement, (ii) Borrower
will not hereafter pledge, hypothecate, sell, exchange, transfer, assign or
otherwise dispose of or encumber in any manner all or any part of the
Collateral, and Borrower has not heretofore done so, (iii) Borrower will not
modify the Purchase Agreement or release or impair in any manner, the Collateral
or any of Borrower's rights, remedies or benefits thereof or thereunder, without
in each instance receiving the express prior written consent of Lender, (iv)
Borrower will promptly deliver to Lender upon receipt copies of any notices of
default, and will promptly notify Lender as to the existence of any default
under the Purchase Agreement whenever Borrower becomes aware
thereof.  Borrower will not take any action to enforce the Purchase
Agreement without prior written notice to and receipt of written approval of
Lender.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    4.       Any
one or more of the following events shall be considered an Event of Default
hereunder and under this Agreement:

    

    (a)            If
Borrower shall fail to pay when due any principal, interest or other sum owing
on any of the Obligations when due; or

    

    (b)           If
Borrower shall fail to perform any other covenant or agreement herein, in the
Warrant or in any of the other Loan Documents and such default continues
uncorrected for a period of thirty (30) days after written notice of such
default from Lender to Borrower; or

    

    (c)            If
any warranty or representation of Borrower made to the Lender shall be untrue or
misleading in any material respect; or

    

    (d)           If
a trustee or receiver is appointed for Borrower or for all or a substantial part
of Borrower's assets; or if Borrower makes a general assignment for the benefit
of creditors; or if Borrower files for bankruptcy; or if an involuntary
bankruptcy petition is filed against Borrower and such petition is not dismissed
within forty-five (45) days after the filing of the same; or

    

    (e)            If
any property of Borrower pledged or hypothecated to Lender, or any deposit
account held by Lender, is levied upon or attached or further encumbered, or
garnished or the Collateral shall otherwise be impaired and same is not removed
within thirty (30) days after written notice thereof from Lender to Borrower, as
determined by Lender; or

    

    (f)            If
there occurs any material adverse change in the financial condition of the
Borrower or value of the Collateral, as determined by Lender; or

    

    (g)           If
a final judgment is entered against Borrower, and the same is not discharged,
appealed (provided such appeal stays such judgment) or satisfied within thirty
(30) calendar days; or

    

    (h)           If
Borrower is liquidated or dissolved; or

    

    (i)           
A default shall occur under that certain Secured Promissory Note in the original
principal amount of $250,000 from Borrower to Lender dated July 1,
2009.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.       At
any time after the occurrence of an Event of Default, Lender may, without any
further notice or demand, exercise the following rights and remedies, in
addition to the rights and remedies available to Lender under any of the other
Loan Documents, the rights and remedies of a secured party under the Uniform
Commercial Code and all other rights and remedies available to the Lender under
law, all such rights and remedies being cumulative and enforceable
alternatively, successively or concurrently; (a) declare any or all of the
Obligations not already due to be immediately due and payable; (b) enforce, by
any proceedings or otherwise, any of the Obligations; (c) take exclusive
possession of any or all of the Collateral from time to time and/or place a
custodian in exclusive possession of any or all of the Collateral from time to
time, and so far as Borrower may give authority therefore, enter upon any
premises on which any of the Collateral may be situated and remove the same
therefrom, Borrower hereby waiving any and all rights to prior notice and to
judicial hearing with respect to repossession of Collateral, and/or require
Borrower, at Borrower's expense, to assemble and deliver any or all of the
Collateral to such place or places as Lender may reasonably request; (d) enforce
any liens or security interests securing the Obligations, including collecting
or liquidating all or any part of the Collateral or other security or selling,
assigning, leasing, renting, licensing or otherwise disposition of all or any
part of the Collateral or other security or any interest therein, in one or more
parcels, at the same or different times, at public of private sale or
disposition, or otherwise; (e) demand, compromise, collect, sue for and receive
any money or property at any time due, payable or receivable on account of any
or all accounts, promissory notes or other instruments, guaranties, letters of
credit, chattel paper, security agreements, contract rights, tax refunds or
general intangibles of Borrower constituting Collateral, or on account
of any or all other debts, liabilities or obligations payable to Borrower
constituting Collateral; (f) endorse Borrower's name on any promissory notes or
other instruments, checks, drafts, money orders or other items of payment
constituting Collateral, or collections or other proceeds of Collateral, that
may come into Lender's possession or control from time to time; and/or (g)
terminate, or cease extending credit under, any or all outstanding commitments
or credit accommodations of Lender to Borrower.  Borrower agrees that
commercial reasonableness and good faith require Lender to give Borrower no more
than ten days prior written notice of the time and place of any public
disposition or any other intended disposition is to be made.  All
sales or other dispositions of Collateral may be made for cash, upon credit or
for future delivery.  In no event shall Borrower be credited with any
part of the proceeds of liquidation, sale or other disposition of any Collateral
until final payment thereon has been received by Lender in immediately available
funds, and Lender shall have no obligation to delay any liquidation, sale or
other disposition because the same may result in the imposition of any
forfeiture, premium or penalty.

