Document:

Securities Purchase Agreement

 EXECUTION COPY 
 Exhibit 10.14 
 SECURITIES PURCHASE AGREEMENT 
 SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of May 25, 2006, by and among DayStar Technologies, Inc., a
Delaware corporation, with headquarters located at 13 Corporate Drive, Halfmoon, New York 12065 (the “Company”), and Castlerigg Master Investments Ltd., a British Virgin Islands company, with address located at Craigmur Chambers,
Road Town, Tortola, British Virgin Islands (the “Buyer”). 
 RECITALS: 
 A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). 
 B. The Company has authorized a new series
of senior convertible notes of the Company, which shall be convertible into the Company’s common stock, $0.01 par value per share (the “Common Stock”), in accordance with the terms of such notes. 
 C. The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) a senior convertible
note in the principal amount of $15,000,000, in substantially the form attached hereto as Exhibit A (the “Note”), which may be converted into shares of Common Stock pursuant to the terms of the Note (as converted,
collectively, the “Conversion Shares”) and (ii) Class A Warrants and Class B Warrants, in substantially the forms attached hereto as Exhibit B-1 and Exhibit B-2, respectively (collectively, the
“Warrants”), to acquire that number of shares of Common Stock (as exercised, collectively, the “Warrant Shares”) as set forth in the Warrants. 
 D. The Note bears interest, which at the option of the Company, subject to certain conditions, may be paid in Common Stock (“Interest
Shares”). 
 E. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering
a Registration Rights Agreement, substantially in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights with respect to
the Conversion Shares, Interest Shares and Warrant Shares under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. 
 F. The Notes, the Conversion Shares, the Interest Shares, the Warrants and the Warrant Shares are collectively are referred to herein as the “Securities”. 

 NOW, THEREFORE, the Company and the Buyer hereby agree as follows: 
 1. PURCHASE AND SALE OF NOTES AND WARRANTS. 
 (a) Amount. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to the Buyer, and the Buyer agrees to purchase from the Company on the
Closing Date (as defined below), a Note in the principal amount of $15,000,000 and Warrants to acquire that number of Warrant Shares as set forth in the Warrants. 
 (b) Closing. The closing (the “Closing”) of the purchase of the Note and the Warrants by the Buyer shall occur at
the offices of McDermott Will & Emery LLP, 340 Madison Avenue, New York, New York 10017. The date and time of the Closing (the “Closing Date”) shall be May 25, 2006 at 10:00 a.m., New York City Time, subject to
notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or such later date as is mutually agreed to by the Company and the Buyer). 
 (c) Purchase Price. The purchase price for the Buyer (the “Purchase Price”) of the Note and related Warrants to be
purchased by the Buyer at the Closing shall be equal to $15,000,000; $1.00 for each $1.00 of principal amount of the Note being purchased by the Buyer at the Closing. 
 (d) Form of Payment. On the Closing Date, (A) the Buyer shall pay the Purchase Price to the Company for the Note and the
Warrants to be issued and sold to the Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, and (B) the Company shall deliver to the Buyer the Note that the Buyer
is then purchasing along with the Warrants that the Buyer is purchasing, duly executed on behalf of the Company and registered in the name of the Buyer or its designee. 
 2. BUYER’S REPRESENTATIONS AND WARRANTIES. 
 The Buyer represents and warrants
that: 
 (a) No Public Sale or Distribution. The Buyer (i) is acquiring the Note and the Warrants, (ii) upon
conversion of the Note will acquire the Conversion Shares, (iii) upon receipt of any Interest Shares will acquire the Interest Shares and (iv) upon exercise of the Warrants will acquire the Warrant Shares, in each case, for its own account
and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making such representations herein,
the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933
Act. The Buyer is acquiring the Securities hereunder in the ordinary course of its business. The Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. 

(b) Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act. 
  

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 (c) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance
with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities. 
 (d) Information. The Buyer 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 Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by the Buyer or its advisors, if any, or its representatives shall modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties contained
herein. The Buyer understands that its investment in the Securities involves a high degree of risk. The Buyer 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. 
 (e) No Governmental Review. The Buyer 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. 
 (f) Transfer or Resale. The Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder or (B) the Buyer shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such registration or pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined in
Section 3(s)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Securities may be
pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, provided,
however, that the Buyer shall provide the Company with written notice at least five (5) days prior to effecting a pledge of Securities. 
  

