EXHIBIT 10.1
 
DAIS ANALYTIC CORPORATION and GREEN VALLEY INTERNATIONAL
SECURITIES PURCHASE AGREEMENT
 
This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of October
17,2012, is made and entered into by and between Dais Analytic Corporation, a
New York corporation with its principal executive offices located at 11552
Prosperous Drive, Odessa, Florida 33556 (the “Company”), and Green Valley
International Investment Management Company Limited, a company organized in Hong
Kong with a US address of 951 Old Country Road, Belmont, CA 94002 (the
“Purchaser”).
 
WHEREAS, the Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the rules and regulations as promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the
“Securities Act”);
 
WHEREAS, the Purchaser desires to purchase and the Company desires to issue and
sell to the Purchaser, upon the terms and subject to the conditions set forth in
this Agreement up to: (i) an aggregate of 70,000,000 shares (the “Shares”) of
common stock, $0.01 par value per share (all references to “$” and “dollars,”
are to the legal currency of the United States), of the Company (together with
any securities into which such shares may be reclassified, whether by merger,
charter amendment or otherwise, the “CommonStock”), at a purchase price of $0.10
per share (the “Per Share Purchase Price”), and (ii) warrants, in the form
attached hereto as Exhibit A (the “Warrants”), to purchase an aggregate of up to
17,500,000 shares of Common Stock (subject to adjustment) with an exercise
period of five years from the date of issue at an exercise price of $0.30 per
share (subject to adjustment) (the “Warrant Shares”) (the Common Stock, the
Warrants and the Warrant Shares, collectively, the “Securities”); and
 
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the Company and the
Purchaser hereby agree as follows:
 
1. Purchase and Sale of Common Stock and Warrants.
 
(a) Initial Closing. Within one Business Day of the satisfaction of the
conditions in Section 6 and Section 7 (other than Section 7(l)) set forth in
this Agreement but no later than October 26, 2012  (the “Initial Closing Date”),
the Company shall issue and sell to the Purchaser and the Purchaser agrees to
purchase from the Company 20,000,000 Shares and Warrants to purchase up to
5,000,000 Warrant Shares for an aggregate purchase price of $2,000,000.
 
(b) Second Closing. Subject to the satisfaction of the conditions in Section 6
and Section 7 set forth in this Agreement, on or before November 20, 2012 (the
“Second Closing Date”), the Company shall issue and sell to the Purchaser and
the Purchaser shall purchase from the Company 20,000,000 Shares and Warrants to
purchase 5,000,000 Warrant Shares for an aggregate purchase price of $2,000,000.
 
(c) Third Closing. Subject to the satisfaction of the conditions in Section 6
and Section 7 set forth in this Agreement, on or before December 28, 2012 (the
“Third Closing Date” and together with the Initial Closing Date and Second
Closing Date, a “Closing”), the Company shall issue and sell to the Purchaser
and the Purchaser agrees to purchase from the Company 30,000,000 Shares and
Warrants to purchase up to 7,500,000 Warrant Shares for an aggregate purchase
price of $3,000,000.
 
 
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2. Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to the Company solely as to such Purchaser that:
 
(a) Investment Purpose. The Securities to be acquired by such Purchaser are
being acquired for investment for such Purchaser’s own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof
in violation of the Securities Act, and such Purchaser has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the Securities Act. Such Purchaser does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities in violation of the Securities Act. Such
Purchaser has not been formed for the specific purpose of acquiring the
Securities.
 
(b) Reliance on Exemptions. Such Purchaser understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.
 
(c) Information. Such Purchaser and its advisors, if any, have been furnished
with all materials relating to the business, financial condition, results of
operations, management and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by such Purchaser
or its advisors, and considered all factors such Purchaser deems material in
deciding on the advisability of investing the Securities. Such Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Notwithstanding the foregoing representations, neither such inquiries
nor any other due diligence investigation conducted by Purchaser or any of its
advisors or representatives shall modify, amend or affect Purchaser’s right to
rely on the Company’s representations and warranties contained in Section 3
below.
 
(d) No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
 
(e) Restricted Securities. Such Purchaser understands that the Securities have
not been registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Purchaser’s representations as expressed herein. Such Purchaser understands
that the Securities are characterized as “restricted securities” under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, Purchaser must hold the Securities indefinitely unless subsequently
registered with the Securities and Exchange Commission and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available.
 
(f) Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following legend:
 
“The securities represented hereby have not been registered with the Securities
and Exchange Commission or the securities commission of any state in reliance
upon an exemption from registration under the Securities Act of 1933, as
amended, and, accordingly, may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933, as amended.”
 
 
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(g) Authorization; Enforcement. Each Transaction Document to which such
Purchaser is a party: (i) has been duly and validly authorized by such
Purchaser, (ii) has been duly executed and delivered by or on behalf of such
Purchaser, and (iii) will constitute, upon execution and delivery by such
Purchaser thereof and the Company, the valid and binding agreements of such
Purchaser enforceable in accordance with their terms, except to the extent
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights and
general principles of equity that restrict the availability of equitable or
legal remedies.
 
(h) Organization and Qualification. The Purchaser is an entity duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. The Purchaser is not in violation
or default of any of the provisions of its certificate or articles of
incorporation, bylaws or other organizational or charter documents.
 
(i) Filings, Consents and Approvals. The Purchaser is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other foreign, federal, state, local
or other governmental authority or other Person in connection with the execution
of, delivery and performance by the Company of the Transaction Documents
(collectively, the “Purchaser Required Approvals”).
 
(j) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Purchaser and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Purchaser’s certificate or articles of
incorporation, bylaws or other organizational or charter documents or (iii)
subject to the Purchaser Required Approvals, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Purchaser
is subject (including foreign, federal and state securities laws and
regulations), or by which any property or asset of the Purchaser is bound;
except in the case of each of clauses (ii) and (iii), such as could not have and
would not reasonably be expected to result in a Material Adverse Effect.
 
3. Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, provided to the Purchaser before the execution of this
Agreement, the Company is hereby making the following representations and
warranties to the Purchaser as of the date hereof and as of the Closing Date
(unless as of a specific date therein, in which case they are made as of such
date) the Purchaser represents and warrants to the Company solely as to such
Purchaser that:
 
(a) Organization and Qualification. The Company is an entity duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has no subsidiaries other than the Asia
Water Subsidiary (defined in Section 4(c)). The Company is not in violation or
default of any of the provisions of its certificate or articles of
incorporation, bylaws or other organizational or charter documents. The Company
is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not have or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of this Agreement or the
Warrants (the “Transaction Documents”), (ii) a material adverse effect on the
results of operations, assets, business, or condition (financial or otherwise)
of the Company, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no proceeding of which the Company has received written notice or otherwise
has Knowledge has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
 
 
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(b) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Company Required Approvals (as
defined below). Each Transaction Document to which the Company is a party has
been (or upon the execution and delivery thereof by the Company will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except (i)
as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
 
(c) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution of,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings with the U.S. Securities and Exchange Commission (the “SEC”) of the
Form 8-K, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities, and (iii) the filing of Form
D with the SEC and such filings as are required to be made under applicable
state securities laws (collectively, the “CompanyRequired Approvals”). Subject
to the accuracy of the representations and warranties of the Purchaser set forth
in Section 2 hereof, the Company has taken all action necessary to exempt (i)
the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares
upon due exercise of the Warrants, and (iii) the other transactions contemplated
by the Transaction Documents from the provisions of any stockholder rights plan
or other “poison pill” arrangement any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company’s Certificate of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to the Purchaser as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Purchaser or the exercise of any right granted to the Purchaser pursuant to this
Agreement or the other Transaction Documents.
 