    

    6.       In
addition to any other sums payable by Borrower with reference to the
Obligations, after the occurrence of any Event of Default, Borrower agrees to
pay Lender's costs of collection and reasonable attorneys' fees incurred in the
enforcement of any provision hereof or collection of any of the Obligations,
whether suit be brought or not.

    

    7.       The
Borrower agrees to pay reasonable costs and expenses incurred by the Lender in
connection with the Revolving Line of Credit Promissory Note, this Agreement and
the other Loan Documents including, but not limited to, reasonable attorneys’
fees and expenses, recording costs, title search fees and the like.

    

    8.       The
proceeds of this Agreement shall be used and dealt with by the Borrower as part
of its working capital and shall be subject to the risks of its
business.

    

    9.       This
Agreement shall be binding upon the Lender and the Borrower and their
respective, heirs, executors, administrators, successors and
assigns.

    

    10.     This
Agreement is governed by the laws of the Commonwealth of Virginia.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    11.    
  The requirements of the Revolving Line of Credit Promissory Note
shall govern the obligations of the Borrower to the extent of any inconsistency
between the terms of this Agreement and the terms of the Revolving Line of
Credit Promissory Note.

    

    12.      
Any notice required to be provided hereunder shall be in writing and shall be
deemed sufficiently given or furnished if delivered by personal delivery, email,
telecopy, expedited delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, at the address shown
below.  Any such notice shall be deemed to have been given at the time
of personal delivery, or in the case of email or telecopy, upon receipt, or in
the case of delivery service or mail, as of the date of the first attempted
delivery at the address and in the manner provided herein.

    

    
      
        	
              	
                (a)

              	
                If
      for Borrower:

              

      

    

     

    SteelCloud,
Inc.

    13962
Park Center Road

    Herndon,
VA  20171

    Attn:
Brian Hajost

    

    
      	
            	
              (b) 

            	
              If
      for Lender:

            

    

    

    Caledonia
Capital Corporation

    19441
Golf Vista Plaza, Suite 360

    Leesburg,
VA  20176

    Attn:  Edward
M. Murchie

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties hereto have set their hands this 3rd day of
November, 2009.

    

    LENDER:

    

    Caledonia
Capital Corporation

    

    
      
        	
                By:

              	
                /s/ Edward M. Murchie

              
	 
      	
                Edward
      M. Murchie, President

              

      

    

    

    BORROWER:

    

    SteelCloud,
Inc.

    

    
      
        	
                By:

              	
                /s/ Brian Hajost

              
	 
      	
                Brian
      Hajost, President

              

      

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Exhibit
A

    

    STEELCLOUD,
INC.