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 (g) Legends. The Buyer understands that the certificates or other instruments
representing the Note and the Warrants and, until such time as the resale of the Conversion Shares, the Interest Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreements, the stock
certificates representing the Conversion Shares, the Interest Shares and the Warrant Shares, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such stock certificates): 
 [NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE][EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT 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 IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR THE SECURITY MAY BE SOLD PURSUANT TO
RULE 144(K) UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. 
 The legend set forth above shall be removed and the Company shall cause a certificate without such legend to issue to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws (i) such Securities are registered for resale under the 1933 Act or (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or pursuant to Rule 144(k).

 (h) No Conflicts. The execution, delivery and performance by the Buyer of this Agreement and the Registration Rights
Agreement and the consummation by the Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Buyer, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer is a party or (iii) result in
a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to perform its obligations hereunder. 
  

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 (i) Residency. The Buyer is a resident of the British Virgin Islands and its
address is Craigmur Chambers, Road Town, Tortola, British Virgin Islands. 
 (j) Organization and Qualification. The
Buyer is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or formed, and has the requisite power and authorization to own its properties and to carry on its business as now being
conducted. 
 (k) Authorization; Enforcement; Validity. The Buyer has the requisite power and authority to enter into
and perform its obligations under this Agreement, the Registration Rights Agreement and each of the other agreements entered into by the Buyer in connection with the transactions contemplated by this Agreement. The execution and delivery by the
Buyer of this Agreement and the other Transaction Documents to which the Buyer is a party and the consummation by the Buyer of the transactions contemplated hereby and thereby, have been duly authorized by the Buyer’s Board of Directors or
other governing body and no further filing, consent or authorization is required by the Buyer, its Board of Directors or other governing body or its shareholders. This Agreement and the other Transaction Documents of even date herewith to which the
Buyer is a party have been duly executed and delivered by the Buyer, and constitute the legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 

(l) Buyer’s Purchase of Securities. The Buyer is acting solely in the capacity of an arm’s length purchaser with
respect to this Agreement and the other Transaction Documents to which the Buyer is a party and the transactions contemplated hereby and thereby and is not (i) an officer or director of the Company, (ii) an “affiliate” of the
Company (as defined in Rule 144) or (iii) a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934
Act”)). The Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement or the other Transaction Documents to which the Buyer is a party and the transactions
contemplated hereby and thereby, and any advice given by the Buyer or any of its representatives or agents in connection with this Agreement and the Transaction Documents to which the Buyer is a party and the transactions contemplated hereby and
thereby is merely incidental to the Buyer’s purchase of the Securities. 
 (m) No General Solicitation; Placement
Agent’s Fees. Neither the Buyer, nor any of its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Buyer has not engaged any agent, financial advisor, or broker (other than Sandell Asset Management Corp.) relating to or arising out of the transactions contemplated hereby. The Buyer shall hold the Company
harmless against any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim (other than claims for previously agreed to payments to Sandell Asset
Management Corp. and Ardour Capital Investments, LLC). 
  

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 (n) Manipulation of Price. The Buyer and its Subsidiaries have not, and to its
knowledge no one acting on its or their behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the purchase or sale
of any of the Securities, (ii) other than the Agent in connection with this transactions contemplated hereby, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities or (iii) other than the
Agent in connection with this transactions contemplated hereby, paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company. 
 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 
 The Company represents and warrants to the Buyer that: 
 (a) Organization and
Qualification. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns at least 50% of the voting securities or the voting interests of such
entity or otherwise controls such entity) are entities duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated or formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as whole, or on the transactions
contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction
Documents. The Company has no Subsidiaries, except as set forth on Schedule 3(a). 
 (b) Authorization; Enforcement;
Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Notes, the Warrants, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in
Section 5(b)) and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Notes, the reservation for issuance and the issuance of the Conversion Shares issuable upon conversion of the Notes, the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares
issuable upon exercise of the Warrants, have been duly authorized by the Company’s Board of Directors and (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights
Agreement, certain Blue Sky Filings, and notice to and listing of shares on the Principal Market) no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the 

  

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other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 
 (c) Issuance of Securities. The issuance of the Notes and the Warrants are duly authorized and are free from all taxes, liens and charges with respect to the issue thereof. As of the Closing, the Company shall have reserved from its
duly authorized capital stock not less than the sum of (i) 130% of the maximum number of shares of Common Stock issuable upon conversion of the Notes (assuming for purposes hereof, that the Notes are convertible at the Conversion Price and
without taking into account any limitations on the conversion or redemption of the Notes set forth in the Notes) and (ii) 130% of the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth in the Warrants). Upon issuance or conversion in accordance with the Notes or exercise in accordance with the Warrants, as the case may be, the Interest Shares, the Conversion Shares and the
Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to
a holder of Common Stock. The offer and issuance by the Company of the Securities is exempt from registration under the 1933 Act. 
 (d) No Conflicts. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Notes, the Warrants, and the Interest Shares and the reservation for issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation or
Bylaws (as defined in Section 3(r)) of the Company or the certificate of incorporation, bylaws or other governing documents of any of its Subsidiaries or any capital stock of the Company or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the NASDAQ Capital Market (the
“Principal Market”)) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. 
 (e) Consents. Other than registration of shares with the SEC, certain Blue Sky Filings and compliance with the notification and
listing requirements of the Principal Market, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any
other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement and the other Transaction Documents, in each case in accordance with the terms hereof or thereof. Other than registration of
the shares with the SEC, certain Blue Sky Filings and compliance with the notification and listing 

