ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On February 5, 2009, SteelCloud, Inc. ("SteelCloud" or the "Company") entered into an executive retention agreement (the "Agreement") with Brian Hajost, the Company's President and Chief Executive Officer, effective as of January 16, 2009. Pursuant to the terms of the Agreement, as compensation for Mr. Hajost serving as the Company's President and Chief Executive Officer, Mr. Hajost shall receive (a) a semi-monthly salary of $8,333.33 (or $200,000 annually); (b) a stock grant of 156,000 shares of the Company's common stock, which shall vest ratably over 12 months; and (c) a stock option grant of 300,000 shares of the Company's common stock, which shall vest ratably over a three year term and have a five year exercise period. The Agreement further provides that in the event the Company terminates Mr. Hajost's employment without cause (as such term defined in the Agreement) (other than due to Mr. Hajost's request), or if Mr. Hajost terminates his employment for Good Reason (as such term is defined in the Agreement), Mr. Hajost shall be entitled to severance payments ranging from two
(2) months salary to twelve (12) months salary based on the length of Mr. Hajost's employment with the Company.

A copy of the Agreement is filed herewith as Exhibit 10.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits

10.1 Executive Retention Agreement, dated February 5, 2009, entered into between SteelCloud and Brian Hajost.

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