FORM OF SECOND WARRANT

THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS OTHERWISE DESCRIBED BELOW.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES
LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF (I) SUCH REGISTRATION OR (II) AN
EXEMPTION THEREFROM AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.

Warrant No. CSW-1002

DAYSTAR TECHNOLOGIES, INC.

VOID AFTER 5:00 P.M. PST ON OCTOBER 2, 2011 Warrant to Purchase 1,666,667 Shares
of Common Stock Dated October 2, 2009

WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK

THIS CERTIFIES THAT, FOR VALUE RECEIVED, TD Waterhouse RRSP Account 240832S, in
trust for Peter Alan Lacey as beneficiary, or its registered assign(s) (the
“Holder”), is entitled to purchase from Daystar Technologies, Inc., a Delaware
corporation (the “Company”), subject to the terms and conditions set forth in
this Warrant, up to 1,666,667 fully paid and nonassessable shares of common
stock (“Common Stock”), of the Company, at any time commencing on the date
hereof (the “Commencement Date”) and expiring at 5:00 p.m. PST, on October 2,
2011 (the “Expiration Date”). The price for each share of Common Stock purchased
hereunder (as adjusted as set forth herein, collectively the “Warrant Shares”)
is $0.50 per share until expiration of this Warrant (as adjusted as set forth
herein, the “Purchase Price”).

The Holder agrees with the Company that this Warrant is issued, and all the
rights hereunder shall be held, subject to all of the conditions, limitations
and provisions set forth herein.

1.      EXERCISE OF WARRANT.     A. MANNER OF EXERCISE. This Warrant may be
exercised in whole at any  

time, or in part from time to time, during the period commencing on the
Commencement Date and expiring on the Expiration Date or, if any such day is a
day on which banking institutions in

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Exhibit 10.1

the City of San Francisco, California, are authorized by law to close, then on
the next succeeding day that shall not be such a day, by presentation and
surrender of this Warrant to the Company at its principal office with the
Purchase Form attached as Annex I (the “Purchase Form”) duly executed and
accompanied by payment (either in cash or by certified or official bank check,
payable to the order of the Company) of the Purchase Price for the number of
shares specified in the Purchase Form and instruments of transfer, if
appropriate, duly executed by the Holder or its duly authorized attorney.

     B. STATUS AS HOLDER OF WARRANT SHARES; TAXES; EXPIRATION. Upon receipt by
the Company of this Warrant, the duly executed Purchase Form and any other
appropriate instruments of transfer, together with the Purchase Price, at its
office, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered to the Holder. The Company
shall pay any and all documentary stamp or similar issue taxes payable in
respect of the issue or delivery of Warrant Shares. This Warrant shall become
void, and all rights hereunder shall cease, at the close of business on the
Expiration Date. The Company in its sole discretion may extend the duration of
this Warrant by delaying the Expiration Date.

     C. ISSUANCE OF CERTIFICATES. As soon as practicable after the exercise of
all or any portion of this Warrant, the Company shall, within three (3) Trading
Days (defined below), (i) issue to the Holder a certificate or certificates for
the number of full Warrant Shares to which the Holder is entitled, or, at the
Holder’s request, deliver such Warrant Shares electronically if such means is
otherwise presently available to and utilized by the Company, registered in such
name or names as may be directed by the Holder, and (ii) if this Warrant has not
been exercised in full, issue to the Holder a new countersigned warrant in
substantially the same form for the Warrant Shares as to which this Warrant
shall not have been exercised. This Warrant may not be exercised by, or
securities issued to, any Holder in any state in which such exercise would be
unlawful.

2. RESERVATION OF SHARES. The Company will at all times reserve for issuance and
delivery upon exercise of this Warrant all Warrant Shares or other shares of
capital stock of the Company (and other securities and property) from time to
time receivable upon exercise of this Warrant. All such shares (and other
securities and property) shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and nonassessable and free of all
preemptive rights.

3. NO FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. If the holder of this
Warrant would be entitled, upon the exercise of this Warrant, to receive a
fractional interest in a share, the Company shall, upon such exercise, purchase
such fractional interest, determined as follows:

(a)      If the Common Stock is listed on a national securities exchange (which
includes the Nasdaq Capital Market) or admitted to unlisted trading privileges
on such exchange or listed for trading on the OTC Bulletin Board, the current
value shall be the last reported sale price of the Common Stock on such exchange
on the last business day prior to the date of exercise of this Warrant or if no
such sale is  

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Exhibit 10.1

made on such day, the average of the closing bid and asked prices for such day
on such exchange; or

(b)      If the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported bid and
asked prices reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of the exercise of this Warrant; or   (c)      If
the Common Stock is not so listed or admitted to unlisted trading privileges and
bid and asked prices are not so reported, the current value shall be an amount
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company.  