(d) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company with the SEC under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
 
 
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(e) Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of preferred stock, $0.01 par value and
200,000,000 shares of Common Stock, of which 37,517,604 shares are issued and
outstanding.  There are 11,093,886 shares are reserved for issuance pursuant to
the Company’s 2000 Incentive Compensation Plan (under which, stock options to
purchase 10,962,332 shares of Common Stock are granted and outstanding) and
15,000,000 shares are reserved for issuance pursuant to the Company’s 2009
Long-Term Incentive Plan (under which, stock options to purchase 5,575,000
shares of Common Stock are granted and outstanding). The Company’s two incentive
option plans are collectively known as the “Employee Benefit Plans.”  The
Company has 26,143,141 outstanding warrants to purchase the Company’s common
stock which were issued in connection with financing arrangements and consulting
agreements.  All of such outstanding shares of capital stock are duly
authorized, validly issued, fully paid and nonassessable and free of pre-emptive
rights and were issued in compliance in all material respects with applicable
state and federal securities law and any rights of third parties. The Shares and
the Warrant Shares have been duly reserved for future issuance. No shares of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the stockholders or any mortgage, lien, title claim,
assignment, encumbrance, security interest, adverse claim, contract of sale,
restriction on use or transfer or other defect of title of any kind, other than
those arising under applicable securities laws (each, a “Lien”). Except for the
Transaction Documents and options and warrants described above, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company, (ii) there are no agreements or
arrangements under which the Company is obligated to register the sale of any of
its or their securities under the Securities Act and (iii) there are no
anti-dilution or price adjustment provisions contained in any security, other
than for the warrants listed on Schedule 3(e),  issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Securities, and the Company is not currently contemplating any
issuances of its debt or equity securities which would trigger the anti-dilution
or price adjustment provisions contained in the Warrants. Except as disclosed in
the SEC Reports, there are no voting agreements, buy-sell agreements, option or
right of first purchase agreements or other agreements of any kind among the
Company and any of the securityholders of the Company relating to the securities
of the Company held by them.
 
(f) Issuance of Shares. The Shares have been duly authorized and, when issued
and paid for in accordance with the applicable Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. The Warrant Shares, when issued in accordance with the terms of the
Transaction Documents, will be validly issued, fully paid and nonassessable,
free and clear of all Liens. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Warrant
Shares. Except as set forth on Schedule 3(f) attached hereto, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s stockholders
 
(g) Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Warrant Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against the
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company.
 
 
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(h) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound, or (iii) provided that the Company Required Approvals are obtained,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound; except in the case of each of clauses (ii) and (iii), such as
could not have and would not reasonably be expected to result in a Material
Adverse Effect.
 
(i) Absence of Certain Changes. Since the date of the latest audited financial
statements included in the SEC Reports, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice, which do not exceed in the aggregate $100,000 to any one party and (B)
liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or disclosed in filings made with the SEC, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock, (v) there has not been any satisfaction or discharge of
any lien, claim, or encumbrance or payment of any obligation by the Company,
except in the ordinary course of business and the satisfaction or discharge of
which would not have a Material Adverse Effect; (viii) there has not been any
sale, assignment or transfer of any patents, trademarks, copyrights, trade
secrets or other intangible assets; (ix) there has not been any resignation or
termination of employment of any officer or key employee of the Company; and the
Company, is not aware of any impending resignation or termination of employment
of any such officer or key employee; (x) there has not been any mortgage,
pledge, transfer of a security interest in, or lien, created by the Company,
with respect to any of its material properties or assets, except liens for taxes
not yet due or payable and liens that arise in the ordinary course of business
and do not materially impair the Company’s ownership or use of such property or
assets; (xi) there have not been any loans or guarantees made by the Company to
or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business; and (xii) except as contemplated hereby,
the Company has not issued any equity securities to any officer, director or
Affiliate (as defined in Rule 405), except pursuant to the Employee Benefit
Plans. The Company does not have pending before the SEC any request for
confidential treatment of information. Except for the issuance of the Securities
contemplated by this Agreement, no event, liability or development has occurred
or exists with respect to the Company or its business, properties, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed prior to the date hereof.
 
 
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(j) Absence of Litigation. Subject to Schedule 3(j), there is no action, suit,
inquiry, notice of violation, proceeding or investigation pending or, to the
Knowledge of the Company, threatened against or affecting the Company, or any of
its properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which is not disclosed in the SEC Reports.
Neither the Company, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the Knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company or any current
or former director or officer of the Company. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company under the Exchange Act or the Securities Act.
 
(k) Intellectual Property. Subject to Schedule 3(j), The Company owns or
possesses sufficient legal rights to (a) all trademarks, service marks,
trade-names, copyrights, trade secrets, licenses, information and proprietary
rights and processes and (ii) to its knowledge, all patents, in each instance as
used by it in connection with the Company’s business, which represent all
intellectual property rights necessary to the conduct of the Company’s business
as has been and is now conducted, without any conflict with, or infringement of,
the rights of others (“Company Intellectual Property”).There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity.  The Company is not in violation of any
license, sublicense or other agreement to which the Company is a party or
otherwise bound relating to any of the Company Intellectual Property and, to the
Knowledge of the Company, no counterparty to any such license or sublicense is
in default thereunder or, with notice or passage of time, would be in default
thereunder.  The Company has not received any communications alleging that the
Company has violated or, by conducting its business, would violate any of the
patents, trademarks, service marks, trade-names, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity.  The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee’s best efforts to
promote the interest of the Company or that would conflict with the Company’s
business.  Neither the execution or delivery of this Agreement, nor the carrying
on of the Company’s business by the employees of the Company, nor the conduct of
the Company’s business as proposed, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
such employee is now obligated.  The Company does not believe it is or will be
necessary to use any inventions of any of its employees (or persons it currently
intends to hire) made prior to their employment by the Company.  Schedule 3(j)
lists: (i) all of the Company’s patents and patent applications; (ii) all of the
Company’s trademarks and applications for registration of trademarks; (iii) all
of the Company’s service marks and applications for registrations of service
marks; (iv) all of the Company’s registered copyrights and copyright
applications; and (v) all licenses granted by the Company to any third party
pursuant to which the Company has granted any rights in its intellectual
property.  The Company has all rights in the Company Intellectual Property
necessary to carry out the Company’s former and current activities, including
without limitation (except as disclosed in Section 3.10(c) of the Schedule of
Exceptions) rights to make, use, reproduce, modify, adapt, create derivative
works based on, translate, distribute (directly and indirectly), transmit,
display and perform publicly, license, rent, lease, assign and sell the
Company’s products in all geographic locations and fields of use in which the
Company is currently operating, and to sublicense any or all such rights to
third parties, including the right to grant further sublicenses.
 
 
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(l) Tax Matters. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and, to the Company’s Knowledge no tax deficiency has been asserted or
threatened against the Company. The Company has not received notice that any
taxing authority is presently auditing any of the Company’s tax returns.
 
(m) Certain Transactions. None of the officers or directors of the Company and,
to the Knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the Knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner, in
each case in excess of $120,000 other than for (i) payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock
option agreements under any Employee Benefit Plan of the Company.
 
(n) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the
Purchaser or their agents or counsel with any information that it believes
constitutes or might constitute material, nonpublic information. All disclosure
furnished by or on behalf of the Company to the Purchaser regarding the Company,
its business and the transactions contemplated hereby, including the schedules
to this Agreement, is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the Company during the
twelve months preceding the date of this Agreement taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made,
not misleading.
 
(o) No General Solicitation. Neither the Company nor any person acting on behalf
of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for
sale only to the Purchaser and certain other “accredited investors” within the
meaning of Rule 501 under the Securities Act.
 
 
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(p) No Integrated Offering. Neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of (i) the
Securities Act which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval provisions of
any trading market on which any of the securities of the Company are listed or
quoted.
 
(q) No Brokers. The Company has taken no action that would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
 
(r) Permits; Compliance. The Company possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct its business, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and the Company has not received
any notice of proceedings relating to the revocation or modification of any
Material Permit.
 
(s) ERISA. There are no employee benefit plans maintained, established or
sponsored by the Company, or in or to which the Company participates or
contributes, which is subject to the Employee Retirement Income Security Act of
1974, as amended (“ERISA”).
 
(t) Title to Property. Subject to Schedule 3(t), the Company has good and
marketable title in fee simple to all real property owned by them and good title
in all personal property owned by them that is material to the business of the
Company, free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
currently made of such property by the Company and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under lease by the
Company are held under valid, subsisting and enforceable leases with which the
Company is in material compliance.
 
(u) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the business in which the
Company is engaged. To the Knowledge of the Company, there is no circumstance
currently existing that would result in the Company not being able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. The Company
has made available to Purchaser, to the extent requested, true and correct
copies of all policies relating to directors’ and officers’ liability coverage,
errors and omissions coverage, and commercial general liability coverage.
 
