Securities Purchase Agreement



 Exhibit 10.1 
 Execution Version 
 SECURITIES PURCHASE AGREEMENT 

This Securities Purchase Agreement (“Agreement”) is entered into and effective as of February 2, 2011
(“Effective Date”), by and among DayStar Technologies, Inc., a Delaware corporation (“Company”), and Socius CG II, Ltd., a Bermuda exempted company (including its designees, successors and assigns,
“Investor”). 
 RECITALS 
 A. The Company’s board of directors has authorized the creation of the Preferred Shares (as defined below) which consist of a new series of preferred stock of the Company designated as Series B
Preferred Stock, par value $0.01 per share, the terms of which are set forth in the Certificate of Designations (as defined below). Subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the
Investor, and the Investor desires to purchase from the Company, (i) the Preferred Shares, (ii) the Additional Investment Right (as defined below), (iii) shares of Common Stock (as defined below) issuable upon exercise of the
Additional Investment Right, (iii) Warrant (as defined below), and (iv) shares of Common Stock issuable upon exercise of the Warrant, in each case as more fully described in this Agreement. 

B. The offer and sale of the Securities provided for herein are being made without registration under the Act (as defined below), in
reliance upon the provisions of Section 4(2) of the Act, Regulation D promulgated under the Act, and such other exemptions from the registration requirements of the Act as may be available with respect to any or all of the purchases/exchanges
of Securities to be made hereunder. 
 AGREEMENT 
 In consideration of the premises, the mutual provisions of this Agreement, and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, Company and Investor agree
as follows: 
 ARTICLE 1 
 DEFINITIONS 
 In addition to the terms defined elsewhere in this Agreement:
(a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Certificate of Designations, and (b) the following terms have the meanings indicated in this ARTICLE 1: 

“Act” means the Securities Act of 1933, as amended. 

“Action” has the meaning set forth in Section 4.1(j). 

“Additional Investment Right” has the meaning set forth in Section 2.3(c)(ii). 







 “Additional Investment Shares” has the meaning set forth in
Section 2.3(c)(ii). 
 “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Act. With respect to Investor, without limitation, any Person owning, owned by, or under
common ownership with Investor, and any investment fund or managed account that is managed on a discretionary basis by the same investment manager as Investor will be deemed to be an Affiliate. 

“Agreement” shall have the meaning ascribed to such term in the preamble to this Agreement. 

“Automatic Termination” has the meaning set forth in Section 3.1. 

“Bloomberg” means Bloomberg Financial Markets. 
 “Certificate of Designations” means the certificate to be filed with the Secretary of State of the State of Delaware, in the form attached hereto as Exhibit B. 

“Closing” means any one of (i) the Commitment Closing and (ii) each Tranche Closing. 

“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing
bid price and last closing trade price, respectively, for such security on the Trading Market, as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or the
closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., Eastern time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or
trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as mutually determined by the Company and Investor. If the Company and Investor are unable to agree upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 6.7. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. 

“Commitment Closing” has the meaning set forth in Section 2.2(a). 

  
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 “Commitment Fee” means a non-refundable fee payable by the Company to
Investor on the earlier of (a) the first Tranche Closing Date, or (b) the six-month anniversary of the Effective Date, which fee, at the option of the Company, shall either be (i) an amount in cash equal to $250,000, delivered by wire
transfer of immediately available funds to an account designated by Investor (provided, however, that if a cash Commitment Fee is paid on the first Tranche Closing Date, such payment may be made by offsetting the first Tranche Amount), or
(ii) a number of shares of Common Stock, which shall be freely tradable, determined by dividing (x) $294,120 by (y) the Closing Bid Price of the Common Stock on the Trading Day immediately preceding the date on which the Commitment
Fee is payable. If not paid earlier, the Commitment Fee shall be due in payable in full on the six-month anniversary of the Effective Date, whether or not any Tranche Closings have occurred. 

“Commitment Fee Shares” means any shares of Common Stock issued in payment of the Commitment Fee. 

“Common Shares” includes the Warrant Shares, the Additional Investment Shares, and any Commitment Fee Shares.

 “Common Stock” means the common stock, par value $0.01 per share, of the Company, and any replacement or
substitute thereof, or any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock. 
 “Company” shall have the meaning ascribed to such term in the preamble to this Agreement. 
 “Company Parties” and “Company Party” have the meanings set forth in Section 5.8(b). 
 “Company Termination” has the meaning set forth in Section 3.2. 
 “Conditions to Commitment Closing” has the meaning set forth in Section 2.2(b). 
 “Delisting Event” means any time during the term of this Agreement, that the Common Stock is not listed for trading or quoted on a Trading Market, or is suspended or delisted with respect
to the trading of shares of Common Stock on a Trading Market. 
 “Disclosure Schedules” means the disclosure
schedules of the Company delivered concurrently herewith and attached hereto. The Disclosure Schedules shall contain no material, non-public information. 
 “DTC” means The Depository Trust Company, or any successor performing substantially the same function for Company. 

“DWAC Shares” means all Common Shares or other shares of Common Stock issued or issuable to Investor or any Affiliate,
successor or assign of Investor pursuant to any of the Transaction Documents, including without limitation any Warrant Shares, Additional Investment 

  
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Shares, and Commitment Fee Shares, all of which shall be (a) issued in electronic form, (b) freely tradable and without restriction on resale, and (c) timely credited by Company to
the specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program or any similar program hereafter adopted by DTC performing substantially the same function, in accordance with
irrevocable instructions issued to and countersigned by the Transfer Agent, in the form attached hereto as Exhibit C or in such other form agreed upon by the parties. 
 “Effective Date” has the meaning set forth in the preamble to this Agreement. 
 “Evaluation Date” has the meaning set forth in Section 4.1(r). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “FINRA” has the meaning set forth in Section 4.1(e). 

“Fundamental Transaction” means and shall be deemed to have occurred at such time upon any of the following events:

 (a) the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another Person or Persons, (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the assets of the Company to another Person, (iii) allow
another Person to make a 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) consummate a stock purchase 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) (other than, in the case of clause (i) above, (A) any such transaction pursuant to which holders of Common Stock
immediately prior to such transaction continue to hold more than 50% of the total voting power of the outstanding shares of Common Stock or (B) any merger or consolidation which is effected solely to change the jurisdiction of incorporation of
the Company, and in the case of clauses (iii) and (iv) above, any transaction which is effected solely to change the jurisdiction of incorporation of the Company and in the case of clauses (i) and (iv) above, any transaction in
which the Company is the surviving entity and continues to have its Common Stock traded on a Trading Market following such transaction); or 
 (b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of 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 voting power of the outstanding shares of Common Stock, other than persons or groups who exceed such ownership level as of the Effective Date (until such point in
time when the 

  
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ownership level of such persons or groups falls below such ownership threshold) and other than in connection with a transaction which is effected solely to change the jurisdiction of
incorporation of the Company. 
 “Funding Default” means a failure by Investor to accept a Tranche Notice
delivered by the Company, provided such Tranche Notice was delivered in accordance with the terms and conditions of this Agreement (including the timely and full satisfaction of the conditions to the obligation of Investor to accept a Tranche
Notice set forth in Section 2.3(b) of this Agreement), and to acquire and pay for the Preferred Shares in accordance therewith upon delivery of such Preferred Shares to the Investor in accordance with the terms of this Agreement (and the
timely delivery by the Company of the other Required Tranche Deliveries required to be delivered by it and the timely and full satisfaction by the Company of all other conditions for the Tranche Closing required to be satisfied by it as set forth in
Sections 2.3(d) and (e) of this Agreement. 
 “GAAP” means United States generally accepted
accounting principles applied on a consistent basis during the periods involved. 
 “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) 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 (c) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. 

“Intellectual Property Rights” has the meaning set forth in Section 4.1(o). 

“Investment Right Exercise Notice” means a notice issued by Investor to the Company under this Agreement, in
substantially the form attached hereto as Exhibit A-2, to purchase Additional Investment Shares. 

“Investor” shall have the meaning ascribed to such term in the preamble to this Agreement. 

“Investor Ownership Limit” has the meaning set forth in Section 2.3(c)(iii). 

“Investor Parties” and “Investor Party” have the meanings set forth in Section 5.8.

 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or
other restriction (excluding restrictions on transfer of securities under applicable U.S. federal or state securities or “blue sky” laws). 
 “Lock-Up Agreements” means an agreement in the form attached as Exhibit D, executed by each of the Company’s executive officers and directors, precluding each such Person from


  
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participating in any sale of the Common Stock from the Tranche Notice Date through the Tranche Closing Date. 
 “Losses” has the meaning set forth in Section 5.8. 

“Material Adverse Effect” means a material adverse effect on (i) the legality, validity or enforceability of any
Transaction Document, (ii) the results of operations, assets, business or financial condition of the Company, or (iii) the Company’s ability to perform in any material respect its obligations under any Transaction Document;
provided, however, that none of the following, individually or in the aggregate, shall be taken into account in determining whether a Material Adverse Effect has occurred: (a) changes in conditions in the U.S. or global capital,
credit or financial markets generally, including changes in the availability of capital or currency exchange rates that does not have a disproportionate effect on the Company; (b) changes generally affecting the industry in which the Company
operates; (c) any deterioration in the results of operations, assets, business or financial condition of the Company substantially resulting from (1) circumstances, conditions or risks (including, without limitation, the section entitled
“Risk Factors” contained in the Company’s Form 10-K for its fiscal year ended December 31, 2009 and the Company’s Form 10-Qs for the quarters ended March 31, 2010, June 30, 2010 and September 30,
2010) existing as of the Effective Date that are set forth in any of the SEC Reports or (2) any of the matters set forth in the Disclosure Schedule (as the same may be updated pursuant to Section 2.3(c)(ii)); (d) any effect of
the announcement of this Agreement or the consummation of the transactions contemplated by this Agreement on the Company’s relationships, contractual or otherwise, with customers, suppliers, vendors, bank lenders, strategic venture partners or
employees; and (e) any decrease in the market price of the Common Stock (but excluding herefrom any condition, occurrence, state of facts or event underlying such decrease to the extent that such condition, occurrence, state of facts or event
otherwise would constitute a Material Adverse Effect). 
 “Material Agreement” includes any loan agreement,
financing agreement, equity investment agreement or securities instrument to which Company is a party, any agreement or instrument to which Company and the Investor or any Affiliate of the Investor is a party, and any other material agreement
listed, or required to be listed, on any of Company’s reports filed or required to be filed with the SEC, including without limitation Forms 10-K, 10-Q or 8-K. 
 “Material Permits” has the meaning set forth in Section 4.1(m). 
 “Maximum Placement” means $5,000,000.00. 
 “Maximum
Tranche Amount” means, subject to any other applicable limitations set forth in this Agreement, the Maximum Placement less the amount of any previously noticed and funded Tranches. 

“Mintz Levin” means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Investor. 

  
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 “Officer’s Closing Certificate” means a certificate in customary form
reasonably acceptable to the Investor, executed by an authorized officer of the Company. 
 “Opinion” means an
opinion from Company’s independent legal counsel, in the form attached as Exhibit E, to be delivered in connection with the Commitment Closing and any Tranche Closing. 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Preferred Shares” means shares of Series B Preferred Stock of the Company provided for in the Certificate of Designations, to be issued to Investor pursuant to this Agreement.

 “Prospectus” includes each prospectus (within the meaning of the Act) related to the sale or offering of any
Warrant Shares, including without limitation any prospectus contained within the Registration Statement. 

“Registration Statement” means a valid, current and effective registration statement registering for resale the Common
Shares, and except where the context otherwise requires, means the registration statement, as amended, including (i) all documents filed as a part thereof, and (ii) any information contained in a prospectus filed with the SEC in connection
with such registration statement, to the extent such information is deemed under the Act to be part of the registration statement. 
 “Regulation D” means Regulation D promulgated under the Act. 

“Required Approval” means any approval of the Trading Market and/or the Company’s stockholders required to be
obtained by Company prior to issuing the Securities pursuant to any applicable rules of the Trading Market. 
 “Required
Tranche Deliveries” has the meaning set forth in Section 2.3(e). 
 “Rule 144” means Rule
144 promulgated by the SEC pursuant to the Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect. 

“Rule 144 Eligible” means eligible for immediate resale under Rule 144 without limitation on the amount of securities
sold under Rule 144(e) and without requiring discharge by payment in full of any promissory notes given to the Company prior to the sale of the securities under Rule 144(d)(2)(iii). 

“SEC” means the United States Securities and Exchange Commission. 

“SEC Reports” includes all reports required to be filed by the Company under the Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years 

  
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preceding the Effective Date (or such shorter period as the Company was required by law to file such material). 
 “Securities” includes the Warrants, Additional Investment Right, Common Shares and Preferred Shares issuable pursuant to this Agreement. 

“Subsidiary” means any Person the Company owns or controls, or in which the Company, directly or indirectly, owns a
majority of the capital stock or similar interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21). 

