Document:

exv10w13

 

Exhibit 10.13

PARTICIPATION AND RIGHT OF FIRST OFFER AGREEMENT

AMENDMENT 1

     THIS PARTICIPATION AND RIGHT OF FIRST OFFER AGREEMENT (this “Agreement”) is made and delivered
effective as of January 25, 2008, by and among Ausam Energy Corporation, a body corporate incorporated
pursuant to the laws of the Province of Alberta (“AEC”), SKH Management L.P., a Delaware limited
partnership (“SKH Management”), SKH Management II L.P., a Delaware limited partnership (“SKH
Management II”), SKH Management III L.L.C., a Delaware limited liability company (“SKH Management
III”), SKH Energy Fund, L.P., a Delaware limited partnership (“SKH Energy”) and Antares Exploration
Fund, L.P., a Delaware limited partnership (“Antares” and, together with SKH Management, SKH
Management II and III and SKH Energy, collectively, the “Vendors”). Capitalized terms that are not
otherwise defined in this Agreement shall have the meanings given to them in that certain Asset
Purchase Agreement of even date herewith, by and among AEC and the Vendors (the “Purchase
Agreement”).

RECITALS

     WHEREAS, Pursuant to the Purchase Agreement, the Vendors have agreed to sell to AEC the
Assets, subject to the terms and conditions set forth in the Purchase Agreement; and

     WHEREAS, the execution of this Agreement is a condition precedent to the closing of the
transactions contemplated by the Purchase Agreement; and

     WHEREAS, the parties hereto desire to set forth herein their agreement and understanding
regarding the Assets following the consummation of the transactions contemplated by the Purchase
Agreement;

     WHEREAS, the execution of this Agreement
supersedes any previously executed version of this
Agreement and that all previous and future farmin and joint venture agreements executed by AEC
relating to the assets acquired under the Purchase Agreement the shall conform to this Agreement;

     NOW THEREFORE, in consideration of the mutual covenants and obligations herein contained, the
parties hereby agree as follows:

I. AEC Obligations

1.1 Acknowledgment of Obligations. The parties hereto acknowledge that the Assets have been
conveyed to AEC in accordance with the Purchase Agreement. The parties further acknowledge and
agree that subject to the obligations of Article III below, but without other obligation as to the
timing thereof, AEC shall undertake the drilling of a well on each Prospect (each such well a “Test
Well”) to the objective depth or a depth adequate to test the formation established by the parties
for that Prospect as set forth in Schedule A to the Purchase Agreement (the “Objective Depth”). AEC
shall bear 100% of the cost, risk and expense of each Test Well and, with respect to any Test Well
on which AEC elects to undertake an attempt to complete the well, AEC shall hear all of the cost,
risk and expense of completing, equipping and connecting the well to the tanks or to the pipeline
of the purchaser of production. In the event that a Test Well fails to achieve the Objective Depth,
AEC may (but shall not be obligated to)

 

 

drill a substitute well therefore and bear 100% of the cost, risk and expense thereof, and any
substitute well shall be deemed to be the Test Well for the Prospect upon the well’s achieving the
Objective Depth. A failed Test Well may be subject to one or more substitute wells until one of the
same reaches the Objective Depth for the Prospect on which the Test Well is located.

1.2 Assignment Obligation. Subject to the terms and conditions of this Agreement, the
Purchaser is obligated to deliver to the Vendor which originally contributed the Prospect, as
set forth on Schedule C of the Purchase Agreement, two assignments, each to be made at a
different time: (A) a back-in interest in the initial Test Well on each Prospect (the “Test Well
Back-in”), together with a like interest in Leases insofar as they cover the production unit or
pooled unit allocated to the initial Test Well (the “Test Well Unit”), and (B) a conveyance of
an interest in the balance of the Leases (excluding the Test Well Unit) included in the Prospect
on which AEC undertakes the initial Test Well (the “Outside Acreage Conveyance”). The magnitude
of the interests to be conveyed is described below in Sections 2.2 and 2.3.

1.3 Allocation of Assigned Interests. When assigned in accordance with this Agreement, the
Test Well Back-in, as to both the Test Well and the Test Well Unit on a Prospect, on one hand,
and the Outside Acreage Conveyance as to the balance of the Leases in a Prospect, on the other,
are to be allocated to the respective Vendor which contributed the Prospect as set forth in
Schedule C to the Purchase Agreement.