 
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(v) Internal Controls. The Company is in material compliance with the provisions
of the Sarbanes-Oxley Act of 2002 currently applicable to the Company. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company is made known to the certifying officers by
others within those entities, particularly during the period in which the
Company’s most recently filed periodic report under the Exchange Act, as the
case may be, is being prepared. The Company's certifying officers have evaluated
the effectiveness of the Company's controls and procedures as of the end of the
period covered by the most recently filed periodic report under the Exchange Act
(such date, the “Evaluation Date”). The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls (as such
term is defined in Item 308 of Regulation S-K) or, to the Company's Knowledge,
in other factors that could significantly affect the Company's internal
controls. The Company maintains and will continue to maintain a standard system
of accounting established and administered in accordance with GAAP and the
applicable requirements of the Exchange Act.
 
(w) Questionable Payments. Neither the Company nor, to the Company’s Knowledge,
any of its respective current or former directors, officers, employees, agents
or other Persons acting on behalf of the Company, has on behalf of the Company
or in connection with its business: (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets;
(d) made any false or fictitious entries on the books and records of the
Company; (e) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment of any nature; or (f) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, or any rules and
regulations thereunder.
 
(x) Investments in Other Persons. The Company has not made any loan or advance
to any person which is outstanding, nor is it committed or obligated to make any
such loan or advance, nor does the Company own any capital stock, assets
comprising the business of, obligations of, or any equity, ownership or other
interest in, any person (other than investments constituting cash and cash
equivalents).
 
(y) No Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
(z) Material Contracts. Except as disclosed on Schedule 3(z) (each contract,
agreement, commitment or understanding disclosed on Schedule 3(z) being
hereinafter referred to as a “Material Agreement”), or as contemplated by this
Agreement or another Transaction Document, there are no agreements,
understandings, commitments, instruments, contracts, employment agreements,
proposed transactions or judgments to which the Company is a party or by which
it is bound which may involve obligations (contingent or otherwise), or a
related series of obligations (contingent or otherwise), of, or payments, or a
related series of payments, by the Company in excess of $250,000 in any one
year. All Material Agreements are in full force and effect and constitute legal,
valid and binding obligations of the Company and, to the Company’s Knowledge,
the other parties thereto and are enforceable in accordance with their
respective terms. To the Company’s Knowledge, other than the default under the
unsecured note to Platinum-Montaur Life Sciences, LLC, neither the Company nor
any person is in default under the terms of any Material Agreement, and no
circumstance exists that would, with the giving of notice or the passage of
time, constitute a default under any Material Agreement. The Purchaser has been
furnished with complete and correct copies of all Material Agreements requested
by them or their counsel to the extent requested.
 
 
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(aa) Employees. No material labor dispute exists or, to the Knowledge of the
Company, is threatened or imminent with respect to any of the employees of the
Company which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s employees is a member of a union that relates to
such employee’s relationship with the Company, and the Company is not a party to
a collective bargaining agreement, and the Company believes that its
relationships with its employees are good. No executive officer is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company to any liability with respect to
any of the foregoing matters. The Company is in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
(bb) Compliance. Except as described in Schedule 3(aa), the Company (i) is not
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company), nor has the Company received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other Material Agreement, other than the default under the
unsecured note to Platinum-Montaur Life Sciences, LLC,to which it is a party or
by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is not in violation of any order of any court,
arbitrator or governmental body, or (iii) is not and has not been in violation
of any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws applicable to its
business and all such laws that affect the environment, except in each case as
could not have or would not reasonably be expected to result in a Material
Adverse Effect.
 
(cc) Environmental Matters. The Company is not in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company’s Knowledge, threatened investigation
that might lead to such a claim.
 
(dd) OTCBB Compliance. The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act and is quoted on The OTC Bulletin Board quotation service
(the “OTCBB”), and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or removal from quotation of the Common Stock from the OTCBB, nor
has the Company received any notification that the SEC, the OTCBB, FINRA or
other relevant regulatory body is contemplating terminating such registration or
quotation, or that the Company is not in compliance with any applicable listing
or maintenance requirements.
 
 
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(ee) Application of Takeover Protections. The Company and the Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities.
 
(ff) Solvency. Based on the consolidated financial condition of the Company,
after giving effect to the receipt by the Company of the proceeds from the sale
at the Initial Closing of the Securities hereunder, the fair saleable value of
the Company’s assets exceeds the amount that will be required to be paid on or
in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature.  The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Closing.  Schedule 3(ee) sets forth as of
the date hereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $250,000 (other than
trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $250,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.
 
(gg) Accountants. The Company’s accounting firm is set forth in the SEC
Reports.  To the knowledge and belief of the Company, such accounting firm: (i)
is a registered public accounting firm as required by the Exchange Act and (ii)
shall express its opinion with respect to the financial statements to be
included in the Company’s Annual Report for the year ending December 31, 2012.
 
(hh) No Disagreements with Accountants and Lawyers. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers which could affect the Company’s ability to
perform any of its obligations under any of the Transaction Documents.
 
(ii) Stock Option Plans. Each stock option granted by the Company under the
Company’s stock option plan was granted (i) in accordance with the terms of the
Company’s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated.  The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.
 
 
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4. Covenants. In addition to the other agreements and covenants set forth
herein, unless otherwise consented to in writing by the Company and the
Purchaser, the applicable parties hereto hereby covenant as follows:
 
(a) Affirmative Obligations. The Company will furnish to the Purchaser and/or
their assignees such information relating to the Company and its Subsidiaries as
from time to time may reasonably be requested by the Purchaser and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Purchaser, or to advisors to or representatives of
the Purchaser, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Purchaser, such advisors and representatives with the opportunity to accept
or refuse to accept such material nonpublic information for review and the
Purchaser wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto. The Company
shall use commercially reasonable best efforts to maintain the quotation of its
Common Stock on the OTC Bulletin Board or listing of the Common Stock on a
securities exchange maintained by The NASDAQ Stock Market LLC (“Trading
Markets”) and maintain such quotation or listing.  .
 
(b) Reporting Status. The Company shall use commercially reasonable efforts file
timely to file all reports required to be filed with the SEC pursuant to the
Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.
 
(c) Use of Proceeds. The Company shall use $4.0 million of the proceeds from the
sale of the Shares to repay the unsecured note and accrued interest to
Platinum-Montaur Life Sciences, LLC and for capital expenditures, working
capital, and general business purposes. The Company shall use $3.0 million of
the proceeds from the sale of the Shares to create and capitalize a wholly owned
subsidiary to be organized and located in China (the “Asia Water
Subsidiary”).  The Company shall use $250,000 from the Initial Closing, $500,000
from the Second Closing and $2.25 million from the Third Closing to capitalize
the Asia Water Subsidiary.
 
(d) Expenses. The parties hereto shall pay their own costs and expenses in
connection herewith, and that each of the Company and the Purchaser has relied
for such matters on the advice of its own respective counsel.
 
(e) Authorization and Reservation of Shares. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full exercise of options and warrants
issued by the Company and issuance of the Warrant Shares (the “Reserved
Amount”). If at any time the Company’s unissued shares of authorized Common
Stock is below the Reserved Amount, the Company will promptly take all corporate
action necessary to authorize and reserve a sufficient number of shares,
including, without limitation, calling a special meeting of stockholders to
authorize additional shares to meet the Company’s obligations under this Section
4(e) as soon as practicable after such occurrence, but in no event later than 30
calendar days after such occurrence (and hold such meeting as soon as
practicable thereafter, but in no event later than 60 calendar days after
calling the meeting as required above), for the sole purpose of increasing the
number of authorized shares of Common Stock. The Company’s management shall
recommend to the Company’s stockholders to vote in favor of increasing the
number of authorized shares of Common Stock.  The Company shall use its best
efforts to cause such additional shares of Common Stock to be authorized so as
to comply with the requirements of this Section.Notwithstanding the above, the
Company, at the first annual meeting held by the Company after the execution of
this Agreement, shall include in its proxy statement and recommend to the
Company’s stockholders to vote in favor of increasing the number of authorized
shares of Common Stock to 250,000,000 shares.
 
 
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(f) Corporate Existence. The Company shall maintain its corporate existence,
except in connection with a consolidation or merger of the Company with or into
another corporation or any transfer of all or substantially all of the assets of
the Company.
 
(g) Intellectual Property. Subject to the Company’s reasonable business
judgment, the Company shall use commercially reasonable efforts to maintain in
full force and effect its existence, rights and franchises and all licenses and
other rights to use Intellectual Property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.
 