“Termination Date” means the earlier of (i) the date that is two years after the Effective Date, or (ii) the
Tranche Closing Date on which the sum of the aggregate Tranche Purchase Price for all Tranche Shares equals the Maximum Placement. 
 “Termination Notice” has the meaning as set forth in Section 3.2. 
 “Trading Day” means any day on which the Common Stock is traded on the Trading Market; provided that it shall not include any day on which the Common Stock is (a) scheduled to trade
for less than 5 hours, or (b) suspended from trading. 
 “Trading Market” means the OTC Bulletin Board,
the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. 

“Tranche” has the meaning set forth in Section 2.3(a). 

“Tranche Amount” means the amount of any individual purchase of a tranche of Preferred Shares, as specified by the
Company, and shall not exceed the Maximum Tranche Amount. 
 “Tranche Closing” has the meaning set forth in
Section 2.3(f). 
 “Tranche Closing Date” has the meaning set forth in Section 2.3(f).

 “Tranche Notice” has the meaning set forth in Section 2.3(b). 

“Tranche Notice Date” has the meaning set forth in Section 2.3(b). 

“Tranche Purchase Price” has the meaning set forth in Section 2.3(b), and shall be specified in writing by
the Company. 
 “Tranche Share Price” means $10,000.00 per Preferred Share. The Company may not issue
fractional Preferred Shares. 

  
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 “Tranche Shares” means the Preferred Shares that are purchased by Investor
pursuant to a Tranche. For the Maximum Placement, the aggregate number of Preferred Shares (not including any Preferred Shares that may be issued as dividend payments) to be issued by the Company to the Investor shall be 500 shares. 

“Transaction Documents” include this Agreement, the Warrant, the Certificate of Designations and the Exhibits hereto and
thereto. 
 “Transfer Agent” means Computershare Investor Services, or any successor transfer agent for the
Common Stock. 
 “VWAP” means, for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted for trading as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)); (b) if the Common Stock is then listed or quoted on the OTC Bulletin Board and the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin
Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investor and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company. 
 “Warrant” means the warrant issuable under this Agreement,
in the form attached hereto as Exhibit A-1, to initially purchase 1,114,650 shares of Common Stock, at an initial exercise price per share equal to the Closing Bid Price of the Common Stock as of the close of trading on the Effective Date,
subject to adjustment as provided therein. 
 “Warrant Shares” means the shares of Common Stock issuable upon
exercise of the Warrant. 
 ARTICLE 2 
 PURCHASE AND SALE 
 2.1 Agreement to
Purchase. Subject to the terms and conditions herein and the satisfaction of the conditions to Closing set forth in this ARTICLE 2: 
 (a) Investor hereby agrees to purchase such amounts of Preferred Shares as the Company may, in its sole and absolute discretion, from time to time elect to issue and sell to Investor according
to one or more Tranches pursuant to Section 2.3 below; and 

  
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 (b) The Company agrees to pay the Commitment Fee and issue the Preferred Shares,
Additional Investment Right, Warrant and Common Shares to Investor in accordance with the terms of this Agreement. 

2.2 Investment Commitment. 
 (a) Investment Commitment. The closing of this Agreement (the “Commitment Closing”) shall be deemed to occur when this Agreement has been duly executed by both Investor
and the Company, and the other Conditions to the Commitment Closing set forth in Section 2.2(b) have been met. 

(b) Conditions to Investment Commitment. As a condition precedent to the Commitment Closing, all of the following (the
“Conditions to Commitment Closing”) shall have been satisfied prior to or concurrently with the parties’ execution and delivery of this Agreement: 
 (i) the following documents shall have been delivered to Investor: (A) this Agreement, executed by the Company; (B) a Secretary’s Certificate as to (w) the resolutions of
the Company’s board of directors authorizing this Agreement and the Transaction Documents, and the transactions contemplated hereby and thereby, (x) a copy of the Company’s current Certificate of Incorporation, (y) a copy of the
Company’s current Bylaws, and (z) the incumbency of the persons executing the Transaction Documents; (C) a copy of the Certificate of Designations filed with the Secretary of State of the State of Delaware; (D) the Opinion; and
(E) a copy of the press release announcing the transactions contemplated by this Agreement and Current Report on Form 8-K of the Company describing the transactions contemplated by, and attaching a complete copy of, the Transaction Documents;

 (ii) other than for losses incurred in the ordinary course of business, there shall have been no Material
Adverse Effect since the date of the last SEC Report filed by the Company; 
 (iii) the representations and
warranties of the Company in this Agreement shall be true and correct in all material respects and the Company shall have delivered an Officer’s Closing Certificate to such effect to Investor, signed by an officer of the Company; 

(iv) the Required Approval, if necessary, has been obtained; and 

(v) the representations and warranties of Investor in this Agreement shall be true and correct in all material respects.

 (c) Delivery of the Warrant. Simultaneously with the Commitment Closing, the Company shall deliver
the Warrant to the Investor. 
 (d) Investor’s Obligation to Purchase. Subject to the prior satisfaction
of all conditions set forth in this Agreement, following the Investor’s receipt of a validly delivered 

  
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Tranche Notice, the Investor shall be required to purchase from the Company a number of Tranche Shares equal to the permitted Tranche Share Amount, in the manner described below. 

2.3 Tranches to Investor. 
 (a) Procedure to Elect a Tranche. Subject to the Maximum Tranche Amount, the Maximum Placement and the other conditions and limitations set forth in this Agreement, at any time
beginning on the time at which the Registration Statement is declared effective, the Company may, in its sole and absolute discretion, elect to exercise one or more tranches of Preferred Shares (each a “Tranche”) according to the
following procedure, provided that each subsequent Tranche Notice Date (defined below) after the first Tranche Notice Date shall be no sooner than the later of five (5) Trading Days following the preceding Tranche Notice Date and the Trading
Day after the date on which the Tranche Closing for the prior Tranche has occurred. 
 (b) Delivery of Tranche
Notice. The Company shall deliver an irrevocable written notice (the “Tranche Notice”) the form of which is attached hereto as Exhibit F (the date of such Tranche Notice being the “Tranche Notice Date”),
to Investor stating that the Company shall exercise a Tranche and stating the number of Preferred Shares which the Company will sell to Investor at the Tranche Share Price, and the aggregate purchase price for such Tranche (the “Tranche
Purchase Price”). A Tranche Notice may be delivered by the Company to Investor before 9:30 a.m., New York City time, on any Trading Day via facsimile or electronic mail, with confirming copy by overnight carrier, in each case, to the
address set forth on the page immediately following the signature pages to this Agreement. A Tranche Notice delivered after such time or on a non-Trading Day shall be deemed delivered on the following Trading Day. Except with respect to
the delivery of a Tranche Notice prior to the first Tranche Closing Date, the Company may not give a Tranche Notice unless the Tranche Closing for the prior Tranche has occurred. 

(c) Issuance of Warrant; Additional Investment Shares. 

(i) Warrant. On each Tranche Notice Date, that portion of the Warrant equal to the quotient calculated by
dividing (A) the Tranche Amount specified in the Tranche Notice delivered on such date by (B) the Maximum Placement, shall vest and be automatically exercised, at the price per share set forth in the Warrant. Investor shall document
the automatic exercise of such portion of the Warrant by delivering an Exercise Notice to the Company and shall make payment for the shares issuable upon such exercise in cash, or through the issuance of a recourse note in the form attached as
Exhibit G to this Agreement, in each case, as set forth in the Warrant. An Exercise Notice in respect of an automatic exercise of the Warrant, and the payment of the exercise price in respect thereof, shall be delivered on or before 4:00
p.m., New York City time, on the Trading Day immediately following the date on which the Tranche Notice is deemed to have been delivered. 
 (ii) Additional Investment Shares. On each Tranche Notice Date, Investor shall become obligated, pursuant to a right automatically vesting on such Tranche Notice Date (each, an
“Additional Investment Right”), to purchase that number of shares of Common Stock (“Additional Investment Shares”) equal in dollar amount to 100% of the Tranche


  
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Amount set forth in the Tranche Notice at the price per share as determined by the immediately following sentence. The exercise price per share of the Additional Investment Right shall be as
follows: (i) until the first Tranche Notice Date, the Closing Bid Price as of the close of trading on the Effective Date, and (ii) on and after the first Tranche Notice Date and each subsequent Tranche Notice Date, an amount per share
equal to the Closing Bid Price of a share of Common Stock on the Trading Day immediately preceding the applicable Tranche Notice Date. The purchase of Additional Investment Shares must occur no later than sixty (60) calendar days following the
Tranche Notice Date. The Additional Investment Right may be exercised from time to time within such sixty calendar day period, on such days as determined by the Investor, in one or more tranches. Investor shall document the exercise the
Additional Investment Right by delivering an Investment Right Exercise Notice to the Company and shall pay for the Additional Investment Shares in cash, or through the issuance of a recourse note in the form attached as Exhibit G to this
Agreement. An Investment Right Exercise Notice, and the payment of the exercise price in respect of such Investment Right Exercise Notice, that is (A) delivered on or before 4:00 p.m., New York City time, on any Trading Day shall be deemed to
have been delivered on such Trading Day, and (B) delivered after 4:00 p.m., New York City time, on any Trading Day or on a day that is not a Trading Day shall be deemed to have been delivered on the immediately following Trading Day.

 (iii) Tranche Notice Restrictions. 

(A) In no event shall the Company be permitted to deliver a Tranche Notice if the total number of registered shares is
insufficient to cover the number of shares underlying Warrants (including the portion of the Warrant vesting on the applicable Tranche Notice Date) and the Additional Investment Right issued on the applicable Tranche Notice Date and, if applicable,
the Commitment Fee Shares. 
 (B) At no time may the Company deliver a Tranche Notice if the number of Warrant
Shares or Additional Investment Shares to be received pursuant to the automatic exercise of the Warrant and the exercise of the Additional Investment Right triggered by such Tranche Notice, aggregated with all other shares of Common Stock and other
voting securities then owned or deemed beneficially owned by Investor and its Affiliates, would result in Investor and its Affiliates owning or being deemed the beneficial owner of more than 9.99% of all of such Common Stock and other voting
securities as would be outstanding on the date of exercise, with such ownership percentage determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder (the “Investor Ownership
Limit”). 
 (iv) Issuance of Warrant Shares and Additional Investment Shares. No later than the
Trading Day immediately following the date on which the Company is deemed to have received each of the Exercise Notice or the Investment Right Exercise Notice, as the case may be, and the aggregate exercise price in respect thereof (the
“Exercise Delivery Date”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of thereof to the Holder and an electronic copy of its share issuance instructions to the Holder and the Transfer Agent
(which such electronic transmissions to comply with the notice provisions of Section 6.2 of this Agreement), and shall instruct and authorize the Transfer Agent to 

  
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immediately credit such aggregate number of freely tradable Common Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account
with The Depository Trust Company (DTC) through the Fast Automated Securities Transfer (FAST) Program through its Deposit/Withdrawal at Custodian (DWAC) system, with such credit to occur no later than 12:00 p.m. Eastern Time on third Trading Day
following the Exercise Delivery Date, time being of the essence; provided, however, that in respect of an automatic exercise of Warrants or an exercise of the Additional Investment Right on or prior to the 2nd Trading Day immediately preceding the related Tranche Closing Date,
if the Common Shares are not credited as DWAC Shares by 5:00 p.m. Eastern Time on the Trading Day following the Exercise Delivery Date, then the applicable Tranche Closing Date shall be extended by one Trading Day for each Trading Day that timely
credit of DWAC Shares is not made.
 (v) Security Agreement. If the Investor elects to pay for the exercise
of any portion of the Warrant or the Additional Investment Right with a recourse note in the form attached hereto as Exhibit G, the Investor and the Company shall execute and deliver to each other a security agreement in the form attached
hereto as Exhibit H simultaneously with the delivery of the first recourse note in connection with such exercise. 