4. STOCK DIVIDENDS; SPLIT-UPS. If after the issuance of this Warrant, and
subject to the provisions herein the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock or by a
split-up of shares of Common Stock or other similar event, then, on the
effective day thereof, the number of Warrant Shares shall be increased in
proportion to such increase in outstanding shares and the then applicable
Purchase Price shall be correspondingly decreased.

5. AGGREGATION OF SHARES. If after the date hereof, and subject to the
provisions herein, the number of outstanding shares of Common Stock is decreased
by a consolidation, combination, reverse stock split, or reclassification of
shares of Common Stock or other similar event, then, after the effective date of
such consolidation, combination or reclassification, the number of Warrant
Shares shall be decreased in proportion to such decrease in outstanding shares
and the then applicable Purchase Price shall be correspondingly increased.

6. REORGANIZATION, ETC. If after the date hereof any capital reorganization or
reclassification of the Common Stock, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its assets
to another corporation or other similar event shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and fair provision shall be made whereby the registered holders
shall thereafter have the right to purchase and receive, upon the basis and upon
the terms and conditions specified in this Warrant and in lieu of the securities
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the number
of outstanding shares of such Common Stock equal to the number of shares of
Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented by this Warrant, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the registered holders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Purchase Price
and the Warrant Shares) shall thereafter be applicable, as nearly as may be in
relation to any share of stock, securities or assets thereafter deliverable upon
the exercise hereof. The Company shall not effect any such consolidation, merger
or sale unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger, or the
corporation purchasing such assets, shall assume by written instrument executed
and delivered to

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Exhibit 10.1

the Company the obligation to deliver to the registered holders such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holders may be entitled to purchase.

7. FORM OF WARRANT. This Warrant need not be changed because of any adjustment
pursuant to the terms herein, and any form of warrant issued after such
adjustment may state the same Purchase Price and the same number of shares as is
stated in this Warrant. However, the Company may at any time in its sole
discretion make any change in the form of this Warrant that the Company may deem
appropriate and that does not affect the substance thereof, and any warrant
thereafter issued, whether in exchange or substitution for this Warrant or
otherwise, may be in the form as so changed. The Company agrees to notify the
Holder of any adjustment to the number of shares or Purchase Price of the
Warrant, any changes to the form of this Warrant or any other change pursuant to
the terms herein.

8. TRANSFER OF WARRANTS. This Warrant and the Warrant Shares have not been
registered under the 1933 Act or similar state laws. This Warrant and Warrant
Shares cannot be sold or transferred by an investor unless (i) they are so
registered or (ii) an exemption from registration is available at the time of
transfer and, if requested by the Company, an opinion of counsel satisfactory to
the Company to the effect that such registration is not required is delivered to
the Company. Subject to the foregoing limitations, the Company shall register
the transfer, from time to time, of this Warrant upon the Company’s warrant
register, upon surrender of this Warrant for transfer, accompanied by a duly
executed Assignment Form in the form attached as Annex II, with signatures
properly guaranteed as indicated. Upon any such transfer, a new warrant or
warrants representing the aggregate number of this Warrant shall be issued and
this Warrant shall be cancelled by the Company.

A restrictive legend shall be placed upon each share certificate acquired upon
exercise of this Warrant in substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AMENDED, OR ANY STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF (I) SUCH REGISTRATION OR (II) AN EXEMPTION
THEREFROM AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. HEDGING
TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.

The foregoing legend will be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become the subject of an effective resale registration statement or they become
eligible for resale pursuant to Rule 144(i) under the 1933 Act.

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Exhibit 10.1

9. NO RIGHTS AS STOCKHOLDERS. Prior to the exercise of this Warrant in
accordance with the terms hereof and payment of the full exercise price
therefor, the Holder will not be entitled to any rights by virtue hereof as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends or other distributions, to exercise any preemptive rights,
to consent or to receive notice as stockholders of the Company in respect to the
meetings of stockholders or the election of directors of the Company or any
other matter.

10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS. If this Warrant is lost,
stolen, mutilated, or destroyed, the Company may on such terms as to indemnity
or otherwise as it may in its discretion impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new warrant of like
denomination, tenor, and date. Any such new warrant shall constitute a
substitute contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable
by anyone.

11. GOVERNING LAW. This Warrant shall be governed by and construed in accordance
with the laws of the State of California without giving effect to conflicts of
laws principles that would require the application of the law of another
jurisdiction.