    REVOLVING
LINE OF CREDIT PROMISSORY NOTE

    

    
      
        	
                $150,000.00

              	
                Herndon,
      Virginia

              	
                November  
      , 2009

              

      

    

    

         FOR
VALUE RECEIVED, the undersigned SteelCloud, Inc., a Virginia corporation
("Borrower"), promises to pay to Caledonia Capital Corporation, a Delaware
corporation ("Lender" and, together with  Borrower hereinafter
collectively referred to as "Parties"), the principal sum of ONE HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($150,000.00), or so much thereof as may from time
to time be advanced, together with interest accrued on the unpaid principal
balance hereof as set forth below.

    1.           Interest Rate;
Payments.  Commencing on the date hereof and continuing until
this Note is paid in full, the unpaid principal amount from time to time
outstanding under this Note shall accrue interest at a rate of interest equal to
fifteen percent per annum (15%) (the “Contract Rate”).  Accrued
interest under this Note shall be payable in monthly installments commencing
thirty (30) days after the date hereof and continuing on the same day of each
successive calendar month thereafter until this Note has been paid in
full.    Interest shall be calculated on a daily based on
the principal amount outstanding and unpaid on each day.  All interest
calculations under this Note shall be made on the basis of a three hundred sixty
(360) day year and actual days elapsed

    2.           Payment of
Principal.  If not sooner paid, the entire principal balance
remaining unpaid, together with interest accrued and unpaid thereon and all
other sums due hereunder, shall be due and payable in full upon the earlier to
occur of (a) March 31, 2010 (the “ Maturity Date”), or (b) the date that the
Borrower shall have raised a total of not less than $1,000,000 in New Equity
Capital (defined below) from one or more investors (“Capitalization
Date”).  For the purposes of this clause, New Equity Capital shall be
defined as capital invested in the equity of the Borrower accompanied by the
issuance by Borrower of shares of stock which were not trading in the public
markets prior to the date of this Note.  This Note may be prepaid in
whole or in part at any time without penalty or premium.  Each payment
by Borrower to Lender on this Note shall be applied first to costs, if any,
pursuant to Section 8 hereof and then applied to any accrued interest, and then
any remaining portion of the payment after such applications shall be applied to
reduction of outstanding principal balance of this Note.  All payments
made under this Note shall be made to the Lender at 19441 Golf Vista Plaza,
Suite 360, Leesburg, VA  20176, or at such other address as the Lender
may direct by notice to Borrower.  Payments shall be deemed made upon
receipt.

    3.           Revolving
Note.  This Note is a "revolving line of credit"
note.  Principal advances may be made, from time to time, by Lender up
to the principal amount of this Note, and principal payments maybe made, from
time to time, by Borrower to reduce the principal balance owing pursuant to this
Note.  In no event shall any principal advance be made after the
Maturity Date.  The initial advance shall be $60,000 and shall be
advanced upon execution of this Note and the Agreement referenced in Section 4
by Borrower.  All advances and all payments made on account of
principal shall be endorsed by the holder on the attached schedule to this Note
(“Schedule A”).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

         4.   Line of Credit
Agreement.  This Note is issued pursuant to, is entitled to the
benefit of, and is subject to the provisions of Line of Credit Agreement (the
"Agreement") between Borrower and Lender dated the same date as this
Note.

         5.   Events of
Default.  The outstanding principal and accrued interest hereon
shall mature and become automatically due and payable, without notice or demand,
upon the occurrence of any of the following Events of Default:

    
      	
            	
              a)

            	
              The
      failure by Borrower to make a payment of any principal or interest on the
      Note within ten (10) days after the same becomes due and
      payable;

            

    

    
      	
            	
              b)

            	
              The
      failure by Borrower to perform any of its obligations, except the payment
      of principal and interest, arising under this Note, the Agreement or any
      other agreement between Borrower and Lender within five (5) days after
      receipt of written  notice of such failure;
  or