  

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requirements of the Principal Market, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and its Subsidiaries are unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is not in violation of the listing requirements of the Principal Market and other than the potential delisting if the Company’s share price falls below $1.00 per share, has
no knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. 
 (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees based, in part, on the Buyer’s representations in Section 2, that the Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby and that the Buyer is not (i) an officer or director of the Company, (ii) an
“affiliate” of the Company (as defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The
Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement or the other Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by the Buyer or any of its representatives or agents in connection with this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Buyer’s purchase
of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives. 
 (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its affiliates, nor any Person acting on
its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by the Buyer or its investment advisor) relating to or arising out of the transactions contemplated hereby. The Company shall pay, and
hold the Buyer harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim. The Company acknowledges that it has engaged Ardour Capital
Investments, LLC as placement agent (the “Agent”) in connection with the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent or other agent in connection with the sale of the Securities.

 (h) No Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates or 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 require registration of any of the Securities under the 1933 Act or cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their 

  

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affiliates or any Person acting on its or their behalf will take any action or steps referred to in the preceding sentence that would require registration of
any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings. 
 (i)
Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares issuable upon conversion of the Notes and the Warrant Shares issuable upon exercise of the Warrants, will increase in certain circumstances. The
Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and the Notes and its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with
this Agreement and the Warrants is, in each case, absolute and unconditional, regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. 
 (j) Application of Takeover Protections; Rights Agreement. 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 Certificate of Incorporation or the
laws of the jurisdiction of its incorporation which is or could become applicable to the Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the
Buyer’s ownership of the Securities. The Company has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company. 
 (k) SEC Documents; Financial Statements. The Company is a “Small Business Issuer” and has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act since its initial public offering (all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to the Buyer or its
representatives true, correct and complete copies of any SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). 
  

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 (l) Absence of Certain Changes. Except as disclosed in Schedule 3(l), since
the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations, prospects, condition (financial or otherwise) or results of operations of the Company. Except as disclosed in Schedule 3(l), since the date of the Company’s most recent audited financial statements contained in an Annual
Report on Form 10-K, the Company has not (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditures,
individually or in the aggregate, in excess of $1,500,000. The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any knowledge of any fact which would reasonably lead a creditor to do so. The Company is not, as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing will
not, be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means (i) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured or (ii) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. 
 (m) No Undisclosed Events, Liabilities, Developments or Circumstances. Other than the transactions contemplated by the Transaction
Documents, no event, liability, development or circumstance has occurred or exists, or to the best knowledge of the Company, is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, assets, liabilities,
properties, operations, prospects, condition (financial or otherwise) or results of operations, that would, individually or in the aggregate, be likely to have a Material Adverse Effect. 
 (n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in
default under its certificate of incorporation, bylaws or other governing documents. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any law, statute, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries has conducted or will conduct its business in violation of any of the foregoing, except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances
that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future other than the market requirements as to minimum share price. Except as disclosed on Schedule 3(n), during the
two (2) years prior to the date hereof, (i) the Common Stock has been designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) the
Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. Except as disclosed on Schedule 3(n), the Company and its
Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess 

  

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such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit, except where the revocation or modification would not have, individually or in the aggregate, a
Material Adverse Effect. 
 (o) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor, to the
best of the Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any such Subsidiary
(i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee. 
 (p) Sarbanes-Oxley Act. The Company is in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof that are mandated for compliance by the Company, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof, except where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect. 
 (q) Transactions With Affiliates. Except as set forth in the SEC Documents and other than the grant of stock options disclosed on
Schedule 3(q), none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any such officer, director or employee has a substantial interest or is an officer, director, trustee or partner. 
 (r) Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 19,850,000 shares of
Common Stock, 150,000 shares of Class B Common Stock, $0.01 par value per share (the “Class B Common Stock”), and 3,000,000 shares of Preferred Stock, $0.01 par value per share, of which as of the date hereof, 6,560,723 shares
of Common Stock, no shares of Class B Common Stock and no shares of Preferred Stock are issued and outstanding, 323,986 shares are reserved for issuance pursuant to the Company’s stock option and purchase plans and 5,219,371 shares are reserved
for issuance pursuant to securities (other than the Notes and Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock. All of such outstanding shares have been, or upon issuance will be, duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in the SEC Documents or on Schedule 3(r): (i) none of the capital stock of the Company or any of its Subsidiaries is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company or any of its Subsidiaries; (ii) there are no 