(d) Conditions Precedent to a Tranche Notice. The right of the Company to deliver a Tranche Notice and the
obligation of the Investor to accept a Tranche Notice and to acquire and pay for the Preferred Shares are subject to the satisfaction, on the Tranche Notice Date, of each of the conditions set forth below: 

(i) the Common Stock shall be listed for trading or quoted on a Trading Market, and to the Company’s knowledge there is
no notice of any suspension or delisting with respect to the trading or quotation of the shares of Common Stock on the Trading Market; 
 (ii) the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as if made on the Tranche Notice Date, except for
representations and warranties that are expressly made as of a particular date in which case, such representations and warranties shall be true and correct as of such particular date (provided, however, that, in respect of any representation and
warranty that is required to be so true and correct as of the Tranche Notice Date which refers to the Disclosure Schedules, any information disclosed by the Company in a filing with the SEC after the Effective Date but prior to the date of the
Tranche Notice shall be deemed to update the Disclosure Schedules automatically and without any further action on the part of the Company), the Company shall have performed, satisfied and complied in all material respects with all covenants and
agreements required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Tranche Notice Date, and the Company shall deliver an Officer’s Closing Certificate to such effect to Investor, signed by an
officer of the Company; 
 (iii) the representations and warranties of the Investor set forth in this Agreement
shall be true and correct in all material respects as if made on such date, except for representations and warranties that are expressly made as of a particular date in which case, such representations and warranties shall be true and correct as of
such particular date, and the 

  
 13 









 
Investor shall have performed, satisfied and complied in all material respects with all covenants and agreements required by this Agreement to be performed, satisfied or complied with by the
Investor at or prior to such date; 
 (iv) other than losses incurred in the ordinary course of business, there
shall have been no Material Adverse Effect since the Commitment Closing; 
 (v) all Common Shares shall have been
timely delivered pursuant to any Exercise Notice properly delivered to the Company under the terms of the Warrant prior to the applicable Tranche Notice Date; 
 (vi) all previously-issued Common Shares are DWAC Shares in electronic form without restriction on resale; 
 (vii) none of the Company or any of its Subsidiaries is, or will be as a result of the applicable Tranche, in default of this Agreement or any Material Agreement (it being hereby acknowledged
and agreed that for purposes of this paragraph (vii), the trigger of any antidilution, price-reset or similar provisions in any outstanding warrants or other derivative securities of the Company as a result of the applicable Tranche shall not be
deemed a default of any Material Agreement, so long as such actions do not trigger a default under such Material Agreement); 

(viii) there is not then in effect any law, rule or regulation prohibiting the transactions contemplated by any of the
Transaction Documents, or requiring any consent or approval which shall not have been obtained, nor is there any pending proceeding or investigation which may have the effect of prohibiting or adversely affecting any of the transactions contemplated
by this Agreement; no statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits the transactions
contemplated by this Agreement, and no actions, suits or proceedings shall be in progress or pending by any person (other than Investor or any Affiliate of Investor) that seek to enjoin or prohibit the transactions contemplated by this Agreement (it
being hereby acknowledged and agreed that for purposes of this paragraph (viii), no proceeding shall be deemed pending unless one of the parties hereto has received written notification thereof prior to the applicable Tranche Notice Date);

 (ix) the Common Stock is listed or quoted on a Trading Market and the Company is in compliance with all
requirements in order to maintain listing on its then current Trading Market (including reporting requirements under the Exchange Act, if applicable); 
 (x) the Required Approval, if necessary, has been obtained; 

(xi) either (A) the Company has a current, valid and effective Registration Statement covering the lawful resale of all
Common Shares then issued or issuable upon exercise of the Warrant, or (B) all of the Common Shares are Rule 144 Eligible; 

  
 14 









 (xii) the Company has a sufficient number of duly authorized shares of Common
Stock reserved for issuance in such amount as may be required to issue all Common Shares issuable pursuant to such Tranche, including, without limitation, all Warrant Shares and Additional Investment Shares that are issuable in connection with such
Tranche; 
 (xiii) the Company has provided notice of its delivery of the Tranche Notice to all signatories of a
Lock-Up Agreement as required under the Lock-Up Agreement; 
 (xiv) the aggregate number of Warrant Shares issuable
upon exercise of the Warrant based on the then-current anticipated exercise price(s) of the Warrant, aggregated with all other shares of Common Stock deemed beneficially owned by the Investor and its Affiliates would not result in the Investor
beneficially owning more than 9.99% of the Common Stock outstanding on the Tranche Notice Date, as determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder; 

(xv) except in connection with the first Tranche Notice, Investor shall have previously received the Commitment Fee; 

(xvi) the Certificate of Designations shall have been duly filed with, and accepted by, the Secretary of State of the State of
Delaware; and 
 (xvii) all deliverables specified in Section 2.3(e) of this Agreement shall have been
delivered. 
 (e) Deliveries at Tranche Closing. The Closing of any Tranche and the parties’ obligations
hereunder shall additionally be conditioned upon the delivery of each of the following (the “Required Tranche Deliveries”), except as otherwise indicated, on or before the applicable Tranche Closing Date: 

(i) a number of Preferred Shares equal to the Tranche Purchase Price divided by the Tranche Share Price shall have been
delivered to Investor or an account specified by Investor for the Tranche Shares; 
 (ii) the Tranche Purchase
Price shall have been paid by the Investor to the Company by wire transfer of immediately available funds to an account designated by the Company prior to the applicable Tranche Closing Date; 

(iii) Investor shall have received that portion of the Commitment Fee, if any, that is payable as set forth in the
definition of Commitment Fee set forth in Article I hereof; 
 (iv) the following executed documents shall
have been delivered to Investor: the Opinion and the Officer’s Closing Certificate; 

  
 15 









 (v) with respect to the first Tranche Closing only, the Lock-Up Agreements
shall have been delivered to Investor; 
 (vi) a “Use of Proceeds” certificate, signed by an
officer of the Company, and setting forth how the Tranche Purchase Price will be applied by the Company, shall have been delivered to Investor; 
 (vii) all Warrant Shares and Additional Investment Shares shall have been timely delivered to Investor in accordance with any exercise notice properly delivered to Company prior to the
applicable Tranche Closing Date; 
 (viii) all documents, instruments and other writings required to be delivered
by the parties on or before the Tranche Closing Date pursuant to any provision of this Agreement in order to implement and effect the transactions contemplated herein; 
 (ix) payment of a $5,000.00 non-refundable administrative fee to Mintz Levin, by offset against the Tranche Amount, or wire transfer of immediately available funds; and 

(x) on each Tranche Closing Date (other than the first Tranche Closing Date), a “bring-down” certificate relating
to the good standing of the Company. 
 (f) Mechanics of Tranche Closing. Each of the Company and
Investor shall deliver all Required Tranche Deliveries required to be delivered by either of them pursuant to Sections 2.3(d) and 2.3(e) of this Agreement, as applicable, at or prior to each Tranche Closing. Subject to such delivery and the
satisfaction (or where legally permissible, the waiver) of the conditions set forth in Section 2.3(d) as of the Tranche Closing Date, the closing of the purchase by Investor of Preferred Shares shall occur by 5:00 p.m., New York City
time, on the date which is ten (10) Trading Days following the Tranche Notice Date (each a “Tranche Closing Date”) at the offices of Investor; provided, however, that if any Warrant Shares or Additional Investment
Shares, with respect to any portion of the Warrant or Additional Investment Right exercised before the Tranche Closing Date have not been timely delivered in accordance with the Transaction Documents, then the Tranche Closing Date shall be extended
one Trading Day for each Trading Day that such delivery is not made; and provided, further, that if any Warrant Shares or Additional Investment Shares are not DWAC Shares upon delivery, then the Tranche Closing Date shall be extended
one Trading Day for each Trading Day that such shares are not DWAC Shares. On or before each Tranche Closing Date, Investor shall pay to the Company the Tranche Purchase Price to be paid for such Tranche Shares by wire transfer of immediately
available funds to an account designated by the Company prior to the applicable Tranche Closing Date. The closing (each a “Tranche Closing”) for each Tranche shall occur on the date that all Required Tranche Deliveries, as
applicable, have been delivered to the applicable party pursuant to Section 2.3(e) of this Agreement. 

(g) Limitation on Obligations to Purchase and Sell. Notwithstanding anything herein to the contrary, in the event
the Closing Bid Price of the Common Stock during any one or more of the nine (9) Trading Days following the Tranche Notice Date falls below 

  
 16 









 
75.0% of the Closing Bid Price of the Common Stock on the Trading Day immediately prior to the Tranche Notice Date, the Company shall not issue any of Tranche Shares on the Tranche Closing Date,
Investor shall not purchase any of the Tranche Shares, and the Tranche shall be cancelled; provided, however, that Investor shall retain any Warrant Shares or Additional Investment Shares issued in connection with the Tranche Notice. 

(g) Good Standing. Promptly upon receipt of the proceeds from the first Tranche Closing, the Company shall pay
all outstanding franchise taxes with the State of Delaware. Promptly thereafter, the Company shall provide Investor with a “long-form” certificate issued by the Secretary of State of the State of Delaware stating that the Company is a
corporation in good standing and has paid all outstanding franchise taxes. 
 2.4 Maximum
Placement. Investor shall not be obligated to purchase any additional Tranche Shares once the aggregate Tranche Purchase Price paid by Investor equals the Maximum Placement. 

2.5 Share Sufficiency. On or before the date on which the Warrants first become exercisable, the Company shall
have a sufficient number of duly authorized shares of Common Stock for issuance in such amount as may be required to fulfill its obligations pursuant to the Transaction Documents and any outstanding agreements with Investor and any Affiliate of
Investor. 
 ARTICLE 3 
 TERMINATION 
 3.1 Automatic Termination. This
Agreement shall terminate automatically (each, an “Automatic Termination”) upon the occurrence of any of the following: 
 (a) if, at any time after the Effective Date, either the Company or the Investor, or any director or executive officer of the Company or the Investor, has engaged in a transaction or conduct
related to the Company or the Investor, as applicable, that has resulted in (i) a SEC enforcement action, or (ii) a civil judgment or criminal conviction for fraud or misrepresentation, or for any other offense that, if prosecuted
criminally, would constitute a felony under applicable law; 
 (b) on any date after a Delisting Event that lasts
for an aggregate of 20 Trading Days during any calendar year; 
 (c) if at any time the Company has filed for and/or
is subject to any bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors instituted by or against the Company or any subsidiary of the Company;

 (d) upon the occurrence of a Fundamental Transaction; 

  
 17 









 (e) the Company or any of its Subsidiaries is in breach or default of any
Material Agreement, which breach or default has had a Material Adverse Effect; 
 (f) the Company is in breach or
default of any material term of this Agreement, any Transaction Document, or any agreement with Investor or any Affiliate of Investor; 
 (g) so long as any Preferred Shares are outstanding, the Company (i) creates or publicly announces its intention to create a class of Common Stock or series of preferred stock senior to
the Series B Preferred Stock with respect to dividend or liquidation rights or (ii) substantially alters or publicly announces its intention to substantially alter the capital structure of the Company in a manner that materially adversely
effects the rights or preferences of the Series B Preferred Stock, in each case without the prior approval of the holders or a majority of the Preferred Shares then outstanding; and 

(h) on the Termination Date. 
 3.2 Company Termination. The Company may at any time in its sole discretion terminate (a “Company Termination”) this Agreement by providing 30 days’ advance
written notice (“Termination Notice”) to Investor. 
 3.3 Other Termination. The
Investor may terminate this Agreement by providing three days’ advance written notice to the Company, if the Company is in breach or default of any Material Agreement which would reasonably be expected to have a Material Adverse Effect, and
such breach or default is not cured within 20 Trading Days after notice of such breach or default is delivered to the Company. The Company or the Investor may terminate this Agreement by providing three days’ advance written notice to the
other, if the other party is in material breach or default of this Agreement or any Transaction Document, and such material breach or default is not cured within 10 Trading Days after notice of such material breach or default is delivered to the
breaching party. This Agreement may be terminated at any time by the mutual written consent of both the Company and the Investor, effective as of the date of such mutual written consent unless otherwise provided in such written consent. 

3.4 Effect of Termination. In the event of termination by the Company or the Investor pursuant to
Section 3.2 or 3.3, as applicable, written notice thereof shall forthwith be given to the other party as provided in Section 6.2 and the transactions contemplated by this Agreement shall be terminated without further action
by either party. If this Agreement is terminated as provided in Section 3.1, 3.2 or 3.3 herein, this Agreement shall become void and of no further force and effect, except as provided in Section 6.8 hereof and in this
Section 3.4. Nothing in this Section 3.4 shall be deemed to release the Company or the Investor from any liability for any breach or default under this Agreement or any of the other Transaction Documents occurring prior to
such termination, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement arising prior to such termination, or to impair rights of indemnification under this
Agreement or any other Transaction Document. The termination of this Agreement will have no effect on any Preferred Shares, Warrant (except as provided therein in the event of a Funding Default) or Warrant Shares previously issued or delivered, or
on any rights of any holder thereof; 

  
 18 









 
provided, however, that in the event that the sum of the aggregate Tranche Purchase Price for all Tranche Shares reaches the Maximum Placement hereunder, any portion of the Warrant or
Additional Investment Right that remains unvested on such Termination Date shall automatically vest and become exercisable in accordance with Section 2.3 (as if the Termination Date was the Tranche Notice Date), with no further action of
the Company, Investor or the holder of the Warrant or Additional Investment Right, as the case may be, as of such Termination Date. Notwithstanding any other provision, (a) all fees paid to Investor or its counsel are non-refundable, and
(b) the Commitment Fee shall be payable irrespective of any termination of this Agreement. 
 ARTICLE 4

 REPRESENTATIONS AND WARRANTIES 
 4.1 Representations and Warranties of the Company. Except as set forth below as being qualified by the corresponding section of the Disclosure Schedules (as the same may be updated
or deemed updated pursuant to Section 2.3(c)(ii)), which shall be deemed a part hereof, or as set forth below as being qualified by the SEC Reports, which, in each case, shall qualify any representation or warranty made herein to the extent of
such disclosure, the Company hereby represents and warrants to, and as applicable covenants with, Investor as follows: 

(a) No Subsidiaries. The Company does not own, directly or indirectly, any capital stock or other equity
interests in any Subsidiary. 
 (b) Organization and Qualification. Except as disclosed in Schedule
4.1(b) of the Disclosure Schedules, the Company is an entity duly incorporated, validly existing and in good standing under the laws of the State of Delaware, 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 is not in violation or default of any of the provisions of its certificate of incorporation or bylaws as currently in effect, except where such violation or default would not,
individually or in the aggregate, constitute a Material Adverse Effect. The Company is duly qualified to conduct business and is in good standing as a foreign corporation 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, would not have or reasonably be expected to result in a Material Adverse Effect, and no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification, except as would not have or reasonably be expected to result in a Material Adverse Effect.