            

    

    
      	
            	
              c)

            	
              The
      filing by or against the Borrower of a voluntary or involuntary proceeding
      seeking liquidation, reorganization or other relief with respect to
      Borrower or its debts under any bankruptcy, insolvency or other similar
      law now or hereafter in effect or seeking the appointment of a trustee,
      receiver, liquidator, custodian or other similar official for Borrower or
      any substantial part of its property and, in the case of any involuntary
      proceeding not consented to by Borrower, such proceeding is not dismissed
      within sixty (60) days of its
filing;

            

    

    
      	
            	
              d)

            	
              If
      all or a substantial portion of Borrower’s assets become subject to writ
      of attachment, writ of execution or any other lien, and such writ or lien
      is not released within twenty (20) calendar days;
  or

            

    

    
      	
            	
              e)

            	
              A
      default shall occur under that certain Secured Promissory Note in the
      original principal amount of $250,000 from Lender to Borrower dated July
      1, 2009.

            

    

    6.           Remedies.  The
following remedies are available to Lender if an Event of Default has occurred
under this Note: (a) the outstanding principal and accrued interest under the
Note shall mature and become automatically due and payable, without notice or
demand; and (b) Lender may exercise any other remedies available to it at law or
in equity.

    7.           Waiver.  Borrower,
sureties, endorsers, guarantors and any other party now or hereafter liable for
the payment of this Note, in whole or in part, hereby severally (a) waive
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices,
filing of suit and diligence in collecting this Note or enforcing any other
security with respect to same, (b) agree to any substitution, subordination,
exchange or release of any such security or the release of any parties primarily
or secondarily liable hereon, (c) agree that the Lender shall not be required
first to institute suit or exhaust its remedies hereon against the Borrower, or
other any party liable or to become liable hereon or to enforce its rights
against any or all of them or any security with respect to same, and (d) consent
to any extension or postponement of time of payment of this Note and to any
other indulgence with respect hereto without notice hereof to any of
them.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    8.           Collection
Fees.  In the event, after default, counsel is employed by the
Lender to collect this obligation or to protect the security hereof, Borrower
hereby agrees to pay the Lender’s attorney's fees so incurred by Lender whether
or not suit be brought, and all other costs and expenses connected with
collection.

    9.           Records.  Borrower
hereby appoints Lender as the authorized agent of Borrower with full authority
to record on the Schedule, which is incorporated herein by reference for all
purposes, the dates of each transaction, amounts of all principal advances, as
well as principal and interest payments, made under this Note, and balance due
on the Note.

    10.        Notice.  Any
notice required to be provided to Borrower hereunder shall be in writing and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, telecopy, expedited delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, at Borrower's
address shown below or at Borrower's most current address on file with
Lender.  Any such notice shall be deemed to have been given at the
time of personal delivery, or in the case of telecopy, upon receipt, or in the
case of delivery service or mail, as of the date of the first attempted delivery
at the address and in the manner provided herein.  Borrower promises
to give Lender prompt notice of any change in Borrower's address.

    11.         Miscellaneous.

    
      	
            	
              a.

            	
              No
      failure or delay by Lender in exercising any right, power or privilege
      under this Note or the Agreement shall operate as a waiver thereof, nor
      shall any single or partial exercise thereof preclude any further exercise
      thereof or the exercise or any other right, power or
      privilege.

            

    

    
      	
            	
              b.

            	
              The
      captions used in this Note are for convenience only and shall not be
      deemed to amplify, modify or limit any provision
  hereof.

            

    

    
      	
            	
              c.

            	
              Words
      of any gender used in this Note shall be construed to include any other
      gender, and words in the singular shall include the plural and vice versa,
      unless the context otherwise
requires.

            

    

    
      	
            	
              d.

            	
              This
      Note shall be binding upon and inure to the benefit of the Parties and
      their respective heirs, legal representatives, successors and
      assigns.