(h) Taxes. The Company shall duly pay and discharge all material taxes or other
material claims, which might become a lien upon any of its material property
except to the extent that any thereof are being disputed in good faith
appropriately contested with adequate reserves provided therefor.
 
(i)  Nomination of Directors. After each of the Initial Closing Date and the
Third Closing Date, the Purchaser shall have the right to propose a candidate
for the Company’s Board of Directors.  After such nomination, the Company’s
Board of Directors or an appropriate committee of the Board of Directors, acting
in good faith within ten Business Days after the later of receiving the written
nomination by the Purchaser the nominee’s completed director and officer
questionnaire, and the results of a standard background check, shall appoint the
Purchaser’s nominee to the Board of Directors; provided that, the Company shall
not be obligated to appoint any nominee of Purchaser if (i) the nomination of
such nominee would violate rules, regulations or other standards of the SEC or
the Company’s Trading Market, or (ii) the nominee is not approved by the
Company’s director and officer insurance carrier. Following such appointment,
the Company’s Board of Directors or an appropriate committee of the Board of
Directors shall include the Purchaser’s nominees on the slate of directors
recommended to the Board for nomination for election by the Company’s
stockholders at the each annual meeting of the Company’s stockholders; provided
that the Purchaser continues to own at least 50% of the Shares it purchased
pursuant to this Agreement.
 
5. REMOVED.
 
6. Conditions to the Company’s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Common Stock Shares and Warrants to the
Purchaser at each Closing is subject to the satisfaction, at or before the
Closing Date of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time
in its sole discretion:
 
(a) The Purchaser shall have executed this Agreement and delivered the same to
the Company.
 
 
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(b) The Purchaser shall have sent by wire transfer the purchase price in
accordance with the applicable Section 1(a), Section 1(b) or Section 1(c) above
to
 
[TO BE PROVIDED BY THE COMPANY TO THE PURCHASER PRIOR TO EACH CLOSING]

(c) The representations and warranties of the Purchaser shall be true and
correct in all material respects, and the Purchaser shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement and the other Transaction Documents to
be performed, satisfied or complied with by the Purchaser at or prior to each
Closing.
 
(d) No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement and the other Transaction Documents.
 
(e) The Purchaser’s counsel shall have delivered the opinion in the form
attached as Exhibit B hereto.
 
(f) The Purchaser and its shareholders shall enter into a Lock-Up Agreement, in
the form attached as Exhibit C hereto, whereby each agrees to not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company.
 
7. Conditions to The Purchaser’s Obligation to Purchase. The obligation of the
Purchaser hereunder to purchase the Common Stock Shares and Warrants at each
Closing is subject to the satisfaction, at or before each Closing of each of the
following conditions, provided that these conditions are for such Purchaser’s
sole benefit and may be waived by such Purchaser at any time in its sole
discretion:
 
 
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(a) The Company shall have executed and delivered to such Purchaser this
Agreement and each other Transaction Document to which the Company is a party.
 
(b) The Company’s transfer agent shall confirm that it has received instructions
from the Company to issue a stock certificate to the Purchaser for the
applicable number of shares specified in Section 1(a), Section 1(b) or Section
1(c), as applicable.
 
(c) The representations and warranties made by the Company in Section 4 hereof
qualified as to materiality shall be true and correct at all times prior to and
on each Closing, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 3 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on each Closing, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to each Closing.
 
(d) The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.
 
(e) No event shall have occurred which would reasonably be expected to have a
Material Adverse Effect on the Company.
 
(f) No judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.
 
(g)  The Company’s counsel shall have delivered the Opinion in the form attached
as Exhibit D hereto.
 
(h)  The executive officers of the Company, shall enter into a Lock-Up
Agreement, in the form attached as Exhibit E hereto, whereby each agrees to not
sell, transfer, make any short sale of, grant any option for the purchase of, or
enter into any hedging or similar transaction with the same economic effect as a
sale, any Common Stock (or other securities) of the Company.
 
 
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(i)  The Company shall have delivered a Certificate, executed on behalf of the
Company by its Chief Executive Officer or its Chief Financial Officer, dated as
of each Closing, certifying to the fulfillment of the conditions specified in
subsections (c), (d), (e), (f) and (k) of this Section 7.
 
(j) The Company shall have delivered a Certificate, executed on behalf of the
Company by its Secretary, certifying the resolution(s) adopted by the Board of
Directors of the Company approving this entire transaction contemplated by this
Agreement. Further it will insure each closing’s other Transaction Documents and
the issuance of the Securities, certifying the current versions of the
Certificate of Incorporation and Bylaws of the Company and certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company is in compliance or delivered to
Purchaser as may be called out in this Agreement.
 
(k) No stop order or suspension of trading shall have been imposed by the SEC or
any other governmental or regulatory body with respect to public trading in the
Common Stock.
 
(l) The Company shall make reasonable efforts to create a wholly owned China
company for the operation of its Asia Water Subsidiary.
 
8. Termination of Obligations to Effect Closing; Effects.
 
(a) The obligations of the Company, on the one hand, and the Purchaser, on the
other hand, to affect each Closing shall terminate as follows:
 
(i) Upon the mutual written consent of the Company and the Purchaser;
 
(ii) By the Company if any of the conditions set forth in Section 6 shall have
become incapable of fulfillment, and shall not have been waived by the Company
or if the Initial Closing Date does not occur by October, 26, 2012, or if the
Second Closing Date does not occur by November 20, 2012 or if the Third Closing
Date does not occur by December 28, 2012;
 
 
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(iii) By the Purchaser (with respect to itself only) if any of the conditions
set forth in Section 7 shall have become incapable of fulfillment, and shall not
have been waived by the Purchaser.
 
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect each Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect each Closing.
 
(b) Nothing in this Section 8 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents.
 
9. Governing Law; Jurisdiction; Waiver of Jury Trial.
 
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
 
 
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10. Miscellaneous.
 
(a) Counterparts; Signatures by Facsimile. This Agreement may be executed in one
or more counterparts. Each of such counterparts shall be deemed an original, and
all of which shall, when taken together, constitute one and the same agreement,
and shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party
(including in the manner described above), may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
 
(b) Headings. The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of, this
Agreement.
 
(c) Severability. In the event that any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
 
(d) Entire Agreement; Amendments. This Agreement, the other Transaction
Documents and the instruments, documents, exhibits and schedules referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as expressly set forth herein or
therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking to the other. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the
Company and the Purchaser.
 
(e) Notices. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile transmission and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile transmission, with
printed confirmation of receipt, in each case addressed to a party. The
addresses for such communications shall be:
 
If to the Company:
 
Dais Analytic Corporation
11552 Prosperous Drive
Odessa, FL 33556
Attention: Chief Executive Officer
Telephone: (727) 375-8484
Facsimile (727) 375-8485

 
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If to the Purchaser:
 
With a copy to:
 
Green Valley International Investment Management Company Limited
951 Old Country Road
Suite 150
Attention: GVI Office Manager
Belmont, CA 94002
Telephone: (650)-533-0042
 
Each party shall provide notice to the other party of any change in address,
telephone or facsimile number (including, if the Purchaser is holding any
Securities purchased hereunder in street name, the address, telephone and
facsimile of the beneficial owner of such Securities), and the Purchaser and its
assignees under Section 10(f) acknowledge and agree that such parties must
provide such notice and contact information promptly (but in any event within 30
days of any change in such information or assignment of any rights hereunder).
 
(f) Successors and Assigns. A party may not assign this Agreement hereto without
the prior written consent of the Company or the Purchaser, as applicable. The
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Without limiting
the generality of the foregoing, in the event that the Company is a party to a
merger, consolidation, share exchange or similar business combination
transaction in which the Common Stock is converted into the equity securities of
another Person, from and after the effective time of such transaction, such
Person shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term “Company” shall be deemed to
refer to such Person and the term “Shares” shall be deemed to refer to the
securities received by the Purchaser in connection with such transaction.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
 
 
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(g) Survival; Indemnification.
 
(i) The representations and warranties of the Company set forth in Section 3
hereof shall survive each Closing, notwithstanding any due diligence
investigation conducted by or on behalf of the Purchaser. The representations
and warranties of the Purchaser set forth in Section 2 shall survive each
Closing notwithstanding any due diligence investigation conducted by or on
behalf of the Company.
 