 (c) 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 or thereunder. The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby or thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or authorization of the Company or its board of directors or
stockholders is required. Each of the Transaction Documents has been, or upon delivery will be, duly executed by the Company and, 

  
 19 









 
when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies. 

(d) No Conflicts. Assuming each of the filings, consents and approvals referred to in Section 4.1(e)
are obtained, given or made on a timely basis, as applicable, the execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions
contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s certificate of incorporation or bylaws as currently in effect, 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 affected, or (iii) 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 U.S.
federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a
Material Adverse Effect. 
 (e) 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, delivery and
performance by the Company of the Transaction Documents, other than (i) the filing of the Certificate of Designations, (ii) such as may be required under the Act (including, without limitation, the filing of a Form D with the SEC and any
Registration Statement required to be filed pursuant to this Agreement) or the Exchange Act (including, without limitation, the filing of a Current Report on Form 8-K of the Company describing the transactions contemplated by, and attaching a
complete copy of, the Transaction Documents), (iii) such as may be required under applicable state securities or “blue sky” laws, (iv) such as may be required under the rules and regulations of the Trading Market or the Financial
Industry Regulatory Authority (the “FINRA”) and (v) such consents, waivers, authorizations, order, notices, filings or registrations, the failure of which to obtain, give or make would not, individually or in the aggregate,
result in a Material Adverse Effect; provided, that, for purposes of the representation made in this Section 4.1(e), the Company is assuming and relying upon the accuracy of the representations and warranties of the Investor
contained in Sections 4.2(d) through and including 4.2(m), and the full performance of and compliance with the covenants and agreements of the Investor contained in Section 5.1 of this Agreement. 

(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, and subject to, and in reliance on, the representations, warranties, covenants and agreements made herein by the 

  
 20 









 
Investor, will be duly and validly issued, fully paid and nonassessable, and subject to Section 5.14, free and clear of all Liens. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock and Preferred Stock for issuance of the Securities at least equal to the number of Securities which could be issued pursuant to the terms of this Agreement based on the then-current
anticipated exercise price(s) of the Warrant. 
 (g) Capitalization. The authorized capital stock of the
Company as of September 30, 2010 and the number of shares of Common Stock issued and outstanding as of November 8, 2010 is as described in the Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended September 30,
2010. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Other than as disclosed in the SEC Reports, except
as a result of the purchase and sale of the Securities and for stock options issued by the Company to its employees, directors and consultants, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or securities convertible into or exercisable for shares of Common Stock. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in compliance with all U.S. federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as disclosed in the SEC Reports, 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. 
 (h) SEC Reports;
Financial Statements. Except as set forth in Schedule 4.1(h) of the Disclosure Schedules, the Company has filed all required SEC Reports for the two years preceding the Effective Date (or such shorter period as the Company was required by
law to file such material) 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 Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, 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 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 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 and its consolidated subsidiaries 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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 (i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to be 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 and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company equity incentive plans. The Company does not have pending before the SEC any request for confidential treatment of information. 

(j) Litigation. Except as set forth in Schedule 4.1(j) of the Disclosure Schedules or as set forth in the SEC
Reports, 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 (i) adversely affects or challenges the legality, validity or enforceability of any of
the Transaction Documents or the Securities, or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor to the knowledge of the Company any director
or officer of the Company, is or has been during the past five years the subject of any Action involving a claim of violation of or liability under U.S. federal or state securities laws or a claim of breach of fiduciary duty. During the past
five years, 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 in their capacity as a director
or officer of the Company. During the past five years, 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 Act. 

(k) Labor Relations. Except as set forth in Schedule 4.1(k) of the Disclosure Schedules or in the SEC Reports, no
material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which would reasonably be expected to result in a Material Adverse Effect. 

(l) Compliance. Except as set forth in Schedule 4.1(l), the Company (i) is not in default under or in
violation of (and, to the Company’s knowledge, 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 under), nor has the Company received written 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 similar agreement or instrument 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 in violation of any order of any court, arbitrator or governmental body applicable to the Company, or (iii) is or has been in 

  
 22 









 
violation of any statute, rule or regulation of any governmental authority applicable to the Company, including without limitation all foreign, federal, state and local laws applicable to its
business, except in each of the cases referenced in clauses (i), (ii) and (iii) above as would not have a Material Adverse Effect. 
 (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit. 

(n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real
property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case 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 made and proposed to be made of such property by the Company and the Subsidiaries 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 and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in compliance. 
 (o) Patents and
Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and which the failure to so have would have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). The Company has not received
a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of the Company. 

(p) Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in which the Company is engaged. Except as set forth in the SEC Reports, the Company has no reason to believe that it will not be 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 without a significant increase in cost. 

(q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, 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 or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services 

  
 23 









 
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 (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee benefits, including stock option agreements under any equity incentive plan of the Company. 

(r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with all provisions of
the Sarbanes-Oxley Act of 2002, which are applicable to it as of the date of the Commitment Closing. The Company and the Subsidiaries maintain 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, including its Subsidiaries, 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 date prior to the filing date
of 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 307(b) of Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other factors that could materially affect the Company’s internal controls. 

(s) Certain Fees. Except for the payment of the Commitment Fee and except as set forth in Schedule 4.1(s) to the
Disclosure Schedules, the issuance of the Warrant and the other payments to be made pursuant to the Transaction Documents, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. Except as a result of any agreements or arrangements made by the Investor or its representatives or
Affiliates, to the Company’s knowledge, Investor shall have no obligation with respect to any such fees or commissions of a type contemplated in this Section 4.1(s) that may be due in connection with the transactions contemplated by
this Agreement. 
 (t) Private Placement. Assuming the accuracy of Investor representations and warranties
set forth in Section 4.2, no registration under the Act is required for the offer and 

  
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sale of the Securities by the Company to Investor as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 (u) 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. The Company shall conduct its business in a manner so that it will not become
subject to the Investment Company Act. 
 (v) Registration Rights. Except as set forth in Schedule
4.1(v) of the Disclosure Schedules, no Person has any right to cause the Company to effect the registration under the Act of any securities of the Company that have not been registered. 

(w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12 of the
Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor, to the Company’s knowledge, is the SEC
contemplating terminating such registration. Except as set forth in Schedule 4.1(w) to the Disclosure Schedules or as set forth in the SEC Reports, the Company has not, in the 12 months preceding the Effective Date, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth in the SEC Reports, the Company is
in compliance with all such listing and maintenance requirements.
 (x) Application of Takeover
Protections. The Company and its 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 the laws of its state of incorporation that is or could become applicable to Investor as a result of Investor and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents, including without limitation the Company’s issuance of the Securities and Investor’s ownership of the Securities. 

(y) Disclosure. Except with respect to (i) the transactions contemplated by the Transaction Documents and
(ii) the information that will be publicly disclosed by the Company pursuant to Section 2.2(b)(i)(E) and Section 5.4, the Company confirms that neither the Company nor any other Person acting on its behalf has provided
Investor or its agents or counsel with any information that constitutes material, non-public information that, according to applicable law, rule or regulation, should have been disclosed publicly by the Company prior to the Effective Date but which
has not been so publicly disclosed. The Company understands and confirms that Investor will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to Investor
regarding the Company, its business and the transactions contemplated hereby, furnished by or on behalf of the Company with respect to the representations and warranties made herein are true and correct in all material respects and do not contain
any untrue statement of a material fact or omit to state 

  
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any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 

(z) 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 the Act or which could violate any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the applicable Trading Market. 

(aa) Financial Condition. Based on the financial condition of the Company as of the date of the Commitment
Closing: (i) the fair saleable market 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; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). 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 date of the Commitment Closing. The Company’s Quarterly Report on Form 10-Q for its fiscal quarter
ended September 30, 2010 sets forth as of September 30, 2010 all outstanding secured and unsecured Indebtedness of the Company, or for which the Company has commitments. The Company is not in default with respect to any indebtedness
for borrowed money. 
 (bb) Tax Status. Except as set forth in Schedule 4.1(hh) to the Disclosure
Schedules, the Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that
the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The
Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statue or local tax. None of the Company’s tax returns is presently being audited by any taxing
authority. 

  
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 (cc) No General Solicitation or Advertising. Except for the
Registration Statement to be filed as contemplated by this Agreement, neither the Company nor, to the knowledge of the Company, any of its directors or officers (i) has conducted or will conduct any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect to the sale of the Securities, or (ii) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration
of the Securities under the Act or made any “directed selling efforts” as defined in Rule 902 of Regulation S. 

(dd) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other
person acting on behalf of the Company, has (i) directly or indirectly, used any corrupt funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any
person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 

(ee) Acknowledgment Regarding Investor’s Purchase of Securities. The Company acknowledges and agrees that
Investor is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that Investor is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by Investor or any of its representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental to Investor’s purchase of the Securities. The Company further represents to Investor that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its representatives. 

(ff) Accountants. The Company’s accountants are set forth in the SEC Reports. To the Company’s
knowledge, such accountants are an independent registered public accounting firm as required by the Act. 

(gg) 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 accountants and lawyers formerly or presently employed by the Company. 
 (hh) Registration Statements and Prospectuses. 

(i) Company will use its commercially reasonable efforts to file within 30 calendar days after the Effective Date (or as
soon as possible thereafter), cause to become effective as soon as possible thereafter, and remain effective until the earlier of (A) the first date on which all Common Shares covered thereby have been sold or are Rule 144 Eligible or
(B) in the event that no Tranche Closing ever occurs, the Termination Date, a Registration Statement covering the public resale by the Investor of all Common Shares issued pursuant to the


  
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Transaction Documents. Such Registration Statement, on the date it is filed with the SEC and on the date it becomes effective, and, as amended or supplemented, at the time of any Tranche
Notice Date, Tranche Closing Date, or issuance of any Warrant Shares, will comply as to form, in all material respects, with the requirements of the Act. 
 (ii) Such Registration Statement, as of its effective date, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that this representation and warranty does not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information relating to the
Investor furnished to the Company in writing by or on behalf of the Investor expressly for use therein, which to the Company’s knowledge are not false or misleading. 
 (iii) The Prospectus, on the date it is filed with the SEC and as of its date, and, at the time of any Tranche Notice Date, Tranche Closing Date, or issuance of any Common Shares, and at all
times during which a prospectus is required by the Act to be delivered in connection with any sale of Common Shares covered thereby, will comply as to form, in all material respects, with the requirements of the Act. 

(iv) The Prospectus and any amendment or supplement thereto, as of its date, will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation and warranty does not apply to
statements in or omissions from the Prospectus or any amendment or supplement thereto made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or on behalf of the Investor expressly for
use therein, which to the Company’s knowledge are not false or misleading. 
 (v) The Registration Statement,
as of its effective date, will meet the requirements of subsections (a)(1)(i) and/or (a)(1)(iii) of Rule 415 under the Act or any other applicable subsections thereof. 
 4.2 Representations and Warranties of Investor. Investor hereby represents and warrants to, and as applicable covenants with, the Company as follows: 

(a) Organization; Authority. Investor is an entity duly formed, validly existing and in good standing under the laws of
the jurisdiction of its organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Investor has the requisite company power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of the Transaction Documents to which Investor is a party and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary company action on the part of Investor and no further consent or authorization of Investor or its members is required. Each Transaction Document to which Investor is a
party has been (or will be) duly executed by Investor, and when delivered by Investor in accordance with the terms hereof or thereof, will constitute the valid and 

  
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legally binding obligation of Investor, enforceable against Investor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies. 
 (b) No Conflicts. The execution, delivery and performance of
the Transaction Documents to which Investor is a party do not and will not conflict with or violate any provision of Investor’s memorandum of association or bye-laws (or similar organizational documents) as currently in effect. 

(c) Investor Status. At the time Investor was offered the Securities, it was, and it is: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Act. 

(d) Experience of Investor. Investor, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Investor is
able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
 (e) Information. The Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which have been requested by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company; provided, however, that neither such inquiries nor any other
due diligence investigations conducted by Investor or its representatives shall modify, amend or affect Investor’s right to rely on the Company’s representations and warranties contained in Section 4.1. The Investor has sought
such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. The Investor understands that it (and not the Company) shall be responsible for its own
tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement. 

(f) General Solicitation. Investor is not purchasing the Securities as a result of any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. 

(g) No Public Sale or Distribution. Investor is acquiring the Securities for its own account, and not as a
nominee or agent. Investor is acquiring the Securities for investment purposes, and not with a view towards, or for resale in connection with, the public sale or distribution of any part thereof, except pursuant to transactions registered under
the Act or exempt from such registration; provided, however, that the disposition of its property shall at all times be within its control. Investor does not presently have any contract, agreement, undertaking, arrangement or understanding,
directly or indirectly, with any non-Affiliate of Investor to sell, transfer, pledge, assign or otherwise distribute any of the Securities. 

