Securities Purchase Agreement



 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 SECURITIES PURCHASE AGREEMENT (this “Agreement”) dated as of January 25, 2012, by and between Michael Moretti
(the “Purchaser”), and DayStar Technologies, Inc., a Delaware corporation (the “Company”). 
 RECITALS 
 The Company desires to issue and the Purchaser
desires to purchase (A) a convertible secured promissory note in substantially the form attached hereto as Exhibit A (the “Note”), and (B) a warrant to purchase shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), in substantially the form attached hereto as Exhibit B (the “Warrant”). The Note, the Warrant and any securities issuable upon conversion of the Note
or upon exercise of the Warrant are collectively referred to herein as the “Securities”. 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

1. PURCHASE AND SALE OF NOTE AND WARRANT.

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

	 	(i)	the Note in the principal amount of US $225,000, and 

  

	 	(ii)	the Warrant. 

 1.2
Closing; Delivery. 
 (a) Closing Date. The closing of the purchase and sale of the Note and the Warrant (the
“Closing”) shall be held on January 25, 2012 or on such other date as the parties may agree to, such other date being as soon thereafter as practicable (the “Closing Date”) at a place and time to
be determined by the Company and Purchaser. 
 (b) Deliveries at Closing. At the Closing (i) the Purchaser
will deliver to the Company payment of the Purchase Price (as defined below) with respect to the Note and the Warrant by wire transfer from the Purchaser to a bank designated by the Company and executed counterpart signature pages to the
Registration Rights Agreement (as defined below); and (ii) the Company shall issue and deliver to the Purchaser the original executed Note in favor of the Purchaser, the executed Warrant in favor of the Purchaser and the Registration Rights
Agreement. 







 (c) Purchase Price. The “Purchase Price” of the Note and the
Warrant shall equal the principal amount of the Note. 
 (d) UCC Financing Statements. Upon delivery of the Purchase
Price, the Company authorizes Purchaser to file its UCC-1 financing statements in the states in which Purchaser shall elect. 

1.3 Use of Proceeds. The Company acknowledges and agrees that it must use the proceeds related to the sale of the Note and
the Warrant for (i) operating capital of the Company and (ii) general corporate purposes related to the Company. 

1.4 Additional Securities Upon a Fundamental Transaction. If, and only if, the Company consummates a Fundamental Transaction, the
Company will use its commercially reasonable best efforts to cause the Company or other parties to the Fundamental Transaction to issue securities (be it Common Stock, other securities of the Company, or securities of another party to the
Fundamental Transaction) equal to the original principal amount of the Purchaser’s Note divided by $0.25. For purposes of this Agreement, a “Fundamental Transaction” means a transaction (a) in which the Company,
directly or indirectly, in one or more related transactions, (i) consolidates or merges with or into (whether or not the Company is the surviving corporation) another person or persons, or (ii) sells, assigns, transfers, conveys or
otherwise disposes of all or substantially all of the properties or assets of the Company to another person, or (iii) allows another person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the person or persons making or party to, or associated or affiliated with the persons making or party to, such purchase, tender or exchange offer), or
(iv) consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person whereby such other person acquires more than
the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganizes, recapitalizes or reclassifies its Common Stock or (b) in which any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
Common Stock. 
 1.5 Limitations on Issuance. The Company shall not issue or sell any Common Stock or securities
convertible into Common Stock pursuant to this Agreement, and the Purchaser shall not purchase or acquire any such securities pursuant to this Agreement, to the extent that, after giving effect thereto, the aggregate number of shares of Common Stock
that would be issued pursuant to this Agreement , together with all shares of Common Stock issued pursuant to any transactions that may be aggregated with the transactions contemplated by this Agreement under applicable rules of The Nasdaq Stock
Market would exceed the maximum number of securities that the Company may issue pursuant to this Agreement without breaching the Company’s obligations under the listing rules or regulations of The Nasdaq Stock Market (the number of shares which
may be issued without violating such rules and regulations, the 







 
“Exchange Cap”), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules of
the Nasdaq Stock Market, unless and until the Company elects to solicit stockholder approval of the transactions contemplated by this Agreement and the stockholders of the Company have in fact approved such transactions in accordance with the
applicable rules of The Nasdaq Stock Market. 
 2. SECURITY INTEREST. The indebtedness represented
by the Note shall be secured by a perfected security interest in certain assets of the Company as further provided in the Amended and Restated Security Agreement existing between the Company and Purchaser (the “Security
Agreement”). 
 3. REGISTRATION RIGHTS. The shares of Common Stock into
which the Note may be converted and the Warrant may be exercised shall be subject to registration rights as further provided in the Registration Rights Agreement attached hereto as Exhibit C (the “Registration Rights
Agreement”). 
 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY. The Company hereby represents and warrants to the Purchaser as follows: 
 4.1 Corporate Power. The Company has all requisite corporate power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement. 