1.4 AEC controls Test Well. The parties acknowledge that the timing, procedures,
operations, budget and all other aspects of undertaking a Test Well on any Prospect in order to
initiate development of the Assets are in the sole control and discretion of AEC.

1.5 Maintenance of Ownership. Notwithstanding the preceding section, AEC hereby agrees, in
order to protect the interests in the Leases to which the Vendors may be entitled under the
terms of this Agreement (in their respective allocations according to their contributions of the
Prospects as set forth in Schedule C thereof), (i) it will continue to maintain each Lease
acquired by it pursuant to the Purchase Agreement in full force and effect until the earlier of
(x) Payout , (y) sale of such Lease by AEC to a third party or (z) 36 months from and after the
Closing; (ii) it will maintain ownership of at least twenty-five per cent (25%) of the interest
in each of the Leases conveyed to AEC pursuant to the Purchase Agreement free and clear of any
lien, encumbrance or burden measured by or payable out of production incurred or imposed by AEC
subsequent to its purchase of the same, except Permitted Encumbrances, or as otherwise agreed,
and (iii) in the event that it sells or otherwise disposes of any of its interest in the Leases,
any such sale or other disposition of all or any portion of the interest in each of the Leases
conveyed to AEC pursuant to the Purchase Agreement shall be made subject to the rights of the
Vendors as set forth in the Purchase Agreement and this Agreement.

II. Assignment of Interests

2.1 Assignments. With respect to each Prospect upon which AEC undertakes a Test Well, AEC
shall be obligated to make two (2) assignments in accordance with Sections 2.2 and 2.3,
respectively: First, the Outside Acreage Conveyance; and Second, an assignment of
the Test Well Back-in. Each Outside Acreage Conveyance and each assignment of any Test Well
Back-in in each case shall be subject to and the Vendors agree to be bound by a joint operating
agreement substantially in the form of that which is attached to the Purchase Agreement as
Schedule “G” with respect to each Prospect (the “Joint Operating Agreement”) designating AEC as
“Operator,” and all operations conducted on each of the Prospects,

 

 

after assignment of the Outside Acreage Conveyance, shall he governed by the applicable Joint
Operating Agreement. The Operator designated in the Joint Operating Agreement for a particular
Prospect may be amended in order to name as Operator a party other than AEC. The Joint Operating
Agreement shall become effective as of the Closing Date.

2.2 Outside Acreage Conveyance. Within seven (7) days following spudding in of a Test Well,
AEC shall assign to the Vendor who originally assigned the Prospect to AEC pursuant to the
Purchase Agreement the Outside Acreage Conveyance consisting of an undivided twenty-five per cent
(25.0%) of the interest acquired by AEC in each of the Leases in the Prospect on which operations
on the Test Well have commenced, except to the extent such Leases are included in the Test Well
Unit. Thereafter, the Vendor who receives the Outside Acreage Conveyance in and to the Leases in
the Prospect shall be responsible for all costs and expenses attributable to its interest therein
subject to the provision of Section 2.5 below if a second well is proposed prior to Payout of the
Test Well.

2.3 Test Well Payout. When a Test Well achieves Payout, as defined below, AEC shall execute
and deliver to the Vendor which originally assigned the Prospect to AEC pursuant to the Purchase
Agreement an assignment of an undivided twenty-five per cent (25.0%) interest, or as otherwise
agreed, in such Test Well and the Test Well Unit, together with a like interest in all of AEC’s
interest in the Assets related to the Leases included in the Test Well Unit.

2.4 Definitions and Payout Calculations. As used in this Agreement, the following terms shall be
defined as follows:

	(i)	 	 “Payout” shall be deemed to occur on the first day of the calendar month
following the month during which the cumulative Production Income from the Test Well
equals the cumulative Exploration and Development Costs of such Test Well including AEC’s
acquisition costs.
	 
	(ii)	 	“Production Income” from any well shall mean the total proceeds realized from the sale of
production from such well after excluding Existing Leasehold Burdens encumbering the
production from the well.
	 
	(iii)	 	“Existing Leasehold Burdens” as to any well shall mean all royalties, overriding
royalties, net profit interests, production or severance taxes and other burdens measured
by or payable out of production from the well.
	 
	(iv)	 	“Exploration and Development Costs” of any Test Well shall include all of the actual (w)
Drilling Costs, (x) Completion Costs, and (y) Operating Costs plus (z) the aggregate GG&L
attributed in the Purchase Agreement to the Prospect on which the Test Well is located,
together with the Post Execution GG&L attributable to the same Prospect as contemplated in
the Purchase Agreement.
	 