  
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 (h) Acknowledgement of Private Placement. Investor understands that
the offer and sale of the Securities provided for herein is being made without registration under the Act, in reliance upon the provisions of Section 4(2) of the Act, Regulation D promulgated under the Act, and such other exemptions from the
registration requirements of the Act as may be available with respect to any or all of the purchases of Securities to be made hereunder, and that the Company is relying in part upon the truth and accuracy of, and such Investor’s compliance
with, the representations, warranties, agreements, covenants, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the
Securities. 
 (i) Transfer or Resale. Investor understands that: (i) the Preferred Shares, the
Additional Investment Right and the Warrants have not been and are not being registered under the Act or any state securities or “blue sky” laws, (ii) as of the Effective Date, the Common Shares have not been registered under the Act
or any state securities or “blue sky” laws and (iii) except as expressly provided in the Transaction Documents with respect to the Common Shares, neither the Company nor any other Person is under any obligation to register the
Securities under the Act or any state securities or “blue sky” laws or to comply with the terms and conditions of any exemption thereunder. 
 (j) Trading Restrictions; Compliance with Securities Laws. The Investor covenants and agrees that during the period beginning on the Trading Day immediately preceding the Effective
Date and ending on the Trading Day next following the termination of this Agreement, neither the Investor nor any of its Affiliates nor any entity managed or controlled by the Investor will, directly or indirectly, enter into or execute or cause or
assist any Person to enter into or execute any “short sale” (as such term is defined in Rule 200 of Regulation SHO, or any successor regulation, promulgated by the SEC under the Exchange Act) of the Common Stock. 

(k) Not an Affiliate. The Investor is not an officer, director or Affiliate of the Company. 

(l) No Governmental Review. Investor understands that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities. 
 (m) Public Resale of Common Shares. The Investor agrees that unless the Common Shares
covered by any Registration Statement are Rule 144 Eligible, it will publicly resell such Common Shares only pursuant to such Registration Statement, in a manner described under the caption “Plan of Distribution” in the Registration
Statement, and in a manner in compliance with any applicable prospectus delivery requirements of the Securities Act. 
 The
Company acknowledges and agrees that Investor does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 4.2. 

  
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 ARTICLE 5 
 OTHER AGREEMENTS OF THE PARTIES 
 5.1 Transfer
Restrictions. 
 (a) The Securities constitute “restricted securities” as such term is defined in Rule
144(a)(3) under the Act and may only be disposed of in compliance with U.S. federal securities laws and applicable state securities or “blue sky” laws. Without limiting the generality of the foregoing, except for a transfer to an
Affiliate of Investor or a bona fide pledge of the Securities, the Securities may not be offered for sale, sold, transferred, assigned, pledged or otherwise distributed unless (i) subsequently registered thereunder, (ii) Investor shall
have delivered to the Company an opinion of counsel reasonably acceptable to the Company (which may be Mintz Levin, in a form generally acceptable to the Company, to the effect that such Securities to be offered for sale, sold, transferred,
assigned, pledged or otherwise distributed may be offered for sale, sold, transferred, assigned, pledged or otherwise distributed pursuant to an exemption from such registration, or (iii) such Securities can be offered for sale, sold,
transferred, assigned, pledged or otherwise distributed pursuant to Rule 144 or Rule 144A promulgated under the Act, as applicable. 
 (b) The parties acknowledge and agree that the Common Shares will be issued without any restrictive legends. Investor agrees to the imprinting, for so long as is required by this
Section 5.1, upon the certificates or other instruments representing the Preferred Shares and Warrants of any legends required by applicable state securities or “blue sky” laws, in addition to the following restrictive legend
(and that a stop transfer order shall be placed against transfer of such certificates):
 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH
THESE SECURITIES ARE EXERCISABLE HAVE 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 (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
 5.2 Furnishing of Information. As long as Investor owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the Effective Date pursuant to 

  
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the Exchange Act. Upon the request of Investor, the Company shall deliver to Investor a written certification of a duly authorized officer as to whether it has complied with the preceding
sentence. As long as Investor owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to Investor and make publicly available in accordance with Rule 144(c) such information as is required
for Investor to sell the Securities under Rule 144 until such time as Investor may sell all such Securities without restriction under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such Person to sell Securities without registration under the Act within the limitation of the exemptions provided by Rule 144. 

5.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Act of the sale of the Securities to Investor or that would
be integrated with the offer or which could violate any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the applicable Trading Market. 

5.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m., New York City
time, on the Trading Day immediately following the Effective Date, issue a press release and shall, by 5:30 p.m., New York City time, on the fourth (4th) Trading Day immediately following the Effective Date, file a Current Report on Form 8-K describing the
transactions contemplated by, and attaching a complete copy of, the Transaction Documents. Such press release and Current Report on Form 8-K shall be reasonably acceptable to Investor. The Company and Investor shall consult with each other in
issuing any additional press releases with respect to the transactions contemplated hereby, and neither the Company nor Investor shall issue any such press release or otherwise make any such public statement without the prior consent of the Company,
with respect to any such press release of Investor, or without the prior consent of Investor, with respect to any such press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required
by law, Trading Market regulations or judicial process, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. The Company shall provide Investor with prior notice
of any public disclosure of the name of Investor or contemplated inclusion of the name of Investor in any filing with the SEC or any regulatory agency or Trading Market (it being hereby acknowledged and agreed by Investor that Investor’s name
may be disclosed, to the extent required, in a supplemental listing application with the Trading Market, any Current Report on Form 8-K of the Company describing the transactions contemplated by the Transaction Documents, in any Registration
Statement and Prospectus covering any Common Shares, and in other reports of the Company required to be filed by the Company under the Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof).

5.5 Shareholders Rights Plan. No claim will be made or enforced by the Company or, to the knowledge of the
Company, any other Person that Investor is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that Investor could be deemed to trigger the
provisions of any such plan or 

  
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arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and Investor. The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act of 1940, as amended. 
 5.6 Non-Public
Information. The Company covenants and agrees that neither it nor any Person acting on its behalf will provide, Investor or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that Investor shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. 
 5.7 Reimbursement. If Investor becomes involved in any
capacity in any proceeding by or against any Person who is a stockholder of the Company (except as a result of sales, pledges, margin sales and similar transactions by Investor to or with any current stockholder), solely as a result of
Investor’s acquisition of the Securities under this Agreement, the Company will reimburse Investor for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred, or will assume the defense of Investor in such matter. The reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of Investor who are actually named in such action, proceeding or investigation, and partners, directors, agents, employees and controlling persons (if any), as the case may be,
of Investor and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Investor and any such Affiliate and any such Person. 

5.8 Indemnification. 
 (a) Indemnification by Company. Subject to the provisions of this Section 5.8(a), the Company will indemnify and hold Investor and any Warrant holder, their Affiliates
and attorneys, and each of their directors, officers, shareholders, partners, employees, agents, and any Person who controls Investor within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (collectively, the
“Investor Parties” and each an “Investor Party”), harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents, (b) any action instituted against any Investor Party, or any of them or their respective Affiliates, by any stockholder of the
Company who is not an Affiliate of an Investor Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of Investor’s representation, warranties or covenants or
agreements under the Transaction Documents or any agreements or understandings Investor may have with any such stockholder or any violations by Investor of state or federal securities laws or any conduct by Investor which constitutes fraud, gross
negligence, willful misconduct or malfeasance), (c) any untrue statement or alleged untrue statement of a material fact contained 

  
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in a Registration Statement (or in a Registration Statement as amended by any post-effective amendment thereof by the Company) or arising out of or based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the statements therein not misleading, and/or (d) any untrue statement or alleged untrue statement of a material fact included in any Prospectus ( or any amendments or
supplements to any Prospectus ), or arising out of or based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that (i) the Company shall not be obligated to indemnify any Investor Party for any Losses finally adjudicated to have been caused solely by an untrue statement of a material fact or an omission to state a
material fact made in reliance upon and conformity with information furnished to the Company in writing by or on behalf of such Person expressly for use in the Registration Statement or the Prospectus (or any amendment or supplement thereto) and
(ii) the foregoing indemnity shall not inure to the benefit of any Investor Party from whom the Person asserting any Losses purchased Securities, if a copy of the Prospectus (as then supplemented) was not sent or given by or on behalf of such
Investor Party to such Person, if required by law to have been delivered, at or prior to the written confirmation of the sale of such Securities to such person, and if delivery of the Prospectus (as then supplemented) would have cured the defect
giving rise to such Losses. The parties intend that any Losses subject to indemnification under this Section 5.8(a) will be net of insurance proceeds (which Investor agrees to use commercially reasonable efforts to recover or cause any
Investor Party to recover). Accordingly, the amount which the Company is required to pay any Investor Party under this Section 5.8(a) will be reduced by any insurance proceeds actually recovered by or on behalf of any Investor Party
in reduction of the related Losses. In addition, if an Investor Party receives indemnification from the Company under this Section 5.8(a) in respect of any Losses and subsequently receives any such insurance proceeds, then Investor
will pay, or will cause such other Investor Party to pay, to the Company an amount equal to the indemnification payment received under this Section 5.8(a) less the amount of the indemnification payment that would have been due if the
insurance proceeds had been received, realized or recovered before such indemnification payment was made. However, no provision herein regarding insurance proceeds shall delay payment by the Company to any Investor Party for any indemnified
Losses. 
 (b) Indemnification by Investor. Subject to the provisions of this
Section 5.8(b), Investor will indemnify and hold the Company, its Affiliates and attorneys, and each of the Company’s directors, officers, shareholders, employees, agents, and any Person who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act (collectively, the “Company Parties” and each an “Company Party”), harmless from any and all Losses that any Company Party has been finally
adjudicated to have suffered or incurred solely as a result of (a) any unexcused material breach of any material representations, warranties, covenants or agreements made by Investor in this Agreement or in the other Transaction Documents,
(b) any conduct by Investor which constitutes fraud, willful misconduct or malfeasance, (c) any untrue statement of a material fact contained in a Registration Statement (or in a Registration Statement as amended by any post-effective
amendment thereof by the Company) based upon any omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case, to the extent the untrue statement or omission was made in
reliance upon, and in conformity with, information furnished to the Company in writing by or on behalf of any Investor Party expressly for use in the 

  
 34 









 
Registration Statement (or any amendment thereto) and/or (d) any untrue statement of a material fact included in any Prospectus (or any amendments or supplements to any Prospectus), or based
upon any omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case, to the extent the untrue statement or omission was made in
reliance upon, and in conformity with, information furnished to the Company in writing by or on behalf of any Investor Party expressly for use in the Prospectus (or any supplement thereto). The parties intend that any Losses subject to
indemnification under this Section 5.8(b) will be net of insurance proceeds (which the Company agrees to use commercially reasonable efforts to recover or cause any Company Party to recover). Accordingly, the amount which Investor
is required to pay any Company Party under this Section 5.8(b) will be reduced by any insurance proceeds actually recovered by or on behalf of any Company Party in reduction of the related Losses. In addition, if a Company Party
receives indemnification from Investor under this Section 5.8(b) in respect of any Losses and subsequently receives any such insurance proceeds, then the Company will pay, or will cause such other Company Party to pay, to Investor an
amount equal to the indemnification payment received under this Section 5.8(b) less the amount of the indemnification payment that would have been due if the insurance proceeds had been received, realized or recovered before such
indemnification payment was made. However, no provision herein regarding insurance proceeds shall delay payment by Investor to any Company Party for any indemnified Losses. 
 (c) Procedure for Indemnification Claims. Promptly after a Person receives notice of a claim or the commencement of an action for which the Person intends to seek indemnification
under this Section 5.8, the Person will notify the indemnifying party in writing of the claim or commencement of the action, suit or proceeding; provided, however, that failure to notify the indemnifying party will not
relieve the indemnifying party from liability under this Section 5.8, except to the extent it has been materially prejudiced by the failure to give notice. The indemnifying party will be entitled to participate in the defense of any
claim, action, suit or proceeding as to which indemnification is being sought, and if the indemnifying party is the Company, the indemnifying party may (but will not be required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it. Subject to the immediately following sentence, if the Company notifies an indemnified party that it wishes to assume the defense of a claim, action, suit or proceeding, the Company will not be liable for any
legal or other expenses incurred by the indemnified party in connection with the defense against the claim, action, suit or proceeding. If the Company notifies an indemnified party that it wishes to assume the defense of a claim, action, suit or
proceeding, the indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party, except to the
extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel, or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material conflict with respect to the dispute in question on any material issue between the position of the Company and the position of the indemnified party such that it would be
inappropriate for one counsel to represent both parties. No indemnifying party will be liable to any indemnified party under this Agreement for any settlement by such indemnified party of any action effected by such indemnified party without
the indemnifying party’s prior written consent, which shall not be unreasonably withheld or delayed. 