(ii) The Company agrees to indemnify and hold harmless the Purchaser and its
Affiliates and their respective directors, officers, trustees, members,
managers, employees and agents, and their respective successors and assigns,
from and against any and all losses, claims, damages, liabilities and expenses
(including without limitation reasonable attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending
any action, claim or proceeding, pending or threatened and the costs of
enforcement thereof) (collectively, “Losses”) to which such Person may become
subject as a result of any breach of representation, warranty, covenant or
agreement made by or to be performed on the part of the Company under the
Transaction Documents, and will reimburse any such Person for all such amounts
as they are incurred by such Person.
 
(iii) Any Person entitled to indemnification hereunder shall (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided that any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person or (c)
in the reasonable judgment of any such Person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying
party with respect to such claims (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such Person); and
provided, further, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.
 
(h) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
 
(i) No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
 
(k) Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have
the meanings set forth below:
 
 
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 “Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person.
 
 “Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
 
 “Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
 
 “Company’s Knowledge,” “Knowledge of the Company” and words of similar import
means the actual knowledge of the executive officers or significant employees
(as defined under the Securities Act) of the Company, after due inquiry.
 
 “Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.
 
[Remainder of page intentionally left blank; signature pages follow.]
 
 
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first above written.
 
 
DAIS ANALYTIC CORPORATION
   
By:
 
/s/ Timothy N. Tangredi
 
Name: Timothy N. Tangredi
 
Title: Chief Executive Officer and President

 
GREEN VALLEY INTERNATIONAL INVESTMENT MANAGEMENT COMPANY LIMITED
   
By:
 
/s/ Mr. Zhou
 
Name: Mr. Zhou
 
Title:

 
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Exhibit A
 
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
 
DAIS ANALYTIC CORPORATION
 
FORM OF STOCK PURCHASE WARRANT
 
[                  ] shares of Common Stock
 
Date of Issuance: _____________
 
FOR VALUE RECEIVED, the Company hereby grants to ____________________________
and its permitted successors and assigns (collectively, the “Holder”) the right
to purchase from the Company up to ____________
______________________(__________) shares of Common Stock  (such shares
underlying this Warrant, the “Warrant Shares”), at a per share purchase price
equal to  $.30 (Thirty cents) (the “Exercise Price, subject to the terms,
conditions and adjustments set forth below in this Warrant.
 
1. Date of Warrant Exercise. This Warrant shall become exercisable on the date
of issuance (the “Exercise Date”).
 
2. Expiration of Warrant. This Warrant shall expire on the five (5) year
anniversary of the Base Date (the “Expiration Date”).
 
3. Exercise of Warrant. This Warrant shall be exercisable pursuant to the terms
of this Section 3.
 
3.1 Manner of Exercise.
 
(a) This Warrant may only be exercised by the Holder hereof on or after the
Exercise Date and on or prior to the Expiration Date, in accordance with the
terms and conditions hereof, in whole or in part (but not as to fractional
shares) with respect to any portion of this Warrant, during the Company’s normal
business hours on any day other than a Saturday or a Sunday or a day on which
commercial banking institutions in New York, New York are authorized by law to
be closed (a “Business Day”), by surrender of this Warrant to the Company at its
office maintained pursuant to Section 9.2(a) hereof, accompanied by a written
exercise notice in the form attached as Exhibit A to this Warrant (or a
reasonable facsimile thereof) duly executed by the Holder, together with the
payment of the aggregate Exercise Price for the number of Warrant Shares
purchased upon exercise of this Warrant. Upon surrender of this Warrant, the
Company shall cancel this Warrant document and shall, in the event of partial
exercise, replace it with a new Warrant document in accordance with Section 3.3.
 
 
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(b) Each exercise of this Warrant must be accompanied by payment in full of the
aggregate Exercise Price in cash by check or wire transfer in immediately
available funds for the number of Warrant Shares being purchased by the Holder
upon such exercise.
 
3.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been duly surrendered to the Company as
provided in Sections 3.1 hereof, and, at such time, the Holder in whose name any
certificate or certificates for Warrant Shares shall be issuable upon exercise
as provided in Section 3.3 hereof shall be deemed to have become the holder or
holders of record thereof of the number of Warrant Shares purchased upon
exercise of this Warrant.
 
3.3 Delivery of Common Stock Certificates and New Warrant. As soon as reasonably
practicable after each proper exercise of this Warrant, in whole or in part, and
in any event within five (5) Business Days thereafter, the Company, at its
expense (including the payment by it of any applicable issue taxes), will cause
to be issued in the name of and delivered to the Holder hereof or, subject to
Sections 8 and 9 hereof, as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct:
 
(a) a certificate or certificates (with appropriate restrictive legends, as
applicable) for the number of duly authorized, validly issued, fully paid and
non-assessable Warrant Shares to which the Holder shall be entitled upon
exercise; and
 
(b) in case exercise is in part only, a new Warrant document of like tenor,
dated the date hereof, for the remaining number of Warrant Shares issuable upon
exercise of this Warrant after giving effect to the partial exercise of this
Warrant (including the delivery of any Warrant Shares as payment of the Exercise
Price for such partial exercise of this Warrant).
 
4. Certain Adjustments. For so long as this Warrant is outstanding:
 
4.1 Mergers or Consolidations. If at any time after the date hereof there shall
be a capital reorganization (other than a combination or subdivision of Common
Stock otherwise provided for herein) resulting in a reclassification to or
change in the terms of securities issuable upon exercise of this Warrant (a
“Reorganization”), or a merger or consolidation of the Company with another
corporation, association, partnership, organization, business, individual,
government or political subdivision thereof or a governmental agency (a “Person”
or the “Persons”) (other than a merger with another Person in which the Company
is a continuing corporation and which does not result in any reclassification or
change in the terms of securities issuable upon exercise of this Warrant or a
merger effected exclusively for the purpose of changing the domicile of the
Company) (a “Merger”), then, as a part of such Reorganization or Merger, lawful
provision and adjustment shall be made so that the Holder shall thereafter be
entitled to receive, upon exercise of this Warrant, the number of shares of
stock or any other equity or debt securities or property receivable upon such
Reorganization or Merger by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such Reorganization or Merger. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the Reorganization or Merger to the end
that the provisions of this Warrant (including adjustment of the Exercise Price
then in effect and the number of Warrant Shares) shall be applicable after that
event, as near as reasonably may be, in relation to any shares of stock,
securities, property or other assets thereafter deliverable upon exercise of
this Warrant. The provisions of this Section 4.1 shall similarly apply to
successive Reorganizations and/or Mergers.
 
 
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4.2 Splits and Subdivisions; Dividends. In the event the Company should at any
time or from time to time effectuate a split or subdivision of the outstanding
shares of Common Stock or pay a dividend in or make a distribution payable in
additional shares of Common Stock or Common Stock Equivalents without payment of
any consideration by such holder for the additional shares of Common Stock or
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of the applicable record
date (or the date of such distribution, split or subdivision if no record date
is fixed), the per share Exercise Price shall be appropriately decreased and the
number of Warrant Shares shall be appropriately increased in proportion to such
increase (or potential increase) of outstanding shares; provided, however, that
no adjustment shall be made in the event the split, subdivision, dividend or
distribution is not effectuated.
 
4.3 Combination of Shares. If the number of shares of Common Stock outstanding
at any time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, the per share Exercise Price shall be
appropriately increased and the number of shares of Warrant Shares shall be
appropriately decreased in proportion to such decrease in outstanding shares.
 
4.4 Adjustments for Other Distributions. In the event the Company shall declare
a distribution payable in securities of other Persons, evidences of indebtedness
issued by the Company or other Persons, assets (excluding cash dividends or
distributions to the holders of Common Stock paid out of current or retained
earnings and declared by the Company’s board of directors) or options or rights
not referred to in Sections 4.1, 4.2 or 4.3, then, in each such case for the
purpose of this Section 4.4, upon exercise of this Warrant, the Holder shall be
entitled to a proportionate share of any such distribution as though the Holder
was the actual record holder of the number of Warrant Shares as of the record
date fixed for the determination of the holders of Common Stock of the Company
entitled to receive such distribution.
 
5. No Impairment. The Company will not, by amendment of its articles of
incorporation or by-laws or through any consolidation, merger, reorganization,
transfer of assets, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all of the terms and in the taking of all actions necessary or
appropriate in order to protect the rights of the Holder against impairment.
 