	(v)	 	“Drilling Costs” with respect to a Test Well shall mean the costs of drilling up to the
casing point and all pre-drilling activities associated therewith (including, without
limitation, the costs of seismic data, preparing the location, title opinions as well as
all other typical pre-drilling costs incurred by operators in similar circumstances).
	 
	(vi)	 	“Completion Costs” with respect to a Test Well shall mean the costs incurred after a well
has been logged and a decision has been made to attempt a completion

 

 

	 	 	through the actual completion of the Test Well so that it is capable of producing oil
and/or gas at the surface, including surface facilities located on the drill site of the
Test Well and connection to the tanks or to the inlet flange of the gathering line
located on the drill site but not including any pipelines or other facilities located
off of the drill site.
	 
	(vii)	 	“Operating Costs” of any Test Well shall include all costs incurred during the drilling,
testing and completion of such well until it is capable of producing at the surface
including, but not limited to:

     (1) labor and other services necessary for the drilling, testing and completion of such well;

     (2) materials, supplies, transportation, repairs, and replacements used in the
drilling, testing and completion of such well; and

     (3) that portion allocated to such well in accordance with the usual and
customary accounting practices of all other costs (including, but not limited to,
overhead costs) which, pursuant to such accounting practices, is determined to be
costs allocable to a drilling well (including a well undergoing completion).

2.5
Subsequent Wells. Subject to the provisions of Section 2.6 below, if AEC undertakes a
second well on a Prospect, it shall be treated in accordance with the provisions of
Article VI.B.2 of the applicable Joint Operating Agreement.

2.6 Shallow Completion Well. If AEC undertakes the drilling of a Test Well but elects to
complete the same in a zone or formation which is shallower than the Objective Depth (a
“Shallow Completion Well”), then:

	(i)	 	AEC shall have the right for a period of time ending 36 months after Closing to
undertake a substitute well for the Shallow Completion Well as the Test Well and
endeavor to drill the same to the Objective Depth. If the substitute well achieves
the Objective Depth, then the obligation of AEC to test the Prospect by drilling a
well to the Objective Depth will have been satisfied and such substitute well will
be considered a Test Well for purposes of this Agreement.
	 
	(ii)	 	Upon the expiration of the 36 month period after Closing, if AEC has elected not to
drill a substitute well for the Shallow Completion Well in an effort to drill the
substitute well to the Objective Depth, then for purposes of this Agreement, the
Shallow Completion Well shall be deemed a completed Test Well; provided that AEC
shall retain all rights in the Prospect on which a Shallow Completion Well is deemed
to be a completed Test Well from the surface to 100 feet below the base of the
producing formation in the Shallow Completion Well, subject to the Test Well Back-in
and subject to the obligation to convey to the Vendor which contributed the same as
set forth on Schedule C to the Purchase Agreement an undivided twenty-five per cent
(25%) working interest, or as otherwise agreed, in the Shallow Completion Well and
the Leases relating thereto insofar as they cover the associate production unit
pursuant to Section 2.3 above. If the Shallow Completion Well shall have achieved
Payout before the end of the 36 month period after Closing, all Production Income
allocable to the after Payout interest of the Vendors shall be paid over to them,
and all costs allocable to the Vendors as if such Shallow Completion Well were
subject to the Joint Operating Agreement following such Payout shall be paid by

 

 

	 	 	the Vendors to AEC, within thirty days following the termination of the 36 month
period after Closing; and
	 
	(iii)	 	With respect to all depths 100 feet below the base of the producing formation in the
Shallow Completion Well (the “Prospect Deep Rights”) the same shall be deemed to be an
UnTested Prospect, as defined below, and the obligations of Section 3.1 below shall apply
to the Prospect Deep Rights.

2.7
Shallow Completion Well as Second Well. If a Test Well is drilled to the Objective Depth
and subsequently completed as a commercially productive well subject to the Payout calculation
provided for herein, and if there is already a Shallow Completion Well on the same Prospect,
the Shallow Completion Well shall be deemed to be the second well undertaken on the Prospect
and Vendors shall have the option to elect whether or not to participate (i.e. continue to own
their respective interests) in the Shallow Completion Well;

	(i)	 	if Vendors elect to participate in the well by continuing to own their interest therein,
AEC shall invoice the Vendors for their shares of the Drilling Costs. Completion Costs
and Operating Costs of such well with a credit for all Production Income therefrom and
the Test Well shall be treated in accordance with Sections 2.1 through 2.4 (and the
conveyance of the Ourside Acreage shall include the Shallow Completion Well).
	 