  
 35 









 5.9 Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents. 

5.10 Limited Standstill. The Company will use reasonable efforts to deliver to Investor on or before the first
Tranche Closing Date, and will thereafter honor and enforce the provisions of, the Lock-Up Agreements with the Company’s executive officers, directors and beneficial owners of 10% or more of the Common Stock. 

5.11 Issuance of Additional Securities. The Company agrees that for the period commencing on each Tranche Notice
Date and ending on the tenth (10th) day after such Tranche Notice Date, neither the Company nor any of its Subsidiaries shall, without the prior written consent of the Investor, (i) directly or indirectly, issue, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration statement under the Act (other than a Registration Statement on Form S-8) with respect to any of the foregoing, or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise; provided, however, that nothing in the foregoing clauses (i) and (ii) shall be construed as limiting the Company’s ability to negotiate and/or
otherwise prepare to consummate a transaction following the expiration of the restricted period so long as such transaction is not publicly announced prior to the expiration of the restricted period. The provisions of this Section 5.11
shall not apply to (A) the Securities to be issued and sold hereunder or issuable upon conversion or exercise of the Securities, (B) issuances of shares of Common Stock issuable upon conversion or exchange of currently outstanding
convertible securities, (C) granting options or other securities under the Company’s incentive compensation plans existing on the date hereof or issuances of shares of Common Stock issuable in connection with outstanding awards thereunder
as of the date hereof, (D) issuances of shares of Common Stock issuable pursuant to agreements in effect as of the date hereof or amendments related thereto, (E) issuances of shares of Common Stock in connection with strategic
acquisitions, or (F) issuances of shares of Common Stock subject to shareholder approval; provided, however, that in the case of clause (B) above, no shares of Common Stock shall be issued as a result of an amendment to such
securities after the date hereof and prior to the expiration of the restricted period. 
 5.12 Prospectus
Availability and Changes. The Company will make available to Investor upon request, and thereafter from time to time will furnish Investor, as many copies of any Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date of the applicable Registration Statement) as Investor may request for the purposes contemplated by the Act; and in case Investor is required to deliver a prospectus after
the nine-month period referred to in Section 10(a)(3) of the Act in connection with the sale of the Common Shares, or after the time a post-effective amendment to the applicable Registration Statement is required pursuant to Item 512(a)


  
 36 









 
of Regulation S-K under the Act, the Company will prepare, at its expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act or Item 512(a) of Regulation S-K under the Act, as the case may be. 
 The Company will advise Investor promptly of the happening of any event within the time during which a Prospectus is required to be delivered by Investor under the Act which, in the good faith judgment of
the Company, following consultation with its independent legal counsel, would require the making of any change in the Prospectus then being used so that the Prospectus would not include an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading, and to advise Investor promptly if, during such period, in the good faith judgment of the Company,
following consultation with its independent legal counsel, it shall become necessary to amend or supplement any Prospectus to cause such Prospectus to comply with the requirements of the Act, and in each case, during such time, to prepare and
furnish, at the Company’s expense, to Investor promptly such amendments or supplements to such Prospectus as may be necessary to reflect any such change or to effect such compliance. The Company shall not be required to disclose to the Investor
the substance or specific reasons of any of the events referred to in the immediately preceding sentence, but rather, shall only be required to disclose that the event has occurred. Notwithstanding anything herein to the contrary, the Company need
not advise the Investor regarding any supplement to the Prospectus the purpose of which is to update the Prospectus and the Registration Statement to include information the Company has previously filed with the SEC pursuant to Section 13 or
15(d) or 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. 
 5.13 Required
Approval. No transactions contemplated under this Agreement or the Transaction Documents shall be consummated for an amount that would require approval by the Company’s stockholders under any approval provisions, rules or regulations
of any Trading Market applicable to the Company, unless and until such approval is obtained. Company shall use its reasonable best efforts to obtain any required approval as soon as possible. 

5.14 Activity Restrictions. For so long as Investor or any of its Affiliates holds any Securities, neither
Investor nor any Affiliate will: (i) vote any shares of Common Stock owned or controlled by it, solicit any proxies, or seek to advise or influence any Person with respect to any voting securities of the Company; (ii) engage or participate
in any actions, plans or proposals which relate to or would result in (a) acquiring additional securities of the Company, alone or together with any other Person, which would result in beneficially owning or controlling, or being deemed to
beneficially own or control, more than 9.99% of the total outstanding Common Stock or other voting securities of the Company, (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Company or any
of its subsidiaries, (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (d) any change in the present board of directors or management of the Company, including any plans or proposals to change
the number or term of directors or to fill any existing vacancies on the board, (e) any material change in the present capitalization or dividend policy of the Company, (f) any other material change in the Company’s business or
corporate structure, including but not limited to, if the Company is a registered closed-end investment company, any plans or proposals to 

  
 37 









 
make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940, (g) changes in the Company’s charter, bylaws or
instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any Person, (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar to any of those enumerated above; or (iii) request the Company or its directors, officers, employees, agents or representatives to amend or waive
any provision of this Section 5.13. 
 ARTICLE 6 

MISCELLANEOUS 
 6.1 Fees and Expenses. Except for the reasonable fees and expenses of Mintz Levin, as to which the $20,000.00 non-refundable document preparation fee previously paid by the Company
shall be applied, and the $5,000.00 non-refundable administrative fee payable to counsel for Investor at each Tranche Closing, and as may be otherwise provided in this Agreement, each party shall pay the fees and expenses of its own advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Investor acknowledges receipt by Mintz
Levin on or prior to the Effective Date of $20,000.00 toward such amount. The Company acknowledges and agrees that Mintz Levin solely represents Investor, and does not represent the Company or its interests in connection with the Transaction
Documents or the transactions contemplated thereby. The Company shall pay (i) all Transfer Agent fees and expenses (including related fees and expenses of any counsel to such persons), (ii) all fees and expenses relating to the
approval of the Common Shares for book-entry transfer through the systems of the DTC, (iii) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities
under the “blue sky” laws, (iv) stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investor, and (v) all fees and expenses relating to the listing or quotation of the Common
Shares on the Trading Market. The obligations of the Company under this Section 6.1 shall survive the termination of this Agreement. 
 6.2 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or electronic mail prior to 5:30 p.m., New York City time, on a Trading Day and an electronic confirmation of delivery is received by the
sender, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered later than 5:30 p.m., New York City time, or on a day that is not a Trading Day, (c) three Trading Days following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses for such notices and communications are those set forth following
the signature page hereof, or such other address as may be designated in writing hereafter, in the same manner, by such Person. 

  
 38 









 6.3 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an amendment, by the Company and Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 

6.4 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall
not be deemed to limit or affect any of the provisions hereof. 
 6.5 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Investor,
which consent will not be unreasonably withheld or delayed. Investor may not assign any or all of its rights under this Agreement. 
 6.6 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except as otherwise expressly set forth in Section 5.8 hereof. 
 6.7 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the 

  
 39 









 
other party for its attorneys’ fees and other costs and expenses reasonably incurred in connection with the investigation, preparation and prosecution of such action or proceeding.

 6.8 Survival. The representations and warranties, covenants, indemnification provisions and fees and
expenses provisions contained herein (including the payment of the Commitment Fee) shall survive the Closing and the delivery and/or exercise of the Securities, as applicable. 
 6.9 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 

6.10 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 

6.11 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. 
 6.12 Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of Investor and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations under the Transaction Documents and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law
would be adequate. 
 6.13 Payment Set Aside. To the extent that the Company makes a payment or payments
to Investor pursuant to any Transaction Document or Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or 

  
 40 









 
equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement or setoff had not occurred. 
 6.14 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated
damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled. 

6.15 Time of the Essence. Time is of the essence with respect to all provisions of this Agreement that specify a
time for performance. 
 6.16 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of the Transaction Documents or any amendments hereto. 
 6.17 Entire Agreement. The
Transaction Documents contain the entire agreement and understanding of the parties, and supersede all prior and contemporaneous agreements, term sheets, letters, discussions, communications and understandings, both oral and written, which the
parties acknowledge have been merged into the Transaction Documents. Neither party has relied upon any agreement, assurance, promise, understanding or representation not expressly set forth in the Transaction Documents and each party agrees
that it may only rely on the agreements, assurances, promises, understandings and representations set forth therein. 

6.18 Further Assurances. From and after the Effective Date, upon the request of Investor or the Company, each of
the Company and Investor shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. 

[Signature Page Follows] 

  
 41 









 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized signatories as of the date first indicated above. 
  

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	 /s/ Christopher T. Lail

	Name:	 	
	Title:	 	


  

			
	SOCIUS CG II, LTD.
		
	By:	 	 /s/ Terren Peizer

	Name:	 	Terren Peizer
	Title:	 	Managing Director


 [Signature Page
– Securities Purchase Agreement] 







 Addresses for Notice 

 

	
	To Company:
	
	DayStar Technologies, Inc.
	1010 South Milpitas Boulevard
	Milpitas, CA 95035
	Fax No.: (408) 343-8491
	Attention: Christopher T. Lail
	Email: clail@daystartech.com
	
	with a copy (which shall not constitute notice) to:
	
	Greenberg Traurig, LLP
	One International Place
	Boston, MA 02110
	Attention: Stephen T. Adams, Esq.
	Fax No.: (617) 279-8416
	Email: Adamss@gtlaw.com

  

	
	 To Investor:

	
	 Socius CG II, Ltd.

	 Clarendon House

	 2 Church Street

	 Hamilton HM 11 Bermuda

	 Fax No.: (310) 444-4394

	
	 with a copy (which shall not constitute notice) to:

	
	 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

	 666 Third Avenue

	 New York, New York 10017

	 Attention: Kenneth R. Koch, Esq.

	 Fax No.: (212) 983-3115

	 Email: krkoch@mintz.com










 Exhibit A-1 
 Form of Warrant 







 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 

DAYSTAR TECHNOLOGIES, INC. 

WARRANT TO PURCHASE COMMON STOCK 

 

			
	Warrant No.:             	  	Issuance Date: February 2, 2011
		
	Number of Warrant Shares: 1,114,650	  	Initial Exercise Price: $1.57

 DayStar Technologies, Inc., a Delaware corporation (“Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Socius CG II, Ltd., a Bermuda exempted company, the holder hereof, or its designees or assigns (“Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon automatic exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times during the
Exercise Period (as defined below), that number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock set forth above (the “Warrant Shares”). The number of Warrant Shares set forth above, subject
to adjustment in accordance with the terms of this Warrant, shall be referred to herein as the “Maximum Warrant Share Amount.” In respect of any Tranche Notice delivered by the Company from time to time, this Warrant shall
automatically be exercised for that number of shares of Common Stock as set forth below. 
 This Warrant is issued pursuant to
the Securities Purchase Agreement dated February 2, 2011, by and among the Company and Socius CG II, Ltd. (the “Purchase Agreement”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in this Warrant or, if not defined in this Warrant, in the Purchase Agreement. 
 This Warrant shall vest and
become automatically exercisable in tranches (each, a “Warrant Tranche”) upon each delivery of a Tranche Notice under the Purchase Agreement. Each Tranche Notice will obligate the Holder to exercise a portion of this Warrant
and purchase up to a number of shares of Common Stock that may be purchased by payment of an Aggregate Exercise Price equal to 35% of the Tranche Purchase Price specified in such Tranche Notice divided by the Exercise Price; provided, however, that
the aggregate number of Warrant Shares issued upon exercise of this Warrant shall not exceed the Maximum Warrant 







 
Share Amount. Attached to this Warrant is a schedule (the “Warrant Tranche Schedule”) that sets forth the issuance date, the number of Warrant Shares, and the Exercise Price
for each Warrant Tranche. The Warrant Tranche Schedule shall be updated by the Company, with an updated copy provided to the Holder, promptly following each exercise of this Warrant.

In no event shall the Company be permitted to deliver a Tranche Notice if the number of registered shares underlying this Warrant is
insufficient to cover the portion of the Warrant that will vest and become exercisable in connection with such Tranche Notice. 