  

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outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to
issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit or loan agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the
aggregate, filed in connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the
1933 Act (except the Registration Rights Agreement); (vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to purchase, repurchase, retire, redeem or otherwise acquire for value a security of the Company or any of its Subsidiaries; (vii) there are
no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company and its Subsidiaries do not have any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those
incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. The Company has furnished to the Buyer true,
correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof or as proposed for amendment, but subject to shareholder approval (the “Certificate of Incorporation”),
and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of
the holders thereof in respect thereto. 
 (s) Indebtedness and Other Contracts. Except as disclosed in the SEC
Documents or on Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which, or default
under which, by the other party(ies) to such contract, agreement or instrument would result in a Material Adverse Effect, (iii) is in violation of any term of or in default (and to the best of the knowledge of the Company, no event has occurred
which, with notice or lapse of time or both would, become a default) under any contract with any New York State government agency (or other governmental body) or any contract, agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect or (iv) is a party to contract with any New York State government agency (or other governmental body) or any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the reasonable judgment of the Company’s officers, has or is expected to have a Material Adverse 

  

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Effect. Except as disclosed on Schedule 3(s), no party to any contract with any New York State government agency (or other governmental body) or
any contract, agreement or instrument relating to any Indebtedness, has given notice to the Company or any of its Subsidiaries of, or made a claim with respect to, any breach or default thereunder, or of a desire or intention to exercise any
optional termination right thereunder and there is no notice of or claim with respect to any such breach, default, desire or intention. For purposes of this Agreement: (x) ”Indebtedness” of any Person means, without duplication
(A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with generally
accepted accounting principals) (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (F) all indebtedness referred to in clauses
(A) through (E) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness and (G) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (F) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto;
and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or other entity and a government or any department or agency thereof.

 (t) Absence of Litigation. Except as set forth in Schedule 3(t), there is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public board, government agency, arbitrator, mediator, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors. 
 (u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to
be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any 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 

  

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as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. 
 (v) Employee Relations. (i) Neither Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) of the Company or any of its Subsidiaries has notified the
Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. To the best knowledge of the Company, no executive
officer of the Company or any of its Subsidiaries, to the knowledge of the Company or any such Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any such Subsidiary to any liability with
respect to any of the foregoing matters. 
 (ii) The Company and its Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. 
 (w) Title. The Company and its
Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of
all liens, encumbrances and defects, except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property and
facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such
property and facilities by the Company and its Subsidiaries. 
 (x) Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations,
trade secrets and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted. None of the Company’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There
is no claim, action or proceeding pending, or to the knowledge of the Company, being threatened, against the Company or its Subsidiaries regarding its Intellectual Property Rights. The Company is unaware of any facts or circumstances which might
give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

  

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 (y) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. 
 (z) Subsidiary Rights. Except as set forth in Schedule 3(z), the Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary. 
 (aa) Investment Company. The Company is not, and is not an affiliate of, an “investment company” within the meaning of
the Investment Company Act of 1940, as amended. 
 (bb) Tax Status. The Company and each of its Subsidiaries
(i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject when due, (ii) 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 (iii) has set aside on its books provision 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. 
 (cc) Internal Accounting and Disclosure Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the 

  

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reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms
of the SEC, including, without limitation, controls and procedures designed in to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. During the twelve months prior to the date
hereof neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant relating to any potential material weakness in any part of the system of internal accounting controls of the Company or any of its
Subsidiaries. 
 (dd) Off Balance Sheet Arrangements. There is no transaction, arrangement or other relationship
between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect. 
 (ee) Ranking of Note. Except as set forth on Schedule (ee), no Indebtedness
of the Company is senior to or ranks pari passu with the Note in right of payment, whether with respect of payment of redemptions, interest, damages or upon liquidation or dissolution or otherwise. 
 (ff) Form S-3 Eligibility. The Company is eligible to register the Conversion Shares, the Warrant Shares and the Interest Shares
for resale by the Buyer using Form S-3 promulgated under the 1933 Act. 
 (gg) Transfer Taxes. On the Closing Date, all
stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to the Buyer hereunder will be, or will have been, fully paid or provided for by
the Company, and all laws imposing such taxes will be or will have been complied with. 
 (hh) Manipulation of Price.
The Company and its Subsidiaries have not, and to its knowledge no one acting on its or their behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Securities, (ii) other than the Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities or (iii) other than the
Agent, paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company. 
 (ii) U.S. Real Property Holding Corporation. The Company is not, nor has it ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon the Buyer’s request. 
 (jj) Disclosure. The Company confirms that as of two
(2) Business Days after the Closing Date, any information that constitutes or could reasonably be expected to constitute 