	(ii)	 	if Vendors elect NOT to continue to own their interests in the Shallow Completion Well,
then Vendors shall be treated as if they had elected not to participate therein under the
provisions of Article VI.B.2 of the Joint Operating Agreement and suffer the penalty
provided for therein; and the Test Well shall be treated in accordance with Sections 2.1
through 2.4 (and the conveyance of the Outside Acreage shall treat the Shallow Completion
Well as a non-consent well).

2.8 Accounting. On or before sixty (60) days after completion of a Test Well, AEC shall
furnish the Vendors a statement of all Exploration and Development Costs with respect to such
well. Monthly thereafter, on or before the 20th day of each month, AEC shall furnish the
Vendors a statement showing (1) the cumulative amount of production sold from each Prospect on
which there is a completed Test Well, (2) the taxes paid thereon, (3) the Production Income
attributable to each Prospect on which there is a completed Test Well or the production
therefrom, and (4) the status of Payout of each Test Well. Within thirty (30) days after each
Test Well achieves Payout, AEC shall notify the Vendors by certified mail or facsimile
transmission or email of the date of Payout. Exploration and Development Costs with respect to
each Test Well shall be calculated in accordance with the terms and provisions of the
accounting procedure included in the operating agreement applicable to the Prospect.

III. Reversion of interest

3.1 Assignment of UnTested Prospects. In the event that AEC has not commenced actual drilling
operations on a Test Well on one or more of the Prospects conveyed to AEC pursuant to the
Purchase Agreement within 36 months after the Closing, AEC shall assign, without
consideration, the Leases constituting such Prospect to the Vendors who contributed the
Prospect under the Purchase Agreement together with such Assets that relate to such Leases
(the “UnTested Prospects”); provided , that if the Leases in a Prospect are due to expire
prior to the expiration of the period of 36 months after Closing, six months

 

 

prior to the commencement of such lease expirations, AEC shall use its commercially reasonable
efforts to renew and extend the expiring Leases for terms at least co-extensive with the 36
month date and then to commence the drilling of a Test Well thereon within 36 months after
Closing or reconvey the Prospect to the Vendors for no consideration. The parties agree that
this Section 3.1 sets forth the sole remedies of the Vendors with respect to the failure of
AEC to drill a Test Well on each Prospect within 36 months after Closing.

IV. Right of First Offer

4.1 UnTested Prospects. None of the Vendors shall sell, transfer, assign, exchange,
voluntarily surrender or otherwise dispose of to any Person, or by merger, business
combination, transfer of securities or otherwise, or any sale or transfer of any entity
owning an interest therein (all of such disposition transactions being referred to herein
as a “Subject Transfer”) of any UnTested Prospect assigned to them pursuant to Section
3.1, or any part thereof, other than to a Permitted Transferee, except after strict
compliance with the First Offer Procedure set forth in Article V below. As used herein, a
“Permitted Transferee” shall be any Affiliate of a Vendor or a Limited Partner of a Vendor
pursuant to certain rights granted to such Limited Partner by the Vendor prior to the date
hereof.

4.2 Vendor’s Interests in Prospects. None of the Vendors shall effect a Subject Transfer
of any Test Well Back-in or any Outside Acreage Conveyance as to any Prospect, or any part
thereof, other than to a Permitted Transferee, except after strict compliance with the
First Offer Procedure set forth below.

4.3 New
Prospects. If a Vendor should develop a “New Prospect” (defined as a 100% working
interest owned prospect (excluding other ownership interests such as royalties) generated
by a Vendor within 36 months of the Closing and intended to be offered for sale as a
drilling prospect), which it intends to sell to the industry or other Person (other than a
Permitted Transferee), whether by assignment, sale, or other conveyance, such sale shall
be subject to the First Offer Procedure set forth in Article V; provided, however, that
the obligation to subject a New Prospect to the First Offer Procedure shall not apply to
acreage held by a Vendor as to which the Vendor has not developed data (e.g. logs
and related geophysical data) or a drillable prospect to support the location of a test
well on the acreage to test a prospective hydrocarbon bearing reservoir the presence of
which is supported by the data gathered by the Vendor.