4.2 Authorization. With the exception of any shareholder approval that may be required pursuant to the terms of the Note
and/or the Warrant, all corporate action on the part of the Company, its directors and its shareholders necessary for the authorization, execution, delivery and performance of this Agreement by the Company and the performance of the Company’s
obligations hereunder, including the issuance and delivery of the Note and Warrant, has been taken prior to the Closing. This Agreement, the Note when executed and delivered by the Company, and the Warrant when executed and delivered by the Company,
shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity,
subject to federal and state securities laws. 
 4.3 Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with this Agreement, the Security Agreement, the Note and the Warrant, will be duly and validly issued, fully paid and nonassessable (as applicable), and free and clear of all liens. The Company
has reserved from its duly authorized capital stock the maximum number of shares of common stock (a) issuable upon the conversion of the Note and (b) that may be issued upon the exercise of the Warrant. 

4.4 Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications,
designations, declarations, or filings with, any governmental authority, required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or issuance of the Note and the Warrant or the
consummation of any other transaction contemplated thereby or hereby shall have been obtained 







 
and will be effective at the Closing or, except for notices required or permitted to be filed with certain state and federal securities commissions, which notices will be filed on a timely basis.

 4.5 No Conflicts. The execution, delivery and performance of this Agreement by the Company and the performance
of the Company’s obligations hereunder, including the issuance and delivery of the Note and the Warrant, will not (a) breach any law to which the Company or any of its subsidiaries or any of their assets is subject or any provision of its
organizational documents, (b) breach any contract, order or permit to which the Company or any of its subsidiaries is a party or by which it is bound or to which any of its assets is subject, or (c) trigger any rights of first refusal,
preferential purchase, or similar rights. 
 4.6 Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 5 hereof, the offer, issue, and sale of the Securities is and will be exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the
“1933 Act”), and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws. 

4.7 Priority. As of the Closing Date the security interests granted by Company to Purchaser under the Security Agreement shall be
pari passu with other bridge lenders and the Secured Party as specified in the Intercreditor Agreement. 
 5.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser represents, warrants and covenants to the Company as
follows: 
 5.1 Accredited Investor; Purchase for Own Account. The Purchaser represents and warrants that it is an
“accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the 1933 Act. The Purchaser represents that it is acquiring the Note and the Warrant solely for its own account and beneficial interest for investment and
not with a view to or for sale in connection with any distribution of the Securities, has no present intention of selling or granting any participation in the same, and does not presently have reason to anticipate a change in such intention.

 5.2 Information and Sophistication. The Purchaser acknowledges that it has received all the information it has
requested from the Company and it considers necessary or appropriate for deciding whether to acquire the Note and the Warrant. The Purchaser represents that it has had an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Note and the Warrant and to obtain any additional information necessary to verify the accuracy of the information given the Purchaser. The Purchaser further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and risk of this investment. 
 5.3
Ability to Bear Economic Risk and Knowledge of Certain Risk Factors. The Purchaser acknowledges that investment in the Note and the Warrant involves a high degree of risk, and represents that it is able, without materially impairing its
financial condition, to hold the Note and the Warrant for an indefinite period of time and to suffer a complete loss of its investment. The Purchaser has evaluated the risks involved in investing in the Note and the








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

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

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

6.3 Counterparts; Delivery via Facsimile. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all parties
reflected hereon as signatories. Executed counterparts of this Agreement may be delivered to the other parties via facsimile; provided, however, that originally executed signature pages to this Agreement shall be delivered (a) to
the Company by the Purchaser and (b) to the Purchaser by the Company, within five business days of the date of this Agreement. 
 6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 

6.5 Notices. Any notice required or permitted under this Agreement, the Note or the Warrant shall be given in writing and
shall be deemed effectively given upon personal delivery, upon confirmation of facsimile delivery, one day after deposit with a national overnight courier service, or three days after deposit with the United States Post Office, postage prepaid,
addressed 







 
to the Company at 3567 Benton Street, Suite 367, Santa Clara, CA 95051, or to the Purchaser at its address shown on the signature page hereto, or at such other address as such party may designate
in writing to the other party. 
 6.6 Modification; Waiver. No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing and approved by the Company and the Purchaser. 

6.7 Expenses. Company and Purchaser shall bear the entire cost of its own expenses and legal fees incurred on its behalf
with respect to this Agreement, the Note, the Warrant, the Security Agreement, the Registration Rights Agreement and the transactions contemplated hereby and thereby. If any action at law or in equity is necessary to enforce or interpret the terms
of this Agreement, the Note, the Security Agreement, the Registration Rights Agreement or any other agreement entered into in conjunction herewith or therewith, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may be entitled. 
 6.8 Entire
Agreement. This Agreement, the Security Agreement, the Note, the Warrant, the Registration Rights Agreement, and the exhibits hereto and thereto constitute the full and entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. In the event of a conflict with the terms of this
Agreement and any of the other agreements or exhibits referenced herein, the terms and provisions of the other agreements and exhibits shall control and prevail. 
 6.9 Survival. The terms and provisions of this Agreement shall survive Closing and not be merged therein. 
 [Signature Page Follows] 







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

			
	COMPANY
	
	 DayStar Technologies, Inc.,

a Delaware corporation

		
	By:	 	/s/ Christopher T. Lail
	 Name: Christopher T. Lail

Title: Chief Financial Officer



  

			
	 PURCHASER

		
	By:	 	/s/ Michael Moretti
		 	 Michael Moretti