            

    

    
      	
            	
              e.

            	
              This
      Note, together with the Agreement, contains the entire agreement between
      the Parties with respect to the subject matter hereof and can be altered,
      amended or modified only by a written instrument executed by both
      Parties.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              f.

            	
              This
      Note may be executed in multiple copies, each of which shall be deemed an
      original, and all of such copies shall together constitute one and the
      same instrument.

            

    

    
      	
            	
              g.

            	
              Time
      is of the essence in the performance of each obligation, covenant and
      condition under this Note.

            

    

    
      	
            	
              h.

            	
              This
      Note shall be governed by the laws of the Commonwealth of
      Virginia

            

    

     

    
      
        	
                12.

              	
                Default Interest and
      Late Fees In
      the event any installment of principal and/or interest due under this Note
      is not actually received by the Lender within fifteen (15) days after the
      date when the same is due, then the Lender shall be entitled to collect a
      "late charge" in an amount equal to five percent (5.0%) of such
      installment.  Time shall be of the essence as to each and every
      provision of this Note.  Any payments of interest and/or
      principal hereunder, not actually received by the Lender within fifteen
      (15) days after the date when the same is due, together with the accrued
      late charges thereon (whether in due course or after acceleration of
      maturity as herein provided for) and all sums advanced or expended by the
      holder for the Borrower's account pursuant to any of the loan documents
      evidencing or securing the loan shall bear interest at the rate of five
      percent (5%) per annum in excess of the interest rate then in effect
      hereunder.

              

      

    

    
      
        	
                13.

              	
                Commercial
      Purpose. The
      Borrower warrants that the loan evidenced by this Note is being made
      solely to acquire or carry on a business or commercial enterprise, and/or
      the Borrower is a business or commercial organization.  The
      Borrower further warrants that all of the proceeds of this Note shall be
      used for commercial purposes and stipulates that the loan evidenced by
      this Note shall be construed for all purposes as a commercial
      loan.

              

      

    

    

    
      WITNESS
the execution hereof by the Borrower on the date first hereinabove
written.

    

     

    BORROWER:

     

    STEELCLOUD,
INC., a Virginia corporation

     

    
      
        
          	
                  By:

                	
                   

                
	 
      	
                  Brian
      Hajost, President

                
	 
      	
                  SteelCloud,
      Inc.

                
	 
      	
                  13962
      Park Center Road

                
	 
      	
                  Herndon,
      VA 20171

                

        

      

    

    

    Signed
and sworn to before me this ___ day of November 2009.

     

    
      
        
          	
                   

                
	
                  Notary
      Public

                

        

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    SCHEDULE
A

    

    
      
        
          	
                  Date of Transaction

                	 
      	
                  Advance Amount

                	 
      	
                  Interest Payments

                	 
      	
                   Principal Payment

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  November  ____,
      2009

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________

                	 
      	
                  _______________

                	 
      	
                  _______________

                	 
      	
                  _______________

                
	
                  ________________  

                	
                    

                	
                  _______________

                	
                    

                	
                  _______________

                	
                    

                	________________

        

      

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Exhibit
B

    

    Warrant

    

    NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

     

    COMMON
STOCK PURCHASE WARRANT

     

    To
Purchase ____________ Shares of Common Stock of

     

    SteelCloud,
Inc.

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES
that, for value received, Caledonia Capital Corporation, a Delaware
corporation,  (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date of this
Warrant (the “Initial
Exercise Date”) and on or prior to the fourth anniversary of the Initial
Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from SteelCloud, Inc., a
corporation incorporated in the Commonwealth of Virginia (the “Company”), up to
_____________ shares (the “Warrant Shares”) of
Common Stock, par value $0.001 per share, of the Company (the “Common
Stock”).  The purchase price of each share of Common Stock (the
“Exercise
Price”) issuable upon the exercise of this Warrant shall be $______,
subject to adjustment hereunder.  The Exercise Price and the number of
Warrant Shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein.

