Exhibit 10.2

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (the “Agreement”) is made as of the 18th day of
September, 2009 (the “Effective Date”) between DayStar Technologies, Inc., a
Delaware corporation (the “Company”), and TD Waterhouse RRSP Account 240832S, in
trust for Peter Alan Lacey as beneficiary (the “Purchaser”). The Company and the
Purchaser are sometimes referred to individually as a “Party” and collectively
as the “Parties.”

RECITALS

The Company desires to issue and the Purchaser desires to purchase (A) a secured
convertible promissory note (the “Note”) in substantially the form attached
hereto as Exhibit A, (B) a warrant in substantially the form attached hereto as
Exhibit B (the “First Warrant”), and (C) a warrant in substantially the form
attached hereto as Exhibit C (the “Second Warrant” and, together with the First
Warrant, the “Warrants”). The Note, the Warrants and any securities issuable
upon conversion of the Note of the exercise of the Warrants are collectively
referred to herein as the “Securities”.

AGREEMENT

Now, therefore, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:

1. PURCHASE AND SALE OF NOTE AND WARRANTS.

1.1 Sale and Issuance of Note and Warrants. Subject to the terms and conditions
of this Agreement, the Purchaser agrees to purchase at the Closing (as defined
below), and the Company agrees to sell and issue to the Purchaser at the
Closing:

(i) the Note in substantially the form attached hereto as Exhibit A in the
principal amount of US$2,000,000,

(ii) the First Warrant in substantially the form attached hereto as Exhibit B,
and

(iii) the Second Warrant in substantially the form attached hereto as Exhibit C.

1.2 Closing; Delivery.

(a) Closing Date. The closing of the purchase and sale of the Note and the
Warrants (the “Closing”) shall be held on September 18, 2009 or as soon
thereafter as practicable (the “Closing Date”) at a place and time to be
determined by the Company and Purchaser.

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(b) Deliveries at Closing. At the Closing (i) the Purchaser will deliver to the
Company payment of the Purchase Price with respect to the Note and the Warrants
by wire transfer from the Purchaser to a bank designated by the Company and
executed counterpart signature pages to the Security Agreement (as defined
below) and the Registration Rights Agreement (as defined below); and (ii) the
Company shall issue and deliver to the Purchaser the executed Note in favor of
the Purchaser, the executed First Warrant in favor of the Purchaser and executed
counterpart signature pages to the Security Agreement (as defined below) and the
Registration Rights Agreement (as defined below). Subject to the execution and
delivery of the amendment to the Rights Plan (as defined below) as set forth in
Section 4.7, the Company shall issue and deliver the executed Second Warrant as
soon as possible after the Closing. The Parties agree that, unless and until
such amendment is obtained, the Purchaser will not beneficially own the Second
Warrant or any shares of stock underlying the Second Warrant.

(c) Purchase Price. The “Purchase Price” of the Note and the Warrants shall
equal the principal amount of the Note.

1.3 Use of Proceeds. The Company must use the proceeds related to the sale of
the Note and the Warrants for (i) operating capital and (ii) funding of the
Company’s ongoing research and development and related business operations, as
more fully described in the Letter of Intent executed by the Parties on
September 18, 2009. The use of any such proceeds in any amount exceeding $5,000
must be approved by the Chief Executive Officer of the Company.

2. SECURITY INTEREST. The indebtedness represented by the Note shall be secured
by certain assets of the Company as further provided in the Security Agreement
attached hereto as Exhibit D (the “Security Agreement”).

3. REGISTRATION RIGHTS. The shares of Company common stock into which the Note
may be converted and the Warrants may be exercised shall be subject to
registration rights as further provided in the Registration Rights Agreement
attached hereto as Exhibit E (the “Registration Rights Agreement”).

4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows:

4.1 Corporate Power. The Company has all requisite corporate power to execute
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement.

4.2 Authorization. All corporate action on the part of the Company, its
directors and its shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the performance of
the Company’s obligations hereunder, including the issuance and delivery of the
Note and Warrants, has been taken prior to the Closing. This Agreement, the Note
when executed and delivered by the Company, and the Warrants when executed and
delivered by the Company, shall constitute valid and binding obligations of the
Company enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency, the relief of debtors and, with
respect to rights to indemnity, subject to federal and state securities laws.

 

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4.3 Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with this Agreement, the Security Agreement,
the Note and the Warrants, will be duly and validly issued, fully paid and
nonassessable (as applicable), and free and clear of all liens. The Company has
reserved from its duly authorized capital stock the maximum number of shares of
common stock (i) issuable upon the conversion of the Note and (ii) that may be
issued upon the exercise of the Warrants.

4.4 Governmental Consents. All consents, approvals, orders, or authorizations
of, or registrations, qualifications, designations, declarations, or filings
with, any governmental authority, required on the part of the Company in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Note and the Warrants or the consummation of any other
transaction contemplated thereby or hereby shall have been obtained and will be
effective at the Closing or, except for notices required or permitted to be
filed with certain state and federal securities commissions, which notices will
be filed on a timely basis.

4.5 No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the performance of the Company’s obligations hereunder,
including the issuance and delivery of the Note and the Warrants, will not
(a) breach any law to which the Company or any of its subsidiaries or any of
their assets is subject or any provision of its organizational documents,
(b) breach any contract, order or permit to which the Company or any of its
subsidiaries is a party or by which it is bound or to which any of its assets is
subject, or (c) trigger any rights of first refusal, preferential purchase, or
similar rights.