6. Chief Financial Officer’s Report as to Adjustments. With respect to each
adjustment pursuant to Section 4 of this Warrant, the Company, at its expense,
will promptly as practicable compute the adjustment or re-adjustment in
accordance with the terms of this Warrant and cause its Chief Financial Officer
to certify the computation (other than any computation of the fair value of
property of the Company, as the case may be) and prepare a report setting forth,
in reasonable detail, the event requiring the adjustment or re-adjustment and
the amount of such adjustment or re-adjustment, the method of calculation
thereof and the facts upon which the adjustment or re-adjustment is based, and
the Exercise Price and the number of Warrant Shares or other securities
purchasable hereunder after giving effect to such adjustment or re-adjustment,
which report shall be mailed by first class mail, postage prepaid to the Holder.
The Company will also keep copies of all reports at its office maintained
pursuant to Section 9.2(a) hereof and will cause them to be available for
inspection at the office during normal business hours upon reasonable notice by
the Holder or any prospective purchaser of the Warrant designated by the Holder
thereof.
 
 
 
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7. Reservation of Shares. The Company shall, solely for the purpose of effecting
the exercise of this Warrant, at all times during the term of this Warrant,
reserve and keep available out of its authorized shares of Common Stock, free
from all taxes, liens and charges with respect to the issue thereof and not
subject to preemptive rights or other similar rights of shareholders of the
Company, such number of its shares of Common Stock as shall from time to time be
sufficient to effect in full the exercise of this Warrant. If at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect in full the exercise of this Warrant, in addition to such other
remedies as shall be available to Holder, the Company will promptly take such
corporate action as may, in the opinion of its counsel, be necessary to increase
the number of authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including without limitation,
using its Reasonable Best Efforts (as defined in Section 13 hereof) to obtain,
as promptly as practicable, the requisite shareholder approval necessary to
increase the number of authorized shares of Common Stock. The Company hereby
represents and warrants that all shares of Common Stock issuable upon exercise
of this Warrant shall be duly authorized and, when issued and paid for upon
exercise, shall be validly issued, fully paid and non-assessable.
 
8. Restrictions on Transfer.
 
8.1 Restrictive Legends. This Warrant and each Warrant issued upon transfer or
in substitution for this Warrant pursuant to Section 9 hereof, each certificate
for Common Stock issued upon the exercise of the Warrant and each certificate
issued upon the transfer of any such Common Stock shall be transferable only
upon satisfaction of the conditions specified in this Section 8. Each of the
foregoing securities shall be stamped or otherwise imprinted with a legend
reflecting the restrictions on transfer set forth herein and any restrictions
required under the Securities Act or other applicable securities laws.
 
8.2 Notice of Proposed Transfer. Prior to any transfer of any securities which
are not registered under an effective registration statement under the
Securities Act (“Restricted Securities”), which transfer may only occur if there
is an exemption from the registration provisions of the Securities Act and all
other applicable securities laws, the Holder will give written notice to the
Company of the Holder’s intention to effect a transfer (and shall describe the
manner and circumstances of the proposed transfer). The following provisions
shall apply to any proposed transfer of Restricted Securities:
 
(i) If in the opinion of counsel for the Holder reasonably satisfactory to the
Company the proposed transfer may be effected without registration of the
Restricted Securities under the Securities Act (which opinion shall state in
detail the basis of the legal conclusions reached therein), the Holder shall
thereupon be entitled to transfer the Restricted Securities in accordance with
the terms of the notice delivered by the Holder to the Company. Each certificate
representing the Restricted Securities issued upon or in connection with any
transfer shall bear the restrictive legends required by Section 8.1 hereof.
 
 
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(ii) If the opinion called for in (i) above is not delivered, the Holder shall
not be entitled to transfer the Restricted Securities until either: (x) receipt
by the Company of a further notice from such Holder pursuant to the foregoing
provisions of this Section 8.2 and fulfillment of the provisions of clause (i)
above, or (y) such Restricted Securities have been effectively registered under
the Securities Act.
 
8.3 Termination of Restrictions. The restrictions imposed by this Section 8 upon
the transferability of Restricted Securities shall cease and terminate as to any
particular Restricted Securities: (a) which shall have been effectively
registered under the Securities Act, or (b) when, in the opinions of both
counsel for the holder thereof and counsel for the Company, such restrictions
are no longer required in order to insure compliance with the Securities Act or
Section 9 hereof. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the Holder thereof shall be entitled to receive from the
Company, without expense (other than applicable transfer fees and taxes, if
any), new securities of like tenor not bearing the applicable legends required
by Section 8.1 hereof.
 
9. Ownership, Transfer, Sale and Substitution of Warrant.
 
9.1 Ownership of Warrant. The Company may treat any Person in whose name this
Warrant is registered in the Warrant Register maintained pursuant to Section
9.2(b) hereof as the owner and holder thereof for all purposes, notwithstanding
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary. Subject to Sections 8 and 9 hereof, this Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
 
9.2 Office; Exchange of Warrant.
 
(a) The Company will maintain its principal office at the location identified in
the Company’s most current filing (as of the date notice is to be given) under
the Exchange Act or as the Company otherwise notifies the Holder.
 
(b) The Company shall cause to be kept at its office maintained pursuant to
Section 9.2(a) hereof a Warrant Register for the registration and transfer of
the Warrant. The name and address of the holder of the Warrant, the transfers
thereof and the name and address of the transferee of the Warrant shall be
registered in such Warrant Register. The Person in whose name the Warrant shall
be so registered shall be deemed and treated as the owner and holder thereof for
all purposes of this Warrant, and the Company shall not be affected by any
notice or knowledge to the contrary.
 
(c) Upon the surrender of this Warrant, properly endorsed, for registration of
transfer or for exchange at the office of the Company maintained pursuant to
Section 9.2(a) hereof, the Company at its expense will (subject to compliance
with Section 8 hereof, if applicable) execute and deliver to or upon the order
of the Holder thereof a new Warrant of like tenor, in the name of such holder or
as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, calling in the aggregate on the face thereof for the number of
shares of Common Stock called for on the face of the Warrant so surrendered
(after giving effect to any previous adjustment(s) to the number of Warrant
Shares).
 
 
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(d) Subject to compliance with applicable federal and state securities laws and
the terms and conditions of this Agreement, Holder shall have the right from
time to time to transfer or sell all or a portion of this Warrant to one or more
third parties (a “Third Party Transferee”); provided, however, (i) no Third
Party Transferee shall be a Competitor (as determined in the reasonable good
faith discretion of the Board of Directors of Company) of the Company and (ii)
that any Third Party Transferee shall agree in writing to be bound as a holder
to the terms and conditions of this Warrant
 
9.3 Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any mutilation, upon surrender of this Warrant for
cancellation at the office of the Company maintained pursuant to Section 9.2(a)
hereof, the Company, at its expense, will execute and deliver, in lieu thereof,
a new Warrant of like tenor and dated the date hereof.
 
10. No Rights or Liabilities as Stockholder. No Holder shall be entitled to vote
or receive dividends or be deemed the holder of any shares of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the shares of Common Stock purchasable upon the exercise hereof
shall have become deliverable, as provided herein. The Holder will not be
entitled to share in the assets of the Company in the event of a liquidation,
dissolution or the winding up of the Company.
 
11. Notices. Any notice or other communication in connection with this Warrant
shall be given in writing and directed to the parties hereto as follows: (a) if
to the Holder, c/o YUEN TO PROVIDE Name and fax and/or email address] or (b) if
to the Company, to the attention of its Chief Executive Officer at its office
maintained pursuant to Section 9.2(a) hereof; provided, that the exercise of the
Warrant shall also be effected in the manner provided in Section 3 hereof.
Notices shall be deemed properly delivered and received when delivered to the
notice party (i) if personally delivered, upon receipt or refusal to accept
delivery, (ii) if sent via facsimile, upon mechanical confirmation of successful
transmission thereof generated by the sending telecopy machine, (iii) if sent by
a commercial overnight courier for delivery on the next Business Day, on the
first Business Day after deposit with such courier service, or (iv) if sent by
registered or certified mail, five (5) Business Days after deposit thereof in
the U.S. mail.
 
 
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12. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock underlying this Warrant
upon exercise of this Warrant; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the transfer or registration of this Warrant or any certificate for shares of
Common Stock underlying this Warrant in a name other that of the Holder. The
Holder is responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving shares of Common Stock
underlying this Warrant upon exercise hereof.
 
13. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of New York. The section headings in this
Warrant are for purposes of convenience only and shall not constitute a part
hereof. When used herein, the term “Reasonable Best Efforts” means, with respect
to the applicable obligation of the Company, reasonable best efforts for
similarly situated, publicly-traded companies.
 
14. Call.  The Company shall have the right, upon notice to the Holder (“Call
Notice”), to “call” all or any portion of this Warrant (a “Call”) provided that
(i) the Warrant Shares have been registered for resale pursuant to the
Securities Act, and are freely tradable without restriction for at least the
30-day period preceding such notice, (ii) the Per Share Market Value for the
Common Stock has been at least $1.00 per share (subject to adjustment to reflect
stock splits, stock dividends, recapitalizations and the like) for each trading
day in the 15-trading day period immediately preceding the date of the Call
Notice, and (iii) the average daily trading volume for the Common Stock has been
at least 50,000 shares for the 15-trading day period immediately preceding the
date of the Call Notice .  The Call Notice shall state what portion of the
Warrant is being Called and on what date the Call shall take effect, which date
shall be at least 10 calendar days after the Call Notice is sent to Holder (the
“Call Date”).  The Company covenants to honor all exercises of this Warrant up
until 5:00pm (Eastern Time) on the Call Date, and any such exercises will be
applied against the portion of the Warrant being Called.  The Call Notice shall
be void if on the Call Date, the Warrant Shares are no longer freely tradable
without restriction.  After 5:01pm (Eastern Time) on the Call Date, any
unexercised portion of the Warrant being Called shall be cancelled without any
consideration due to the Holder. For purposes of this Warrant, the term “Market
Value” means with respect to a particular date, (i) if the Common Stock is then
listed or quoted on the New York Stock Exchange, the NYSE AMEX, the NASDAQ
Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market or
any other national securities exchange, the closing price per share of the
Common Stock for such date (or the nearest preceding date) on the primary
eligible market or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then quoted on the OTC Bulletin Board,
the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; or (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent closing bid price per share of the Common
Stock so reported. If the Common Stock is not publicly traded as set forth
above, the “fair value” per share of Common Stock shall be reasonably and in
good faith determined by the Board of Directors of the Company as of the date
which the exercise is deemed to have been effected.
 
 
(Signature Page Follows)
 
 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of the date first above written.
 
 

 
DAIS ANALYTIC CORPORATION
               
By:
     
_________________________________________________
   
Name:
   
Title:

 
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EXHIBIT A
 
FORM OF EXERCISE NOTICE
 
[To be executed only upon exercise of Warrant]
 
To DAIS ANALYTIC CORPORATION:
 
The undersigned registered holder of the within Warrant hereby irrevocably
exercises the Warrant pursuant to Section 3.1 of the Warrant with respect to
________________________ Warrant Shares, at an exercise price per share of
$[   ], and requests that the certificates for such Warrant Shares be issued,
subject to Sections 9 and 10, in the name of, and delivered to:
 

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The undersigned is hereby making payment for the Warrant Shares in cash in
accordance with Section 3.1(b) of the Warrant.
 
The undersigned hereby represents and warrants that it is, and has been since
its acquisition of the Warrant, the record and beneficial owner of the Warrant.
 
Unless and until there is an effective registration statement covering the
Warrant Shares at the time of exercise, the undersigned hereby represents and
warrants that it is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.
 
Dated:
___________________________________________________________________  

 

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Print or Type Name
 

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(Signature must conform in all respects to name of holder as specified on the
face of Warrant)
 

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(Street Address)
 

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(City) (State) (Zip Code)
 
 
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EXHIBIT B
 
FORM OF ASSIGNMENT
 
[To be executed only upon transfer of Warrant]
 
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto
______________________________________________________________________ [include
name and addresses] the rights represented by the Warrant to purchase
_________________ shares of Common Stock of DAIS ANALYTIC CORPORATION to which
the Warrant relates, and appoints _________________________________________
Attorney to make such transfer on the books of DAIS ANALYTIC CORPORATION
maintained for the purpose, with full power of substitution in the premises.
 

         
Dated:
 
________________________
     
 
_________________________________________________________________________
     
(Signature must conform in all respects to name of holder as specified on the
face of Warrant)
     
 
_________________________________________________________________________
(Street Address)
             
 
_________________________________________________________________________
     
(City) (State) (Zip Code)
         
Signed in the
presence of:
         
_________________________________________________________________________
     
(Signature of Transferee)
 
     
_________________________________________________________________________
     
(Street Address)
 
     
_________________________________________________________________________
     
(City) (State) (Zip Code)
         
Signed in the
presence of:
         
_________________________________________________________________________

 
 
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Exhibit B
Form of Hong Kong Opinion

1.           The Company is duly incorporated and validly existing in good
standing under the Laws of the Hong Kong Special Administrative Region, Peoples'
Republic of China.
 
The Company's Memorandum and Articles of Association allow the Company to issue
a maximum of [ XX] shares with a nominal value of HK[ ] each. As at the date of
the latest Companies Registry search, it reveals that all [ ] shares (paid-up)
have been issued to date and they are all registered under the ownership of
[XX]. The Company's [XX] Director(s) is/are [XX ] and its Corporate Secretary is
[XX ]. The address of the Company's registered office is [ XX].
 
Powers & Authorities
 
2.           The [ XX] issued shares of the Company with a total nominal value
of HK$[ ] issued to [XX] have been fully-paid-up. The absence of any shares
mortgage, charge or other document of a charging nature registered in the
Companies Registry at the time of our Companies Registry search appears to point
to the deduction that the said shares are held free from liens, charges and
pre-emptive rights.
 
3.           The Company has been registered for business in Hong Kong and
carries a current renewed Business Registration Certificate valid between [XX]
and [XX ] legitimizing its conducting of business in the Hong Kong SAR during
the period in question.
 
4.           The Company has the requisite corporate power and authority to own,
lease and operate its properties and assets and to conduct its business in Hong
Kong in accordance with its Memorandum and Articles of Association.
 
Search Results
 
5.           No court proceedings pending against the Company (whether with the
Company as Plaintiff or Defendant) are indicated by our searches of the Hong
Kong Courts referred to in this opinion.
 
6.           On the basis of our searches of the Hong Kong SAR Companies
Registry and the Hong Kong SAR courts referred to in this opinion, respectively,
no currently valid order or resolution for winding up or dissolution of the
Company and no current notice of appointment of a receiver, liquidator or
similar officer over the Company or any of its assets appears on the records
maintained in respect of the Company at the Companies Registry.
 
 
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Exhibit C
 
Purchaser Lock-Up Agreement
 
This AGREEMENT (the “Agreement”) is made as of the _____ day of ________ 2012,
byGREEN VALLEY INTERNATIONAL INVESTMENT MANAGEMENT COMPANY LIMITED
 
(“Holder”) in connection with ownership of shares of Dais Analytic Corporation,
a New York corporation (the “Company”).
 
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:
 
1. Background.
 
a. Holder is the beneficial owner of the amount of shares of the Common Stock,
$0. 01 par value, of the Company (“Common Stock”) designated on the signature
page hereto.
 
b. Holder acknowledges that the Company has entered into or will enter into at
or about the date hereof an agreement (the “Purchase Agreement”) with the
purchaser of the Company’s Common Stock (the “Purchaser”). Holder understands
that, as a condition to proceeding with the Purchase Agreement, the Company has
required, and the Holder has agreed to obtain on behalf of the Company an
agreement from the Holder to refrain from selling any securities of the Company
for a period from the date of the Purchase Agreement until six months from
October 26, 2012 (“Restriction Period”).
 
2. Sale Restriction.
 
a. Holder hereby agrees that during the Restriction Period, the Holder will not
sell, transfer or otherwise dispose of any shares of Common Stock or any
options, warrants or other rights to purchase shares of Common Stock or any
other security of the Company which Holder owns or has a right to acquire as of
the date hereof, other than in connection with an offer made to all stockholders
of the Company in connection with merger, consolidation or similar transaction
involving the Company or the Exchange Offer (as defined in the Warrants to be
issued pursuant to the Purchase Agreement). Holder further agrees that the
Company is authorized to and the Company agrees to place “stop orders” on its
books to prevent any transfer of shares of Common Stock or other securities of
the Company held by Holder in violation of this Agreement. The Company agrees
not to allow to occur any transaction inconsistent with this Agreement.
 
b.  Further, until October 26, 2015, Purchaser shall not sell over 10% of their
shares, or exercise over 10% of their warrants when the market price of the
Company’s common stock is less than US$4.00 (such covenant, the “Standstill”),
provided, however, that the Standstill shall terminate from and after such time,
if any, as (i) the Company is in breach of any agreement by and between the
Company and either the Purchaser or any of the Purchaser’s affiliates or
subsidiaries, (ii) the Company fails to present to its Board of Directors the
Purchaser’s written request for a waiver of the Standstill within 5 business
days of the Company’s receipt of such written request, or (iii) the Company
shall make a public announcement that it has, or the Company has in fact entered
into a letter of intent or definitive agreement for the acquisition of the
Company, or (iv) an order by Dais’s Board of Directors as it relates to the
Lockup terms and conditions at the time.
 
c. Any subsequent issuance to and/or acquisition by Holder of Common Stock or
options or instruments convertible into Common Stock will be subject to the
provisions of this Agreement.
 