ARTICLE 1 

EXERCISE OF WARRANT. 
 1.1 Mechanics of Exercise. 
 (a) Subject to the terms and conditions
hereof, this Warrant shall be automatically exercised by the Holder on each Tranche Notice Date, in whole or in part, with each such automatic exercise documented by (i) delivery of a written notice to the Company, in the form attached hereto
as Appendix 1 (the “Exercise Notice”), of the Holder’s exercise of this Warrant and (ii) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which
this Warrant is being exercised (the “Aggregate Exercise Price”), which payment shall be made, at the option of the Holder, in cash or by wire transfer of immediately available funds, by the issuance and delivery of a recourse
promissory note substantially in the form attached as Exhibit G to the Purchase Agreement (each, a “Recourse Note”), or, if applicable and permitted by Section 1.4, by cashless exercise pursuant to
Section 1.4. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall
have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. 
 (b) On the Trading Day immediately following the Exercise Delivery Date, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the
Holder and an electronic copy of its share issuance instructions to the Holder and the Company’s transfer agent (the “Transfer Agent”) (which such electronic transmissions to comply with the notice provisions of
Section 6.2 of the Purchase Agreement), and shall instruct and authorize the Transfer Agent to credit such aggregate number of freely tradable Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with The Depository Trust Company (DTC) through the Fast Automated Securities Transfer (FAST) Program through its Deposit/Withdrawal at Custodian (DWAC) system, with such credit to occur no later than 12:00 p.m.
Eastern Time on third Trading Day following the Exercise Delivery Date, time being of the essence; provided, however, that if the Warrant Shares are not credited as DWAC Shares by 5:00 p.m. Eastern Time on the Trading Day following the
Exercise Delivery Date, then the Tranche Closing Date applicable to the Exercise Notice shall be extended by one Trading Day for each Trading Day that timely credit of DWAC Shares is not made. Upon automatic exercise of any portion of this
Warrant, the Holder shall be deemed for all corporate purposes to have become the holder of 

  
 2 








 
record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificate(s) evidencing the Warrant Shares (as the case may be). 
 (c) If this Warrant is submitted
in connection with any exercise pursuant to this Section 1.1 and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the
Company, upon the request of the Holder, shall as soon as practicable and in no event later than three Trading Days after any exercise and return of the previously issued Warrant, at its own expense issue a new Warrant representing the right to
purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant. 
 1.2 Exercise Price. For purposes of this Warrant,
“Exercise Price” means, subject to adjustment as provided herein: (i) until the first Tranche Notice Date, $1.57 per Warrant Share as set forth on the face of this Warrant, and (ii) on and after the first Tranche Notice Date and
each subsequent Tranche Notice Date, an amount per Warrant Share equal to the Closing Bid Price of a share of Common Stock on the Trading Day immediately preceding the applicable Tranche Notice Date. 

1.3 Number of Shares. The number of Warrant Shares underlying this Warrant and each Warrant Tranche, subject to further
adjustment as provided under Article 2 herein, shall be, with respect to the portion of this Warrant that becomes automatically exercisable on any Tranche Notice Date including the first Tranche Notice Date, a number of shares equal to the Tranche
Purchase Price set forth in the applicable Tranche Notice multiplied by 35%, with the resulting sum divided by the Exercise Price then in effect (in respect of any Warrant Tranche, the “Warrant Tranche Shares”). For example, if
the Tranche Purchase Price is $1,000,000 and the Exercise Price then in effect is $0.20, then the number of Warrant Shares underlying the Warrant that become vested and automatically exercised shall be $1,000,000 x 35% = $350,000 divided by $0.20 =
1,750,000 shares of Common Stock. On each Tranche Notice Date, the number of Warrant Shares underlying the related Warrant Tranche shall vest and become exercisable, and the Maximum Warrant Share Amount and the aggregate number of Warrant
Shares underlying this Warrant that are currently exercisable shall automatically adjust up or down to account for the change in the number of Warrant Shares covered by the new Warrant Tranche and for any Warrant Shares issued upon any prior or
simultaneous exercise of this Warrant. 
 If a portion of the Warrant has been automatically exercised pursuant to the terms of
this Warrant but the related Tranche Closing fails to occur, the Maximum Warrant Share Amount shall be increased by the number of Warrant Shares that were issued in connection with such automatic exercise. Notwithstanding anything to the contrary
herein, until the Securities Purchase Agreement has been terminated in accordance with its terms, the number of Warrant 

  
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Shares underlying this Warrant shall be adjusted, as necessary, to permit the issuance of all Warrant Tranche Shares in connection with any Warrant Tranche. 

1.4 Cashless Exercise. Notwithstanding anything contained herein to the contrary (other than Sections 1.1(b) above and
1.6 below), if at any time a registration statement is not effective (or the prospectus contained therein is not available for use) for the resale by the Holder of the Warrant Shares that are the subject of the Exercise Notice (the
“Unavailable Warrant Shares”), the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”): 

 

			
	Net Number = (B-C) x A	  	
	     B
	  	

 For purposes of the foregoing formula: 

A = the total number of shares with respect to which this Warrant is then being exercised. 

B = the average of the Closing Bid Prices of the shares of Common Stock (as reported by Bloomberg) for the five (5) consecutive
Trading Days ending on the date immediately preceding the date of the Exercise Notice. 
 C = the Exercise Price then in effect
for the applicable Warrant Shares at the time of such exercise. 
 1.5 Company’s Failure to Timely Deliver
Securities. If the Company shall fail for any reason or for no reason to credit, by 5:00 p.m. Eastern Time on the Trading Day following the Exercise Delivery Date, the Holder’s balance account with DTC for such number of Warrant Shares
to which the Holder is entitled upon the Holder’s automatic exercise of this Warrant (as the case may be), then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day that the
issuance of such Warrant Shares is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of Warrant Shares not issued to the Holder on a timely basis and to which the Holder is entitled and (B) the Closing
Sale Price of the shares of Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Warrant Shares to the Holder without violating Section 1.1. In addition to the foregoing, if
after the Company’s receipt of the applicable Exercise Delivery Documents the Company shall fail to timely credit the Holder’s balance account with DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s
automatic exercise hereunder, and the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant Shares issuable upon such exercise that the Holder anticipated
receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of 

  
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Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to credit such Holder’s balance account with DTC for the number of Warrant
Shares to which the Holder is entitled upon the Holder’s exercise hereunder and to issue such Warrant Shares shall terminate, or (ii) promptly honor its obligation to credit such Holder’s (or its designee’s) balance account with
DTC for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock sold by Holder in satisfaction of its obligations, times (B) the Closing Bid Price on the date of exercise. 
 1.6 Exercise Limitation. Notwithstanding any other provision, at no time may the Company deliver a Tranche Notice if the automatic exercise of this Warrant would result in the number of
Warrant Shares to be received pursuant to such exercise, aggregated with all other shares of Common Stock then owned by the Holder beneficially or deemed beneficially owned by the Holder, to exceed 9.99% of all of such Common Stock as would be
outstanding on such Exercise Date, as determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. In addition, as of any date, the aggregate number of shares of Common Stock
into which this Warrant is exercisable within 61 days, together with all other shares of Common Stock then beneficially owned (as such term is defined in Rule 13(d) under the Exchange Act) by Holder and its affiliates, shall not exceed 9.99% of
the total outstanding shares of Common Stock as of such date. At no time when the number of Warrant Shares then owned by the Holder, when aggregated with all other shares of Common Stock then owned by the Holder beneficially or deemed
beneficially owned by the Holder, would result in the Holder owning more than 1.0% of all outstanding Common Stock will Holder vote or cause to be voted any such shares. 
 1.7 Restrictions. For so long as Holder holds this Warrant or any Warrant Shares, Holder will not: (i) vote any shares of Common Stock owned or controlled by it, solicit any
proxies, or seek to advise or influence any Person with respect to any voting securities of the Company; (ii) engage or participate in any actions, plans or proposals which relate to or would result in (a) acquiring additional securities
of the Company, alone or together with any other Person, which would result in beneficially owning or controlling, or being deemed to beneficially own or control, more than 9.99% of the total outstanding Common Stock or other voting securities of
the Company, (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Company or any of its subsidiaries, (c) a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, (d) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board, (e) any material change
in the present capitalization or dividend policy of the Company, (f) any other material change in the Company’s business or corporate structure, including but not limited to, if the Company is a registered closed-end investment company,
any plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company Act of 1940, (g) changes in the Company’s charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any Person, (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of the 

  
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Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar to any of those
enumerated above; or (iii) request the Company or its directors, officers, employees, agents or representatives to amend or waive any provision of this Section 1.7. 

1.8 Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 12. 

1.9 Insufficient Authorized Shares. If at any time while this Warrant (or any portion thereof) remains outstanding the
Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least a number of shares of Common Stock equal to 110% of the number of
shares of Common Stock as shall from time to time be necessary to effect the exercise in full of any unexercised portion of this Warrant (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the
Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the unexercised portion of the Warrant then
outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 90 days after the occurrence of such Authorized Share
Failure, the Company shall use commercially reasonable efforts to hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its commercially reasonable efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal. 
 ARTICLE 2 

ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK 
 If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Issuance
Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this ARTICLE 2 shall become effective at the close of business on the date the subdivision or combination becomes effective.

 ARTICLE 3 
 PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS 

  
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 3.1 Purchase Rights. In addition to any adjustments pursuant to
ARTICLE 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock
(the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or,
if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. 
 3.2 Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the
Company under this Warrant in accordance with the provisions of this Section 3.2 pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental
Transaction, including agreements to deliver to each holder of Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including,
without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares
of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and satisfactory to the Required Holders. Upon the occurrence of
any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Required Holders confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any
other property whatsoever (including warrants or other purchase or subscription rights) which the Required Holders would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been converted immediately
prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that
the Required Holders will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Common


  
 7 








 
Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or subscription rights) which the Required Holders would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been exercised immediately
prior to such Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 3.2 shall apply similarly
and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant. 
 ARTICLE 4 
 NONCIRCUMVENTION 

The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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,
and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as the Warrant (or any portion thereof) is outstanding, take all action necessary to reserve and keep available
out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrant, 110% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the
unexercised portion of the Warrant then outstanding (without regard to any limitations on exercise). 
 ARTICLE 5

 WARRANT HOLDER NOT DEEMED A STOCKHOLDER 
 Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder
of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the


  
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Company or by creditors of the Company. Notwithstanding this ARTICLE 5, the Company shall provide the Holder with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. 
 ARTICLE 6

 REISSUANCE OF WARRANTS; COMPANY CALL RIGHT 
 6.1 Transfer of Warrant. 
 (a) This Warrant and the Warrant Shares
constitute “restricted securities” as such term is defined in Rule 144(a)(3) under the Securities Act of 1933, as amended (the “Act”) and may only be disposed of in compliance with U.S. federal securities laws
and applicable state securities or “blue sky” laws. Without limiting the generality of the foregoing, except in connection with a bona fide pledge or transfer to an affiliate of Holder, (i) the Warrant and the Warrant Shares may
not be offered for sale, sold, transferred, assigned, pledged or otherwise distributed unless (A) subsequently registered thereunder, (B) Investor shall have delivered to the Company an opinion of counsel reasonably acceptable to the
Company (which may be Mintz Levin), in a form generally acceptable to the Company, to the effect that the Warrant or the Warrant Shares, as applicable, to be offered for sale, sold, transferred, assigned, pledged or otherwise distributed may be
offered for sale, sold, transferred, assigned, pledged or otherwise distributed pursuant to an exemption from such registration, or (C) the Warrant or the Warrant Shares, as applicable, can be offered for sale, sold, transferred, assigned,
pledged or otherwise distributed pursuant to Rule 144 or Rule 144A promulgated under the Act, as applicable. 
 (b) So long
as is required by this Section 6.1, the certificates or other instruments representing the Warrant shall bear any legends as required by applicable state securities or “blue sky” laws, in addition to the restrictive legend set forth
on the front page of this Warrant. The parties acknowledge and agree that the Warrant Shares will be issued without any restrictive legends. 
 (c) If this Warrant is to be transferred, in accordance with this Section 6.1, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new Warrant, registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant to the Holder representing the right to purchase the number of Warrant Shares not being transferred. 
 6.2 Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and,
in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to
the Holder a new Warrant representing the right to purchase the Warrant Shares then underlying this Warrant. 

  
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 6.3 Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will
represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given. 

6.4 Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new
Warrant being issued pursuant to Section 6.1 or Section 6.3, the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance,
does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and
conditions as this Warrant. 
 6.5 Company Call Right. If a Funding Default occurs and the Holder has not previously
exercised this Warrant in full, the Company shall have the right to demand the surrender of this Warrant, or any remaining portion thereof, from the Holder without compensation, and the Holder shall promptly surrender this Warrant, or remaining
portion thereof. Following such demand for surrender, this Warrant shall automatically be canceled and shall have no further force or effect. 
 ARTICLE 7 
 NOTICES 

Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 6.2 of the Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) as soon as practicable upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least fifteen days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock as such or (C) for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder. 

ARTICLE 8 

AMENDMENT AND WAIVER 

  
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 Except as otherwise provided herein, the provisions of this Warrant may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders; provided that except as provided herein, no such action
may increase the exercise price of the Warrant or decrease the number of shares or class of stock obtainable upon exercise of the Warrant without the written consent of each Holder. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Warrants then outstanding 
 ARTICLE 9 

GOVERNING LAW 
 This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed
by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of
any jurisdictions other than the State of New York. 
 ARTICLE 10 

CONSTRUCTION; HEADINGS 
 This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this Warrant. 
 ARTICLE 11 

DISPUTE RESOLUTION 
 In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations
via facsimile within 2 Trading Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price
or the Warrant Shares within three Trading Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment bank or independent registered public accounting firm selected by Holder subject to Company’s approval, which may not be unreasonably withheld or delayed, or
(b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent registered public accounting firm. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the results no later than 3 Trading Days from the time it receives the 

  
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disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent
demonstrable error. 
 ARTICLE 12 
 REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF 
 The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 
 ARTICLE 13 
 DEFINITIONS 

For purposes of this Warrant, the following terms shall have the following meanings: 

13.1 “Bloomberg” means Bloomberg Financial Markets.

