Option Agreement Between Peltz Capital Management LLC and Anthony Macaluso, dated October 15, 2012 and December 7, 2012, as amended

THIS AMENDMENT TO OPTION AGREEMENT (this “Amendment”) is entered into as of December 26, 2012, by and among Anthony Macaluso, whose business address is 2235 Encinitas Boulevard, Suite 210, Encinitas, California 92024 (“Grantor”), and Peltz Capital Management, LLC, a Delaware limited liability company with a business address of 280 Park Ave, 41st Floor New York, NY 10017 (“Grantee”).

WHEREAS, the signatories hereto are parties to that certain Option Agreement dated October 15, 2012 (the “Option Agreement”).

 

WHEREAS, the signatories hereto desire to enter into this Amendment to amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto, intending legally to be bound, agree as follows:

 

1.      Amendment of Section 4.  Section 4 of the Option Agreement is amended to read in its entirety as follows:

 

4.           Delivery of Shares. As soon as practicable on or after the date of any exercise of this Warrant but in any event by the close of business on the sixth Trading Day after its receipt of the purchase price for the shares subject to the exercise (the “Exercise Amount”), Macaluso shall deliver to the person or persons designated by Grantee (“Holders”) a certificate or certificates for the aggregate number of shares of Common Stock issuable upon such exercise (the “Option Shares”). The Option Shares so delivered must be duly authorized, validly issued, fully paid, non-assessable and free and clear of all taxes, liens, charges and security interests.  If Grantor fails to deliver to one or more Holders a certificate or certificates representing the Option Shares by the close of business on the sixth Trading Day after its receipt of the Exercise Amount, then Grantee will have the right to rescind such exercise. In addition, if Grantee fails to deliver to the Holders a certificate or certificates representing the Option Shares pursuant to an exercise by the close of business on the sixth Trading Day after Grantee’s receipt of the Exercise Amount, and if after such sixth Trading Day a Holder is required by its broker to purchase (in an open market transaction or otherwise) common shares of STS (“Common Stock”) to deliver in satisfaction of a sale by such Holder of the Option Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then Grantor shall (i) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Option Shares that Grantor was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, or (ii) at the option of the

Holder, either reinstate the portion of the Option and equivalent number of Option Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been delivered had Grantor timely complied with its delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Option Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (i) of the immediately preceding sentence Grantor shall be required to pay the Holder $1,000. The Holder shall provide Grantor written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by Grantor. Nothing herein shall limit Grantee’s or a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to Grantor’s failure to timely deliver certificates representing Option Shares upon exercise of this Option as required pursuant to the terms hereof.  The Holders are express third party beneficiaries to this Section 4.

2.      Amendment to Section 6.  Section 6 of the Option Agreement is amended by replacing “Exhibit B” with “Exhibit A”.

 

3.      Amendment to Section 9.  Section 9 of the Option Agreement is amended by replacing the word “There” with “Except as otherwise expressly provided by this Agreement, there”.

 

4.      Amendments of Exhibits.  Exhibit A of the Option Agreement is deleted in its entirety and Exhibit B of the Option Agreement is renamed “Exhibit A”.

 

5.      Miscellaneous.

 

(a)           Ratification.  Except as amended herein, the Option Agreement shall remain in full force and effect.

 

(b)           Entire Agreement.  This Amendment and the Option Agreement (including the documents referred to therein) constitute the entire agreement among the parties hereto and collectively supersede any prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof.

 

(c)           Conflict of Terms.  In the event of any inconsistency between the provisions of this Amendment and any provision of the Option Agreement, the terms and provisions of this Amendment shall govern and control.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Option Agreement as of the date first written above.