XSTELOS HOLDINGS, INC.
630 Fifth Avenue, Suite 2260
New York, New York 10020

 

May 24, 2012

 

To:Jonathan Couchman
c/o Xstelos Holdings, Inc.
630 Fifth Avenue, Suite 2260
New York, NY 10020

 

We are pleased to inform you that on April 19, 2012, the Board of Directors of
Xstelos Holdings, Inc. (the “Company”) authorized the grant to you on April 26,
2012 of a non-qualified stock option (the “Option”) to purchase Two Million Five
Hundred Thousand (2,500,000) shares of common stock (the “Shares”), $0.001 par
value, of the Company (“Common Stock”), at a price of $0.35 per Share.

 

All of the Option is currently exercisable. The Option, to the extent not
previously exercised, will expire March 14, 2020.

 

The Option is not transferable and may be exercised solely by you during your
lifetime or after your death by the person or persons entitled thereto under
your will or the laws of descent and distribution. Any attempt to transfer,
assign, pledge or otherwise dispose of, or to subject to execution, attachment
or similar process, the Option contrary to the provisions hereof, shall be void
and ineffective and shall give no right to the purported transferee.

 

In the event of your death, the Option may thereafter be exercised, by the legal
representative of your estate or by your legatee under your will, for a period
of one year after the date of such death or until the expiration of the stated
term of the Option, whichever period is shorter.

 

In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, cash dividend or distribution or other change in corporate
structure affecting the Common Stock, the Board of Directors of the Company
shall make an appropriate and equitable adjustment in the number and option
price of shares subject to the Option to the end that after such event your
proportionate interest shall be maintained as immediately before the occurrence
of such event.

 

The Company may make such provisions as it may deem appropriate, consistent with
applicable law, in connection with the Option with respect to the withholding of
any taxes or any other tax matters.

 

The Company, in its sole discretion, may file a registration statement under the
Securities Act of 1933, as amended (the “Act”), in order to register the Shares.
Unless at the time of the exercise of the Option a registration statement under
the Act is in effect as to such Shares, any Shares purchased by you upon the
exercise of the Option shall be acquired for investment and not for sale or
distribution, and if the Company so requests, upon any exercise of the Option,
in whole or in part, you will execute and deliver to the Company a certificate
to such effect. The Company shall not be obligated to issue any Shares pursuant
to the Option if, in the opinion of counsel to the Company, the Shares to be so
issued are required to be registered or otherwise qualified under the Act or
under any other applicable statute, regulation or ordinance affecting the sale
of securities, unless and until such Shares have been so registered or otherwise
qualified.

 

 

 

 

You understand and acknowledge that, under existing law, unless at the time of
the exercise of the Option a registration statement under the Act is in effect
as to such Shares (i) any Shares purchased by you upon exercise of the Option
may be required to be held indefinitely unless such Shares are subsequently
registered under the Act or an exemption from such registration is available;
(ii) any sales of such Shares made in reliance upon Rule 144 promulgated under
the Act may be made only in accordance with the terms and conditions of that
Rule (which, under certain circumstances, restrict the number of shares which
may be sold and the manner in which shares may be sold); (iii) in the case of
securities to which Rule 144 is not applicable, compliance with some other
disclosure exemption will be required before any Shares may be sold; (iv)
certificates for Shares to be issued to you hereunder shall bear a legend to the
effect that the Shares have not been registered under the Act and that the
Shares may not be sold, hypothecated or otherwise transferred in the absence of
an effective registration statement under the Act relating thereto or an opinion
of counsel satisfactory to the Company that such registration is not required;
(v) the Company will place an appropriate “stop transfer” order with its
transfer agent with respect to such Shares; and (vi) the Company has undertaken
no obligation to register the Shares or to include the Shares in any
registration statement which may be filed by it subsequent to the issuance of
the Shares to you.

 

The Option (or installment thereof) is to be exercised by delivering to the
Company a written notice of exercise in the form attached hereto as Exhibit A,
specifying the number of Shares to be purchased, together with payment in full
of the purchase price of the Shares to be purchased. The purchase price is to be
paid in by check, such other instrument as may be acceptable to the Board of
Directors of the Company, or, at the discretion of the Board of Directors of the
Company, by delivering shares of Common Stock already owned by you and having a
Fair Market Value (as hereinafter defined) on the trading day immediately
preceding the date of exercise equal to the exercise price of the Option, or a
combination of shares of Common Stock and cash.

 

Fair Market Value means the closing price of publicly traded shares of Common
Stock on the principal securities exchange on which shares of Common Stock are
listed (if the shares of Common Stock are so listed), or on the NASDAQ or NYSE
Stock Markets (if the shares of Common Stock are regularly quoted on the NASDAQ
or NYSE Stock Markets), or, if not so listed or regularly quoted, the mean
between the closing bid and asked prices of publicly traded shares of Common
Stock in the over-the-counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Board of Directors of the
Company. Anything in this provision to the contrary notwithstanding, in no event
shall the purchase price of a share of Common Stock be less than the minimum
price permitted under rules and policies of the national securities exchange on
which the shares of Common Stock are listed.

 

Would you kindly evidence your acceptance of the Option and your agreement to
comply with the provisions hereof by executing this letter under the words
“Agreed To and Accepted.”

 

 

 

 

  Very Truly Yours,       XSTELOS HOLDINGS, INC..       By:     Name: Adam
Finerman     Title: Director

 

  Jonathan M. Couchman  

 

 

 

 

Exhibit A

 

[Name]
[Address]
[City, State Zip]

 

Gentlemen:

 

Notice is hereby given of my election to purchase __________ Shares of Common
Stock, $0.001 par value per share (the “Shares”), of Xstelos Holdings, Inc., at
a price of U.S. $____ per Share, pursuant to the provisions of the option
granted to me on ______________, 2010. I elect to pay for the Shares as follows:

 

¨by delivery of my check in the amount of $__________.

 

¨* by delivery of Shares having a total value of $__________, such value being
based on the closing price(s) of the Shares on the date hereof.

 

¨* by my election to have Shares withheld by the Company from the Shares
otherwise to be received, with such withheld Shares having an aggregate fair
market value on the date of exercise equal to the purchase price.

 

The following information is supplied for use in issuing and registering the
Shares purchased hereby:

 

Number of Certificates and Denominations     Name     Address           Social
Security Number  

 

 

Dated: _________________

 

  Very truly yours,        

 

 

 

* Subject to approval of the Board of Directors