4.6 Offering. Assuming the accuracy of the representations and warranties of the
Purchaser contained in Section 5 hereof, the offer, issue, and sale of the Note
and the Warrants is and will be exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the “1933
Act”), and have been registered or qualified (or are exempt from registration
and qualification) under the registration, permit, or qualification requirements
of all applicable state securities laws.

4.7 Delivery of Second Warrant. The Company agrees to use its best efforts to
amend the Company’s Stockholder Rights Agreement dated as of May 6, 2008 (the
“Rights Plan”) as set forth in Exhibit F and to deliver the Second Warrant to
Purchaser immediately upon the execution and delivery thereof, in each case to
occur within three business days of the date of this Agreement. In the event the
Company does not obtain such amendment to the Rights Plan and deliver the Second
Warrant to the Purchaser in accordance with this Section 4.7, then the Company
shall immediately pay to the Purchaser by wire transfer liquidated damages in
the amount of $416,666.75.

5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser
represents, warrants and covenants to the Company as follows:

5.1 Purchase for Own Account. The Purchaser represents that it is acquiring the
Note and the Warrants solely for its own account and beneficial interest for
investment and not with a view to or for sale in connection with any
distribution of the Securities, has no present intention of selling, granting
any participation in the same, and does not presently have reason to anticipate
a change in such intention.

 

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5.2 Information and Sophistication. The Purchaser acknowledges that it has
received all the information it has requested from the Company and it considers
necessary or appropriate for deciding whether to acquire the Note and the
Warrants. The Purchaser represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Note and the Warrants and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser. The Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.

5.3 Ability to Bear Economic Risk and Knowledge of Certain Risk Factors. The
Purchaser acknowledges that investment in the Note and the Warrants involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Note and the Warrants for an
indefinite period of time and to suffer a complete loss of its investment. The
Purchaser has evaluated the risks involved in investing in the Note and the
Warrants, and has determined that the Note and the Warrants are suitable
investments for the Purchaser.

5.4 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until there is
then in effect a registration statement under the 1933 Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement or such disposition does not require registration under
the 1933 Act or any applicable state securities laws. In the event that
Purchaser seeks to make a disposition of all or any portion of the Securities in
the absence of registration under the 1933 Act and any applicable state
securities laws, Purchaser shall furnish an opinion of counsel reasonably
satisfactory in form and in substance to the Company that such disposition is
exempt from registration under the 1933 Act and any applicable state securities
laws.

6. MISCELLANEOUS.

6.1 Binding Agreement. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
Parties. Nothing in this Agreement, express or implied, is intended to confer
upon any third party any rights, remedies, obligations, or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.

6.2 Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and
construed under the laws of the State of California without giving effect to the
conflict of laws provisions thereof that would require the application of the
law of another jurisdiction. THE PARTIES EACH HEREBY, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF ANY
DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS
RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS.

 

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6.3 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

6.5 Notices. Any notice required or permitted under this Agreement, the Note or
the Warrants shall be given in writing and shall be deemed effectively given
upon personal delivery, upon confirmation of facsimile delivery, one day after
deposit with a national overnight courier service, or three days after deposit
with the United States Post Office, postage prepaid, addressed to the Company at
2972 Stender Way, Santa Clara, California 95054, or to the Purchaser at its
address shown on the signature page hereto, or at such other address as such
Party may designate in writing to the other Party.

6.6 Modification; Waiver. No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and approved by the Company and the Purchaser of a majority in interest of the
outstanding Loan Amount.

6.7 Expenses. Company and Purchaser shall bear the entire cost of its own
expenses and legal fees incurred on its behalf with respect to this Agreement,
the Note, the Warrants, the Security Agreement and the transactions contemplated
hereby and thereby. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Note, the Security Agreement or any
other agreement entered into in conjunction herewith or therewith, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

6.8 Entire Agreement. This Agreement, the Security Agreement, the Note, the
Warrants, the Registration Rights Agreement, and the Exhibits hereto and thereto
constitute the full and entire understanding and agreement between the Parties
with regard to the subjects hereof and no Party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this PURCHASE AGREEMENT as of the
date first written above.

 

COMPANY:   DayStar Technologies, Inc.,   a Delaware corporation   By:  

/s/ William S. Steckel

  Name:   William S. Steckel   Title:   Chief Financial Officer PURCHASER:   TD
Waterhouse RRSP Account 240832S,   In trust for Peter Alan Lacey as beneficiary
  By:  

/s/ Peter Alan Lacey

  Name:   Peter Alan Lacey   Address:   RR#2 Site 19     Box 6 Red Deer AB    
T4N 5E2

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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Exhibit A

Form of Promissory Note

[SEE ATTACHED]

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Exhibit B

Form of First Warrant

[SEE ATTACHED]

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Exhibit C

Form of Second Warrant

[SEE ATTACHED]

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Exhibit D

Form of Security Agreement

[SEE ATTACHED]

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Exhibit E

Form of Registration Rights Agreement

[SEE ATTACHED]

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Exhibit F

Amendment to Rights Plan

[SEE ATTACHED]