13.2 “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last
closing bid price and last closing trade price, respectively, for such security on the Trading Market, as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or
the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., Eastern time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved
pursuant to ARTICLE 11. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. 

  
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 13.3 “Common Stock” means (i) the Company’s shares of Common
Stock, par value $0.01 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock. 

13.4 “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock. 
 13.5 “Exercise Delivery Date” shall mean the
Trading Day on which the Company is deemed to have received each of the Exercise Notice and the Aggregate Exercise Price in accordance with the terms of the Purchase Agreement. 

13.6 “Exercise Delivery Documents” in respect of any exercise of this Warrant shall mean each of the Exercise Notice and
the Aggregate Exercise Price in respect of such exercise. 
 13.7 “Exercise Period”
means that period beginning on the Trading Day immediately following the effective date of the Registration Statement (or, in the case of a cashless exercise pursuant to Section 1.4 hereof, the first date on which Warrant Shares are eligible
for resale without limitation under Rule 144) and continuing until the earlier of (i) 11:59 p.m., Eastern time, on the second (2nd) anniversary of the effective date of the Registration Statement, or (ii) a Funding Default;
provided, however, that the Exercise Period shall be suspended for any period during which either (A) the effectiveness of the Registration Statement lapses for any reason (including, without limitation, the issuance of a stop
order by the SEC) or the Registration Statement or prospectus included therein is otherwise unavailable for the resale of Warrant Shares, or (B) Warrant Shares are not eligible for resale without limitation under Rule 144 under the Securities
Act (it being understood that the Holder shall not be permitted to exercise all or any portion of this Warrant during any such suspension period). 
 13.8 “Fundamental Transaction” means and shall be deemed to have occurred at such time upon any of the following events: (a) the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of
the assets of the Company to another Person, (iii) allow another Person to make a 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) consummate a stock purchase 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) (other than, in the case of clause (i) above, (A) any
such transaction pursuant to which holders of Common Stock immediately prior to such transaction continue to hold more than 50% of the total voting power of the outstanding shares of Common Stock or (B) any merger or consolidation which is
effected solely to change the jurisdiction of 

  
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incorporation of the Company, and in the case of clauses (iii) and (iv) above, any transaction which is effected solely to change the jurisdiction of incorporation of the Company); or
(b) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of 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 voting power of the outstanding shares of Common Stock, other than persons or groups who exceed such ownership level as of the Effective Date (until such point in time when the ownership level of such
persons or groups falls below such ownership threshold) and other than in connection with a transaction which is effected solely to change the jurisdiction of incorporation of the Company. 

13.9 “Funding Default” means a failure by Investor to accept a Tranche Notice delivered by the Company,
provided such Tranche Notice was delivered in accordance with the terms and conditions of the Purchase Agreement (including the timely and full satisfaction of the conditions to the obligation of Investor to accept a Tranche Notice set forth
in Section 2.3(b) of the Purchase Agreement), and to acquire and pay for the Preferred Shares in accordance therewith upon delivery of such Preferred Shares to the Investor in accordance with the terms of the Purchase Agreement (and
the timely delivery by the Company of the other Required Tranche Deliveries required to be delivered by it and the timely and full satisfaction by the Company of all other conditions for the Tranche Closing required to be satisfied by it as set
forth in Sections 2.3(d) and (e) of the Purchase Agreement). 
 13.10 “Investor”
means Socius CG II, Ltd., a Bermuda exempted company (including its designees, successors and assigns). 

13.11 “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities. 
 13.12 “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on a Trading Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental Transaction. 
 13.13 “Person” means an
individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof. 

13.14 “Preferred Shares” means shares of Series B Preferred Stock of the Company provided for in the Certificate of
Designations, to be issued to Investor pursuant to the Purchase Agreement. 
 13.15 “Purchase Agreement”
means the Securities Purchase Agreement dated February 2, 2011 by and among the Company and the investors referred to therein. 
 13.16 “Registration Statement” means a registration statement registering for resale the Common Shares, and except where the context otherwise requires, means the registration


  
 14 









 
statement, as amended, including (i) all documents filed as a part thereof and (ii) any information contained in a prospectus filed with the Securities and Exchange Commission in
connection with such registration statement, to the extent such information is deemed under the Act to be part of the registration statement. 
 13.17 “Required Holders” means the Holders of the Warrants representing at least a majority of shares of Warrant Shares underlying the Warrants then outstanding. 

13.18 “Trading Market” means the OTC Bulletin Board, the NASDAQ Capital Market, the NASDAQ Global Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. 
 13.19 “Public Successor Entity” means a Successor Entity that is a publicly traded corporation whose stock is quoted or listed for trading on a Trading Market. 

13.20 “Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent Entity) with which such Fundamental Transaction shall have been entered into. 

13.21 “Trading Day” means any day on which the Common Stock is traded on a Trading Market; provided that it shall
not include any day on which the Common Stock (a) is suspended from trading, or (b) is scheduled to trade on such exchange or market for less than 5 hours. 
 13.22 “Tranche Closing” has the meaning set forth in the Purchase Agreement. 
 [Signature Page Follows] 

  
 15 









 IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above. 
  

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	 /s/ Christopher T. Lail

	Name:	 	  

	Title:	 	  



 [Signature Page – Warrant] 







 APPENDIX 1 
 EXERCISE NOTICE 
 DAYSTAR TECHNOLOGIES, INC. 

The undersigned hereby exercises the right to purchase
                     shares of Common Stock (“Warrant Shares”) of DayStar Technologies, Inc., a Delaware corporation
(“Company”), evidenced by the attached Warrant to Purchase Common Stock (“Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant. The
Holder intends that payment of the Exercise Price shall be made as: 
  

	 	            	Cash Exercise with respect to                      Warrant
Shares having an exercise price of $             per share          


 

	 	            	Cashless Exercise with respect to                     
Warrant Shares having an exercise price of $             per share          


 

	 	            	Recourse Note Exercise with respect to                     
Warrant Shares having an exercise price of $             per share 

 Please issue said shares in electronic form to the Deposit/Withdrawal at Custodian (DWAC) account with Depository Trust Company (DTC) specified below: 

 

					
		 	 Name and Contact for Broker:
	 	  

			
		 		 	  



 

					
		 	Broker no:	 	  



 

					
		 	Account no:	 	  



 

					
		 	Account holder:	 	  


 HOLDER NAME: 
  

			
	  
 
		
	By:	 	  

	Name:	 	  

		 	  

	Title:	 	








 ACKNOWLEDGMENT 

The Company hereby acknowledges the foregoing Exercise Notice and hereby directs Computershare Investor Services to issue the above
indicated number of shares of Common Stock as specified above, in accordance with the Transfer Agent Instructions dated February 2, 2011 from the Company, and acknowledged and agreed to by the transfer agent. 

 

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	  

	Name:	 	  

	Title:	 	  










 Exhibit A-2 
 Investment Right Exercise Notice 







 INVESTMENT RIGHT EXERCISE NOTICE 

The undersigned, Socius CG II, Ltd., a Bermuda exempted company (the “Investor”), hereby exercises the right to purchase
                                        
shares of common stock, par value $0.01 per share (the “Common Stock”), of DayStar Technologies, Inc., a Delaware corporation (“Company”), pursuant to the Additional Investment Right contained in the Securities
Purchase Agreement, dated as of February 2, 2011, between the Company and the Investor (the “Purchase Agreement”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the
Purchase Agreement. 
 (1) Payment shall take the form of (check applicable box): 

 

	 	[  ]	lawful money of the United States; or 

  

	 	[  ]	recourse promissory note(s). 


(2) Tranche Amount:
$                                        

 (3) Applicable Exercise Price: $             per share of
common stock 
 (4) Number of shares of Common Stock to be Issued:
             shares of common stock 
 (5) DWAC Instructions:

  

					
		 	Number of shares of Common Stock for DWAC:	 	  



 

					
		 	 Name and Contact for Broker:
	 	  

			
		 		 	  



 

					
		 	Broker no:	 	  



 

					
		 	Account no:	 	  



 

					
		 	Account holder:	 	  


 SOCIUS CG II, LTD. 
  

			
	By:	 	  

	Name: Terren Peizer
	Title: Managing Director








 Exhibit B 
 Certificate of Designations 







 Exhibit C 
 Transfer Agent Instructions 







 Exhibit D 
 Lock-Up Agreement 








                   
 , 20     
 Socius CG II, Ltd. 
 c/o Socius Capital Group, LLC 
 11150 Santa Monica Boulevard, Suite 1500 

Los Angeles, CA 90025 
 Ladies and Gentlemen:

 This Lock-Up Agreement is being delivered to you in connection with the Securities Purchase Agreement dated February 2,
2011 (“Purchase Agreement”) and entered into by and among DayStar Technologies, Inc., a Delaware corporation (the “Company”), and Socius CG II, Ltd., a Bermuda exempted company (“Investor”),
with respect to the purchase without registration under the Securities Act of 1933, as amended (the “Act”), in reliance on Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder, of shares of the
Company’s Series B Preferred Stock and related Securities. Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Purchase Agreement. 

In order to induce Investor to enter into the Purchase Agreement, the undersigned agrees that, for a period of ten Trading Days beginning
on each date the Company delivers a Tranche Notice to Investor (the “Tranche Notice Date”) and ending on the Tranche Closing Date pursuant to the terms of the Purchase Agreement (the “Lock-up Period”), the
undersigned will not, without the prior written consent of Investor, (a) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly,
in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC
promulgated thereunder (the “Exchange Act”) with respect to, any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock or any such
securities, or any securities substantially similar to the Common Stock, (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or any such securities, or warrants or other rights to purchase Common Stock, whether any such transaction is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise or (c) publicly announce an intention to effect any transaction specified in clause (a) or (b). 
 The foregoing sentence shall not apply to (a) bona fide gifts, provided the recipient thereof agrees in writing to be bound by the terms of this Lock-Up Agreement, (b) dispositions to any trust
for the direct or indirect benefit of the undersigned and/or the immediate family of 







 
the undersigned, provided that such trust agrees in writing to be bound by the terms of this Lock-Up Agreement, (c) sales made pursuant to any written sales plans established prior to the
date of this Lock-Up Agreement in conformity with the requirements of Rule 10b5-1(c) promulgated under the Exchange Act or (d) exercise of options for Common Stock and the disposition (whether by sale, gift or otherwise) of Common Stock
underlying such options. Notwithstanding subsection (a) above, the undersigned may make a bona fide gift of up to 10,000 shares of Common Stock to a charity or other non-profit entity and such charity or entity shall not be required
to be bound by the terms of this Lock-Up Agreement; provided, however, that in the event the undersigned exercises options during the Lock-Up Period, the undersigned may not, during the Lock-Up Period, dispose of the number of shares
of Common Stock underlying such exercised options equal to the number of shares of Common Stock gifted by the undersigned pursuant to this sentence during the Lock-Up Period. For purposes of this paragraph, “immediate family” shall
mean the undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the undersigned. 
 The Company
agrees to provide the undersigned with notice that the Company has delivered a Tranche Notice to Investor prior to, or simultaneous with, its delivery of the Tranche Notice to Investor. Such notice shall provide the undersigned with the Tranche
Notice Date and clearly indicate the beginning of the Lock-up Period. 
 Upon the termination of the Purchase Agreement, this
Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder. 
  

	
	Sincerely,
	
	  

	[NAME OF STOCKHOLDER]


 Acknowledged and Agreed:

 DayStar Technologies, Inc. 
  

			
	By:	 	  

	Name:	 	  

	Title:	 	  









 Exhibit E 
 Opinion 







 Exhibit F 
 Tranche Notice 







 Dated:
                    , 20     
 Socius CG II, Ltd. 
 c/o Socius Capital Group, LLC 

11150 Santa Monica Boulevard, Suite 1500 
 Los
Angeles, CA 90025 
  

	Re:	Tranche Notice 

 Ladies & Gentlemen:

 Pursuant to the Securities Purchase Agreement dated February 2, 2011 (“Agreement”) between DayStar
Technologies, Inc., a Delaware corporation (“Company”), and Socius CG II, Ltd. (“Investor”), Company hereby elects to exercise a Tranche. Capitalized terms not otherwise defined herein shall have the meanings
defined in the Agreement. 
 At the Tranche Closing, Company will sell to Investor
             Preferred Shares at $10,000.00 per share for a Tranche Amount of $            . 

On behalf of Company, the undersigned hereby certifies to Investor as follows: 

1. The undersigned is a duly authorized officer of Company; 
 2. The above Tranche Amount does not exceed the Maximum Tranche Amount; and 
 3.
All of the conditions precedent to the right of the Company to deliver a Tranche Notice set forth in Section 2.3(d) of the Agreement have been satisfied. 
 IN WITNESS WHEREOF, the Company has executed and delivered this Tranche Notice as of the date first written above. 

 

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	  

	Name:	 	  

	Title:	 	  










 Exhibit G 
 Form of Secured Promissory Note 







 Exhibit H 
 Form of Security Agreement