    

    1.    Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.  The transferee shall sign an investment letter in
form and substance reasonably satisfactory to the Company.

     

    2.    Authorization of
Shares.  The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such
issue).

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    3.    Exercise of
Warrant.

     

    (a)  Subject
to Section 3(b), exercise of the purchase rights represented by this Warrant may
be made at any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise/Exchange Form annexed  hereto
(or such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company); provided, however, within 5
business days of the date said Notice of Exercise is delivered to the Company,
the Holder shall have surrendered this Warrant to the Company and the Company
shall have received  payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier’s check drawn on a United
States bank.  Certificates for shares purchased hereunder shall be
delivered to the Holder within the earlier of (i) 5 business days after the date
on which the Notice of Exercise shall have been delivered by facsimile copy or
(ii) 3 business dates from the delivery to the Company of the Notice of Exercise
Form by facsimile copy, surrender of this Warrant and payment of the aggregate
Exercise Price as set forth above (“Warrant Share Delivery
Date”); provided, however, in the event
the Warrant is not surrendered or the aggregate Exercise Price is not received
by the Company within 5 business days after the date on which the Notice of
Exercise shall be delivered by facsimile copy, the Warrant Share Delivery Date
shall be extended to the extent such 5 business day period is
exceeded.  This Warrant shall be deemed to have been exercised on the
later of the date the Notice of Exercise is delivered to the Company by
facsimile copy and the date the Exercise Price is received by the
Company.  The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section 5
prior to the issuance of such shares, have been paid.  If the Company
fails to deliver to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 3(a) by the third Trading Day following
the Warrant Share Delivery Date, then the Holder will have the right to rescind
such exercise.

     

    (b)             If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

     

    4.    No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise
Price.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    5.    Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    6.    Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

     

    7.    Transfer, Division and
Combination.

     

    (a)             Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 1 and 7(e) hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer.  Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled.  A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

     

    (b)             This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

     

    (c)             The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 7.

     

    (d)             The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (e)             If, at the time of
the surrender of this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities
Act and under applicable state securities
or blue sky laws, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions and reasonably acceptable to the Company) to the effect that such
transfer may be made without registration under the Securities Act and under applicable state securities
or blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act.

     

    8. 
   No
Rights as Shareholder until Exercise.  This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.  Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed to be
issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.

     

    9.   
 Loss, Theft,
Destruction or Mutilation of Warrant.  The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.

     

    10.    Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day that is not a Saturday, Sunday or
legal holiday.

     

    11.    Adjustments of Exercise
Price and Number of Warrant Shares; Stock Splits, etc.  The
number and kind of securities purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.  In case the Company shall (i) pay
a dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of its capital stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof.  Upon each
such adjustment of the kind and number of Warrant Shares or other securities of
the Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such
adjustment.  An adjustment made pursuant to this paragraph shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    12.    Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.  In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of any of its property, assets or
business to another corporation (including by way of a spinoff) and, pursuant to
the terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other
Property”), are to be received by or distributed to the holders of Common
Stock of the Company, then the Holder shall have the right thereafter to
receive, at the option of the Holder upon exercise of this Warrant, the number
of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other Property receivable upon
or as a result of such reorganization, reclassification, merger, consolidation
or disposition of assets to which the holder of the securities deliverable upon
the exercise of this Warrant would have been entitled in such reorganization,
reclassification, merger, consolidation or disposition of assets if this Warrant
had been exercised immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined in good faith by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of Warrant Shares for which this Warrant is exercisable which shall
be as nearly equivalent as practicable to the adjustments provided for in this
Section 12.  For purposes of this Section 12, “common stock of the
successor or acquiring corporation” shall include stock of such corporation of
any class which is not preferred as to dividends or assets over any other class
of stock of such corporation and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock.  The foregoing provisions of this Section 12 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.