V. First Offer Procedure

Before any Subject Transfer of any interest described in Sections 4.1, 4.2 or 4.3 that is
intended to be offered for sale can be made to a third party (other than a Permitted
Transferee) by a Vendor, the Vendor must follow the following procedure (the “First Offer
Procedure”);

5.1 Transfer Notice. The Vendor shall send AEC a written notice of its intention
containing full information concerning the Subject Transfer of any interest described in
Sections 4.1, 4.2 or 4.3, including the purchase price and all other material terms on
which such Vendor proposes to make the Subject Transfer (the
“Transfer Notice”);

5.2 AEC Response. AEC will have 15 days from the date of its receipt of the Transfer
Notice (A) to accept the terms pertaining to a Subject Transfer or (B) to deliver to the

 

 

Vendor which sent the Transfer Notice a binding counteroffer (the “Counteroffer”) to
acquire the interest subject to a Subject Transfer. If made by AEC, the Counteroffer shall
include (i) the cash price, (ii) the estimated closing date, and (iii) any other
significant terms of the proposed purchase by AEC.

5.3
Vendor’s election. If the Vendor accepts the Counteroffer, AEC and the Vendor will
have 30 days in which to negotiate in good faith and execute a
mutually acceptable purchase
agreement. If the Vendor rejects the Counteroffer, the Vendor shall be entitled for a
period of one year, to sell or otherwise dispose of the Subject Transfer to a third party.
The terms and conditions of such transfer to a third party must be equal or more favorable
to the Vendor, as determined by the Vendor in its sole discretion, than the terms and
conditions proposed by AEC in the Counteroffer.

5.4 Priority of Rights of Permitted Transferees. AEC acknowledges that its rights under
Articles 3, 4 and 5 of this Agreement are subject to, and inferior to, those of Permitted
Transferees. Such Permitted Transferees have existing rights of first refusal and first offer
with respect to sale of certain assets owned by the Vendors and when offered for sale by them.

VI. Prospect Areas of Mutual Interest

6.1 Area of Mutual Interest. Each Prospect originally acquired by AEC pursuant to the
Purchase Agreement (the individual Prospects being designated on Schedule A of the Purchase
Agreement) shall be deemed to be subject to an Area of Mutual Interest, the boundaries of
which and the lands covered thereby shall be deemed to be one-half mile outside of the
perimeter boundaries of the Leases included in the Prospect (the “Prospect AM]”). To the
extent that AEC acquires any new lease which is within a Prospect AMI, the lease shall be
deemed covered by this Agreement. In the event that any of the Vendors acquires any new lease
within a Prospect AMI, it shall offer the same to AEC at its cost therefor. If AEC elects to
acquire the interest in the lease, it shall do so within thirty (30) days of the offer by the
Vendor. If AEC elects not to acquire the interest from the Vendor, then the Vendor shall be
entitled to retain the same free and clear of any obligations to the AEC. The Prospect AMI for
each Prospect shall be deemed to continue in force and effect for a term of five years from
the date of this Agreement.

VII. Miscellaneous

7.1 Notices. All notices, proposals, requests, consents, communication, reports, bills,
calls or demands for payment or other document required or permitted hereunder shall be made
in accordance with the notice provisions of the Purchase Agreement.

7.2 Entire Agreement/Amendments. This Agreement, together with the assignments delivered
hereunder, the Purchase Agreement and the Joint Operating Agreement pertaining to each of the
Prospects, constitutes the entire agreement between the parties with respect to the subject
matter discussed herein and supersedes any and all other written or oral agreements or
understandings between the parties concerning the subject matter hereof. No modification or
amendment of the terms and provisions of this Agreement shall be effective unless in writing
and signed by the party against whom enforcement is sought.

7.3 Conflicts. In the event of any conflict between this Agreement and any Joint

 

 

Operating Agreement pertaining to any of the Prospects, the terms and provisions of this
Agreement shall be deemed to govern and control.

7.4 Counterparts. This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed an original, and such counterparts, when taken together,
shall constitute one and the same instrument.

7.5 Assignments. No party may convey, assign, transfer, sell or encumber its rights or
obligations under this Agreement without the prior written consent of the other parties, which
consent such parties are under no obligation to grant.

7.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF TEXAS WITHOUT REGARD TO THE APPLICATION OF
THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.