 
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d. The Holder may transfers of shares of Common Stock or any options, warrants
or other rights to purchase shares of Common Stock as a bona fide gift, by will
or intestacy or to a family member or trust for the benefit of a family member;
provided that in the case of any transfer or distribution (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter agreement and (ii) no filing under Section 16(a) of the Exchange
Act, reporting a reduction in beneficial ownership of Common Stock, shall be
required or shall be voluntarily made during the Restriction Period.
 
3. Miscellaneous.
 
a. At any time, and from time to time, after the signing of this Agreement,
Holder will execute such additional instruments and take such action as may be
reasonably requested by the Company to carry out the intent and purposes of this
Agreement.
 
b. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the principles of conflicts of
law thereof.
 
c. The restrictions on transfer described in this Agreement are in addition to
and cumulative with any other restrictions on transfer otherwise agreed to by
the Holder or to which the Holder is subject to by applicable law.
 
d. This Agreement shall be binding upon Holder, its legal representatives,
successors and assigns.
 
e. This Agreement may be signed and delivered by facsimile, electronically and
such facsimile or electronically signed and delivered Agreement shall be
enforceable.
 
f. The Holder agrees not to take any action or allow any act to be taken which
would be inconsistent with this Agreement.
 
g. The Holder acknowledges that this Lockup Agreement is being entered into for
the benefit of the Company and may be enforced by the Company and may not be
amended without the consent of the Company (in the manner described in the
Purchase Agreement), which may be withheld for any reason.
 
 
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Exhibit D
 
Form ofU.S.Opinion
 
1. The Company and each of the Subsidiaries is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.
 
2. The Company has all necessary corporate power and authority to execute,
deliver, enter into and perform its obligations under each of the Transaction
Documents and to consummate the transactions contemplated thereby. The
execution, delivery, and performance of each of the Transaction Documents have
been duly authorized by all necessary corporate action on the part of the
Company.
 
3. The Transaction Documents have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company and
are enforceable against the Company in accordance with their respective terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy.
 
4. The Securities to be issued pursuant to the Purchase Agreement have been duly
authorized by the Company’s Board of Directors.
 
5. The Securities, upon issuance and receipt by the Company of the purchase
price of the Securities from the Purchaser therefor will be validly issued and
non-assessable. The shares of Common Stock to be issued upon exercise of the
Warrants, if exercised in accordance with their terms, will, upon issuance, be
validly issued, fully paid and non-assessable. No Person is entitled to any
preemptive right or right of first refusal with respect to the issuance of the
Securities pursuant to the Company’s Certificate of Incorporation or Bylaws, New
York or Delaware law or any Material Agreement (as defined below).
 
6. The execution and delivery by the Company of the Transaction Documents do not
and the consummation of the transactions contemplated thereby will not (A)
violate any provision of the Certificate of Incorporation or Bylaws of the
Company, or (B) violate any law, statute, rule, regulation, order, judgment or
decree of any court or governmental authority which, to our knowledge, is
applicable to the Company, (C) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or require a consent under, any agreement, arrangement or instrument to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which its properties are subject that have been
identified as material to the Company and its Subsidiaries, taken as a whole, in
the attached Officer’s Certificate (collectively, the “Material Agreements”), or
(D) a violation of any judgment or order (if any) known to us to be applicable
to the Company, except for, in the case of clauses (B) and (C), any violation,
breach or default which would not reasonably be expected to have a material
adverse effect to the Company’s business, operations or financial condition.
 
7. Except for filings, authorizations or approvals as have been made and are in
full force and effect, no authorizations or approvals of, and no filings with,
any governmental authority are necessary or required by the Company for the
execution and delivery of the Transaction Documents or the consummation of the
transactions contemplated thereby.
 
8. The initial sale of the Securities and the issuance of Securities pursuant to
exercise of the Warrants as contemplated by the Transaction Documents are exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended, and from the qualification requirements of applicable state
securities laws.
 
 
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Exhibit E
 
Form of Lock-Up Agreement
 
This AGREEMENT (the “Agreement”) is made as of the ______ day of _________2012,
byNAME OF DAIS EXECUTIVE OFFICER

 
(“Holder”) in connection with his ownership of shares of Dais Analytic
Corporation, a New York corporation (the “Company”).
 
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which consideration are hereby acknowledged, Holder agrees as follows:
 
1. Background.
 
a. Holder is the beneficial owner of the amount of shares of the Common Stock,
$0.01 par value, of the Company (“Common Stock”) designated on the signature
page hereto.
 
b. Holder acknowledges that the Company has entered into or will enter into at
or about the date hereof an agreement (the “Purchase Agreement”) with the
purchaser of the Company’s Common Stock (the “Purchaser”). Holder understands
that, as a condition to proceeding with the Purchase Agreement, the Purchaser
has required, and the Company has agreed to obtain on behalf of the Purchaser an
agreement from the Holder to refrain from selling any securities of the Company
for a period from the date of the Purchase Agreement until six months from the
execution date of the Stock Purchase Agreement associated with the issuance and
acquisition by the Purchaser of the Company’s equity. (“Restriction Period”).
 
2. Sale Restriction.
 
a. Holder hereby agrees that during the Restriction Period, the Holder will not
sell, transfer or otherwise dispose of any shares of Common Stock or any
options, warrants or other rights to purchase shares of Common Stock or any
other security of the Company which Holder owns or has a right to acquire as of
the date hereof, other than in connection with an offer made to all stockholders
of the Company in connection with merger, consolidation or similar transaction
involving the Company or the Exchange Offer (as defined in the Warrants to be
issued pursuant to the Purchase Agreement). Holder further agrees that the
Company is authorized to and the Company agrees to place “stop orders” on its
books to prevent any transfer of shares of Common Stock or other securities of
the Company held by Holder in violation of this Agreement. The Company agrees
not to allow to occur any transaction inconsistent with this Agreement.
 
b. Any subsequent issuance to and/or acquisition by Holder of Common Stock or
options or instruments convertible into Common Stock will be subject to the
provisions of this Agreement.
 
c. The Holder may transfers of shares of Common Stock or any options, warrants
or other rights to purchase shares of Common Stock as a bona fide gift, by will
or intestacy or to a family member or trust for the benefit of a family member;
provided that in the case of any transfer or distribution (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter agreement and (ii) no filing under Section 16(a) of the Exchange
Act, reporting a reduction in beneficial ownership of Common Stock, shall be
required or shall be voluntarily made during the Restriction Period.
 
 
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3. Miscellaneous.
 
a. At any time, and from time to time, after the signing of this Agreement,
Holder will execute such additional instruments and take such action as may be
reasonably requested by the Purchaser to carry out the intent and purposes of
this Agreement.
 
b. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the principles of conflicts of
law thereof.
 
c. The restrictions on transfer described in this Agreement are in addition to
and cumulative with any other restrictions on transfer otherwise agreed to by
the Holder or to which the Holder is subject to by applicable law.
 
d. This Agreement shall be binding upon Holder, its legal representatives,
successors and assigns.
 
e. This Agreement may be signed and delivered by facsimile, electronically and
such facsimile or electronically signed and delivered Agreement shall be
enforceable.
 
f. The Holder agrees not to take any action or allow any act to be taken which
would be inconsistent with this Agreement.
 
The Holder acknowledges that this Lockup Agreement is being entered into for the
benefit of the Purchaser identified in the Purchase Agreement may be enforced by
the Purchaser and may not be amended without the consent of the Purchaser (in
the manner described in the Purchase Agreement), which may be withheld for any
reason.
 
 
 
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