INTERCREDITOR

AGREEMENT

THIS INTERCREDITOR AGREEMENT (this "Agreement") dated as of the ____ day
___________, 20__, is made by and among ______________________, a
_____________________ corporation/an individual ("Lender 1"), ____________, a
_______________ corporation ("Lender 2""),_______________, a
_______________corporation ("Lender 3"), _______________, a
_______________corporation ("Lender 4"), _______________, a
_______________corporation ("Lender 5"),and _______________, a
_______________corporation ("Lender 6"), (Lender 1, Lender 2 Lender 3, Lender 4,
Lender 5, and Lender 6 are sometimes referred to herein as the "Lenders").

WITNESSETH

:

WHEREAS, each of the Lenders has entered into a secured lending arrangement with
Daystar Technologies, Inc. (the "Company");

WHEREAS, as part of each such lending arrangement, the Company has issued a
convertible promissory note to each of the Lenders (all indebtedness and other
obligations of the Company to the Lenders as evidenced by each convertible
promissory note being the "Loan Obligations" and all convertible promissory
notes being, collectively, "Notes");

WHEREAS, the Loan Obligations of each of the Lenders are secured by security
interests granted by the Company to each of the Lenders in certain assets of the
Company (all such assets being collectively, the "Collateral") as described in
security agreements between the Company and each of the Lenders (the security
agreements being, collectively, "Security Agreements"); and

WHEREAS, it is contemplated that the security interests held by each of the
Lenders in the Collateral shall rank pari passu on the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the
Lenders agree as follows:

 1.  Each Lender hereby acknowledges that the security interests held by each of
     the Lenders pursuant to the Security Agreements rank equally and ratably
     without priority over one another, regardless of the order of time in which
     any such security interests or claims arise, attach or are perfected by
     filing, recording or otherwise. Each Lender and its Loan Obligation is
     listed in Schedule 1 attached hereto.
 2.  The Security Agreements and Notes include all renewals, replacements,
     modifications and extensions thereof, to the extent that such renewals,
     replacements and modifications do not increase the principal amount
     thereof.  
 3.  The Security Agreements and Notes of the Lenders listed herein, or as
     amended, may not exceed $4 million of Collateral in the aggregate.
 4.  This Agreement and all obligations hereunder, or with respect hereto, shall
     continue in full force and effect so long as any of the Loan Obligations
     remain outstanding.
 5.  Each of the Lenders shall (a) promptly notify the other Lenders of any
     default under the Notes, Security Agreements or any other agreements or
     documents executed in connection therewith, as applicable (a "Default")
     known to such Lender and not reasonably believed to have been previously
     disclosed to the other Lenders; (b) provide the other Lenders with such
     information and documentation as such other Lenders shall reasonably
     request in the performance of their respective obligations hereunder,
     including but not limited to information relative to the outstanding
     balance of principal, interest and other sums owed to such Lender by the
     Company; and (c) cooperate with the other Lenders with respect to any and
     all collections and/or foreclosure procedures at any time commenced against
     the Company or otherwise in respect of the Collateral securing the Loan
     Obligations.
 6.  This Agreement shall be governed by the laws of the State of New York. 
     Unless the context otherwise requires, all capitalized terms used herein
     which are defined in the New York Uniform Commercial Code shall have the
     meanings stated therein.
 7.  This Agreement is solely for the benefit of and shall bind the parties
     hereto and their respective successors and assigns, and no other person or
     persons shall have any right, benefit, priority or interest under or
     because of the existence of this Agreement.  In the event of the transfer
     or assignment of all or any part of any of our security interests or claims
     described in this Agreement, the priorities established in this Agreement
     shall continue in full force and effect with respect to such assigned or
     transferred interests or claims, and the assigning party agrees to advise
     such assignee and transferee of such continuing priorities and obtain such
     assignee's or transferee's agreement thereto. 
 8.  This Agreement may be amended to add additional Lenders up to an aggregate
     amount of $4 MM in secured Collateral without a writing signed by all the
     Lenders.
 9.  This Agreement may not be amended to increase the aggregate amount of
     secured Collateral to more than $4 MM or to affect any amendment other than
     as found in paragraph 8 above, except in a writing signed by all the
     Lenders.
 10. This Agreement may be executed in counterparts, which when executed and
     delivered shall be an original, but all such counterparts shall together
     constitute one and the same agreement. 
 11. This Agreement shall inure to the benefit of and be binding upon the
     parties hereto and their respective successors and assigns.

 

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

TD Waterhouse RRSP Account 240832S, in trust for Peter Alan Lacey as beneficiary

By: __________________________ 

Name:_________________________

Title:_________________________

Peter A. Lacey

By: __________________________ 

Name:_________________________

Title:_________________________

Michael Moretti

By: /s/ Michael Moretti

Name: Michael Moretti

Title: Authorized Signatory

LENDER 4

By: __________________________ 

Name:_________________________

Title:_________________________

LENDER 5

By: __________________________ 

Name:_________________________

Title:_________________________

LENDER 6

By: __________________________ 

Name:_________________________

Title:_________________________

 

 

Schedule 1. Lenders and Loan Obligations

Lender

Loan Obligation

Contact Information

                                   

Aggregate Loan Obligations