7.7 No Partnership. The parties acknowledge that this Agreement, and the activities which
may be conducted under or pursuant hereto, are not intended, and shall not be construed to,
create a partnership, joint venture, agency relationship, or other fiduciary relationship among
the parties hereto within the meaning of the federal common law nor under the applicable laws of
any state nor under the laws of the state which either party is incorporated, organized or
conducting business.

7.8 Binding Agreement. Subject to the other provisions of this Agreement, all of the terms
and provisions hereof shall be binding upon and inture to the use and benefit of the parties and
their respective successors and assigns.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

 

 

WITNESS
THE EXECUTION HEREOF this, the
          ,2008, but effective as of the 25 day of January, 2008.

	 	 	 	 	 
	AUSAM ENERGY CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Mark G. Avery	 	 
	Name:
	 	Mark G. Avery	 	 
	Title:

	 	PRESIDENT
		 
	 
	 	 	 	 
	SKH MANAGEMENT III, L.L.C.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENT	 	 
	 
	 	 	 	 
	SKH MANAGEMENT L.P.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENT	 	 

 

 

	 	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENT	 	 
	 
	 	 	 	 
	SKH ENERGY FUND, L.P.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENT	 	 
	 
	 	 	 	 
	SKH MANAGEMENT II, L.P.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENT	 	 
	 
	 	 	 	 
	ANTARES EXPLORATION FUND, L.P.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul J. Sigmund	 	 
	Name:

	 	 

Paul J. Sigmund
	 	 
	Title:

	 	PRESIDENTexv10w22

 

EXHIBIT 10.22

STEELCLOUD, INC.

FORM OF

RESTRICTED STOCK AGREEMENT

     THIS RESTRICTED STOCK AGREEMENT (the “Agreement”) is made as of                      , by and between SteelCloud,
Inc., a Virginia corporation (the “Company”), and                      (the “Employee”).

     The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to provide incentive to the Employee to remain with
the Company by making this grant of Restricted Stock in accordance with the terms of this
Agreement.

AGREEMENT

     1. Award of Restricted Stock. The Board hereby grants, as of                      (the “Date of Grant”),
to Employee                      shares of the Company’s common stock, par value $0.001 per share (the “Restricted
Stock”).

     2. Delivery of Restricted Stock

          (a) Except as otherwise provided in Section 3 hereof, the Restricted Stock shall vest, the
restrictions on the Restricted Stock shall lapse, and the Restricted Stock shall be delivered to
the Employee at the rate of                      shares of Restricted Stock per year at the anniversary of the Date of
Grant, for from the Date of Grant. Until such time as delivery of the Restricted Stock is made to
the Employee, or the Employee’s right to such Stock is terminated in accordance with this
Agreement, the Company’s share transfer records shall reflect the Employee’s status as holder of
such Restricted Stock.

          (b) Notwithstanding any other provisions of this Agreement, the Company’s Board of Directors
(the “Board”) shall be authorized in its discretion, based upon its review and evaluation of the
performance of the Employee and of the Company or its subsidiaries, to accelerate the lapse of any
restrictions under this Agreement upon the Restricted Stock, at such times and upon such terms and
conditions as the Board shall deem advisable.

          (c) Until shares of the Restricted Stock are delivered without restrictions to the Employee in
accordance with the terms of this Agreement, the Employee hereby irrevocably appoints the Secretary
of the Company as his attorney-in-fact to execute and deliver any stock power or other instrument
which may be necessary to effectuate the transfer of the Restricted Stock (or assignment of
distributions thereon) on the books and records of the Company.

          (d) The Employee shall not effect a Disposition of any shares of Restricted Stock unless,
until and to the extent the restrictions imposed upon such stock shall have lapsed in accordance
with this Agreement. Any attempt to effect a Disposition of any shares of Restricted Stock prior
to the date on which the restrictions have lapsed, shall be void ab initio. For purposes of this
Agreement, “Disposition” shall mean any sale, transfer, encumbrance, gift, donation, assignment,
pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously
enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by
operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.

     3. Forfeiture. If, prior to the three years from the Date of Grant, the Employee’s
employment with the Company or its subsidiaries is terminated for any reason, any undelivered
shares of Restricted Stock shall be deemed to have been forfeited by the Employee. The Board shall
have the power and authority to enforce on behalf of the Company any rights of the Company under
this Agreement in the event of the Employee’s forfeiture of the shares of Restricted Stock pursuant
to this Section 3.