12.      NOTICES OF CERTAIN ACTIONS. In the event:     (a)      the Company sets
a record date with respect to the holders of Common Stock for the purpose of
entitling or enabling them to receive any dividend or other distribution, or to
receive any right to subscribe for or purchase any shares of stock of any class
or any other securities, or to receive any other right;     (b)      the number
of outstanding shares of Common Stock is increased by a stock dividend payable
in shares of Common Stock or by a split-up of shares of Common Stock or other
similar event;     (c)      the number of outstanding shares of Common Stock is
decreased by a consolidation, combination, reverse stock split, or
reclassification of shares of Common Stock or other similar event;     (d)     
of any capital reorganization or reclassification of the Common Stock, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event; or     (e)      of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;  

then, and in each such case, the Company will provide written notice (an “Event
Notice”) to the Holder at least ten days prior to (i) the record date in the
case of (a) above, specifying the record date and the amount and character of
such dividend, distribution or right, and (ii) the effective date of any event
specified in clause (b), (c), (d) or (e) above, specifying the effective date on
which such event is to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock will be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
event, if applicable. Any failure to mail an

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Exhibit 10.1

Event Notice required by this Section 12 or any defect therein or in the mailing
thereof will not affect the validity of the corporate action required to be
specified in such Event Notice. Nothing herein shall prohibit the Holder from
exercising this Warrant during the ten day period commencing on the date of an
Event Notice, provided that such exercise occurs prior to the Expiration Date
and the Holder otherwise complies with the terms hereof.

13. DELIVERY OF NOTICE. Notices and other communications to be given to the
Holder of this Warrant evidenced by this certificate shall be deemed to have
been sufficiently given, if delivered or mailed, addressed in the name and at
the address of such owner appearing on the records of the Company, and if
mailed, sent registered or certified mail, postage prepaid. Notices or other
communications to the Company shall be deemed to have been sufficiently given if
delivered by hand or mailed, by registered or certified mail, postage prepaid,
to the Company at 2972 Stender Way, Santa Clara, California 95054, Attn: Mr.
Robert Aldrich, Interim Chief Executive Officer and Chairman, or at such other
address as the Company shall have designated by written notice to the registered
owner as herein provided. Notice by mail shall be deemed given when deposited in
the United States mail as herein provided.

[Remainder of page intentionally left blank]

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Exhibit 10.1

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, manually or in facsimile, by the undersigned thereunto duly
authorized, as of the date first written above.

DAYSTAR TECHNOLOGIES, INC.

By: William S. Steckel
Name: William S. Steckel
Title: Chief Financial Officer

[SIGNATURE PAGE TO WARRANT]

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Exhibit 10.1

ANNEX I

TO COMMON STOCK PURCHASE WARRANT

PURCHASE FORM

To:
_________________

Dated:
____________

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___) (the “Warrant”), hereby irrevocably elects to purchase
__________
shares of the Common Stock covered by such Warrant.

The undersigned herewith makes payment of the full exercise price for such
shares at the price per share provided for in such Warrant, which is $
________
in lawful money of the United States.

IF PAYMENT FOR ANY OF THE SHARES TO BE ISSUED HEREUNDER IS PURSUANT TO THE
CASHLESS EXERCISE PROVISION IN SECTION 1(B) OF THE WARRANT, PLEASE PROVIDE THE
FOLLOWING INFORMATION:

     Number of Warrant Shares to be purchased under this Warrant:
___________________

Closing Price per share of Common Stock on the Trading Day before this Purchase
Form and the Warrant are surrendered: $
_____________
as of
___________________
, 20__*

Number of shares of Common Stock to be issued to the undersigned pursuant to the
purchase described herein based upon the calculation in Section 1(B) of the
Warrant:
_________________
*

* Note: The undersigned understands that this information is provided by the
undersigned solely for informational purposes, and that it is not binding on the
Company for any purpose. The terms of the Warrant, and not this Purchase Form,
will govern the calculation of these items and the actual number of shares of
Common Stock to be received by the undersigned pursuant to the purchase of
shares of Common Stock hereunder.

     Capitalized terms used but not defined herein have the meaning assigned to
such terms in the Warrant.

[Name]

Name:
Title:
Address:

[ANNEX I TO WARRANT]

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Exhibit 10.1

ANNEX II

TO COMMON STOCK PURCHASE WARRANT

ASSIGNMENT FORM

FOR VALUE RECEIVED,
________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (No. ____) with respect to the number of shares of Common
Stock covered thereby set forth below, unto:

Name of Assignee

Address

No. of Shares

Dated:
_____________________

[Name]

_____________________________
Name:
Title:

Signature Guaranteed:

By:
_______________________

The signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.

[ANNEX II TO WARRANT]

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