     

    13.    Voluntary Adjustment by the
Company.  The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the
Company.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    14.    Notice of
Adjustment.  Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

     

    15.    Notice of Corporate
Action.  If at any time:

     

    (a)           the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of stock
of any class or any other securities or property, or to receive any other right,
or

     

    (b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to, another
corporation or,

     

    (c)           there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;

     

    then, in
any one or more of such cases, the Company shall give to Holder the same notice
given to the record holders of its Common Stock. Each such written notice shall
be sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
17(d).

     

    16.    Authorized
Shares.  The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this
Warrant.  The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant.  The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the trading market upon which the Common Stock may be
listed.

     

    Except and to the extent as waived or
consented to by the Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    Before taking any action which would
result in an adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction
thereof.

     

    17.    Miscellaneous.

     

    (a)             Jurisdiction.  All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the Commonwealth of Virginia, without regard to the
principles of conflicts of law thereof.

     

    (b)             Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    (c)             Nonwaiver.  No
course of dealing or any delay or failure to exercise any right hereunder on the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding all rights hereunder
terminate on the Termination Date.

     

    (d)             Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the
following:

     

    If to the
Company:

    SteelCloud,
Inc.

    13962
Park Center Road

    Herndon,
VA 20171

    Attention:
Kevin Murphy, Chief Financial Officer

    

    If to the
Holder:

    Caledonia
Capital Corporation

    19441
Golf Vista Plaza

    Suite
360

     Leesburg,
VA  20176

    Attention:
Edward M. Murchie

    

    (e)             Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (f)             Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate.

     

    (g)             Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.

     

    (h)             Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    (i)             Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    (j)             Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    18. Registration Rights.
Commencing on or about December 31, 2009, the Company shall prepare and file a
registration statement with respect to the issuance and the resale of the
Warrant Shares on an appropriate form
for an offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (the “Registration
Statement”) and shall use its best efforts to cause the Registration
Statement to be declared effective on or as soon as practicable thereafter, and
to keep such Registration Statement continuously effective for a period ending
upon all Warrant Shares having been otherwise transferred in a
transaction that would constitute a sale thereof under the Securities Act, the
Company has delivered a new certificate or other evidence of ownership for Warrant Shares not bearing the Securities Act
restricted stock legend and such Warrant
Shares may be resold without restriction under the Securities
Act.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

     

    
      
        
          	
                  Dated: 
      ___________,
      200__

                	
                   

                
	 
      	
                  STEELCLOUD,
      INC.

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:
      Kevin Murphy

                
	 
      	
                  Title:  Chief
      Financial Officer

                

        

      

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    NOTICE
OF EXERCISE/EXCHANGE

     

    To:           SteelCloud,
Inc.

     

    (1)    The
undersigned hereby elects to purchase ________ Warrant Shares of SteelCloud,
Inc. pursuant to the terms of the attached Warrant (only if exercised in full),
and tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2)    Payment
shall take the form of (check applicable box):

     

    o in lawful money of
the United States; or

     

    o the cancellation
of such number of Warrant Shares as is necessary, in accordance with the formula
set forth in subsection 3(c), to exercise this Warrant with respect to the
maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 3(c).

     

    (3)    Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    The
Warrant Shares shall be delivered to the following:

     

    _______________________________

    

    _______________________________

    

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

     

    
      
        
          	 
      	
                  Caledonia
      Capital Corporation

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                
	
                  Dated:  ________________________

                	 
      

        

      

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    ASSIGNMENT
FORM

     

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

     

    FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

     

    _______________________________________________
whose address is

     

    _______________________________________________________________.

     

    _______________________________________________________________

     

    Dated:  ______________,
_______

     

    
      	 
      	
              Holder's
      Signature:

            	
              _____________________________

            
	 
      	 
      	 
      
	 
      	
              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 Warrant, 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 Warrant.

    

    
      
         

      

      
        24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]