 

 

     4. Rights with Respect to Restricted Stock.

          (a) Except as otherwise provided in this Agreement, the Employee shall have, with respect to
all shares of Restricted Stock, all the rights of a shareholder of the Company, including the right
to vote the Restricted Stock and the right to receive cash dividends, if any, as may be declared on
the Restricted Stock from time to time. Any shares of Stock issued the Employee as a dividend with
respect to Restricted Stock shall have the same status, be subject to the same terms and conditions
and shall be held on behalf of the Employee by the Company, if the Restricted Stock is being so
held unless otherwise determined by the Board.

          (b) In the event that the Stock, as a result of a stock split or stock dividend or combination
of shares or any other change or exchange for other securities, by reclassification, reorganization
or otherwise, is increased or decreased or changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation, the number of
shares of the Restricted Stock shall be appropriately adjusted to reflect such change. If any such
adjustment shall result in a fractional share, such fraction shall be disregarded.

     5. Taxes.

          (a) If the Employee properly elects, within thirty (30) days of the date of this Agreement, to
include in gross income for federal income tax purposes an amount equal to the fair market value
(as of the date of grant) of the Restricted Stock pursuant to Section 83(b) of the Internal Revenue
Code of 1986, as amended (the “Code”), the Employee shall make arrangements satisfactory to the
Board to pay to the Company any federal, state or local income taxes required to be withheld with
respect to the Restricted Stock. If the Employee shall fail to make such tax payments as are
required, the Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Employee any federal, state or local taxes of any kind
required by law to be withheld with respect to the Restricted Stock.

          (b) If the Employee does not make the election described in Subsection 5(a) above, the
Employee shall, no later than the date as of which the restrictions referred to in this Agreement
hereof shall lapse, pay to the Company, or make arrangements satisfactory to the board for payment
of, any federal, state or local taxes of any kind required by law to be withheld with respect to
the Restricted Stock, and the Company shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to Employee any federal, state, or local taxes of
any kind required by law to be withheld with respect to the Restricted Stock.

     6. Delivery upon Death. If after                      years from the Date of Grant the Employee
dies prior to receiving the shares of Restricted Stock, such shares shall be delivered, free of any
restrictions under this Agreement, to the beneficiary or beneficiaries designated by the Employee,
or if the Employee has not so designated any beneficiary, or no designated beneficiary survives the
Employee, such shares shall be delivered to the personal representative of the Employee’s estate.

     7. Amendment, Modification and Assignment. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Employee and the Chairman or other duly authorized member of the Board. No
waiver by either party of any breach by the other party hereto of any condition or provision of
this Agreement shall be deemed a waiver of any other conditions or provisions of this Agreement.
No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall not be assigned by the Employee in whole or in part. The rights
and obligations created hereunder shall be binding on the Employee and his heirs and legal
representatives and on the successors and assigns of the Company.

     8. Miscellaneous.

          (a) No Right to Employment. The grant of the Restricted Stock shall not be construed
as giving the Employee the right to be retained in the employ of the Company.

2

 

          (b) No Limit on Other Compensation Arrangements. Nothing contained in this Agreement
shall preclude the Company from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or applicable only in
specific cases.

          (c) Severability. If any provision of this Agreement is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would disqualify this Agreement or the
Award under any applicable law, such provision shall be construed or deemed amended to conform to
applicable law (or if such provision cannot be so construed or deemed amended without materially
altering the purpose or intent of this Agreement and the Award, such provision shall be stricken
as to such jurisdiction and the remainder of this Agreement and the Award shall remain in full
force and effect).

          (d) No Trust or Fund Created. Neither this Agreement nor the grant of Restricted
Stock shall create or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and the Employee or any other person. To the extent that the
Employee or any other person acquires a right to receive payments from the Company pursuant to this
Agreement, such right shall be no greater than the right of any unsecured general creditor of the
Company.

          (e) Governing Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia.

          (f) Headings. Headings are given to the Paragraphs and Subparagraphs of this
Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of this Agreement or any
provision thereof.

     9. Complete Agreement. This Agreement and those agreements and documents expressly
referred to herein embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written
above.

	 	 	 	 	 
	 	SteelCloud, Inc.

 	 
	 	By  	 	 
	 	 	Name/Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	Agreed and Accepted:

 	 	 
	By:  	 	 	 
	 	Name/Title: 	 	 
	 	 	 	 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]