  

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material, nonpublic information previously disclosed to the Buyer, its agent or counsel, will have been publicly disclosed. The Company understands and
confirms that the Buyer will rely on the foregoing representation in effecting transactions in securities of the Company. All disclosure provided to the Buyer regarding the Company, its business and the transactions contemplated by this Agreement
and the other Transaction Documents, including the Schedules and Exhibits hereto and thereto, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company during the twelve (12) months preceding the date of
this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, assets, liabilities, properties, prospects, operations or
condition (financial or otherwise) or results of operations, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company, but which has not been so publicly announced or disclosed. 
 4. COVENANTS. 
 (a)
Blue Sky. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Buyer at the Closing pursuant
to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the
Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date
(“Blue Sky Filings”). 
 (b) Reporting Status. Until the date on which the Investors (as defined in
the Registration Rights Agreement) shall have sold all the Conversion Shares, Interest Shares and Warrant Shares and none of the Notes or Warrants is outstanding (the “Reporting Period”), the Company shall file all reports required
to be filed by it with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act, even if the 1934 Act or the rules and regulations thereunder would otherwise permit
such termination. 
 (c) Use of Proceeds. The Company will use the proceeds from the sale of the Securities for working
capital purposes, and not for (A) repayment of any outstanding Indebtedness of the Company or any of its Subsidiaries or (B) redemption, purchase, repurchase, retirement or other acquisition for value of any of its or its
Subsidiaries’ equity securities. 
 (d) Financial Information. The Company agrees to send the following to each
Investor (as defined in the Registration Rights Agreement) during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K or 10-KSB, any interim reports and any consolidated balance 

  

 - 17 - 

 
sheets, income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases issued by the Company or any of its
Subsidiaries and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. 
 (e) Listing. The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall maintain such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company shall maintain the Common Stock’s authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(e). 
 (f) Fees. The Company shall reimburse the Buyer or its designee(s) for all reasonable costs and expenses incurred in connection
with documenting the transactions contemplated by the Transaction Documents (including all reasonable legal fees and disbursements in connection therewith, documentation and implementation of the transactions contemplated by the Transaction
Documents and due diligence in connection therewith), which amount shall be offset against the $50,000 already paid to Sandell Asset Management, and any amount in excess of such $50,000 shall be withheld by the Buyer from its Purchase Price at the
Closing. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees and broker’s commissions (other than for Persons engaged by the Buyer) relating to or arising out of the transactions
contemplated by the Transaction Documents, including, without limitation, any fees payable to the Agent. The Company shall pay, and hold the Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable
attorney’s fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. The Buyer shall pay, and hold the Company harmless against, any liability, loss or expense (including, without limitation, reasonable
attorney fees and out-of-pocket expenses) arising in connection with any payment due by Buyer to Sandell Asset Management Corp. or any other Person acting solely on the Buyer’s behalf. 
 (g) Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by an Investor (as defined in the
Registration Rights Agreement) in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, provided, however, that an Investor shall provide the Company with written notice at least five (5) days prior to effecting a pledge of Securities. An Investor and its pledgee shall be required to comply with
the provisions of Section 2(f) hereof, in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor. 
  

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 (h) Disclosure of Transactions and Other Material Information. On or before
8:30 a.m., New York Time, on the first Business Day following the date of this Agreement, the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement (and all Schedules to this Agreement), the form of Notes, the forms of Warrants and the Registration Rights Agreement)
(including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, the Company represents and acknowledges that the Buyer shall not be in possession of any material, nonpublic information
received from the Company or any of its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders, representatives or agents, that is not disclosed in the 8-K Filing. The Company shall not, and shall cause each of
its Subsidiaries and its and each of their respective officers, directors, employees, stockholders, representatives and agents, not to, provide the Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries from
and after the filing of the 8-K Filing with the SEC without the express prior written consent of the Buyer. In the event of a breach of the foregoing covenant by the Company or any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders, representatives and agents, in addition to any other remedy provided herein or in the other Transaction Documents, the Buyer, upon five (5) business days’ notice to the Company, shall have the right to
make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company or its Subsidiaries or any of its or their respective officers, directors,
employees, stockholders, representatives or agents. The Buyer shall not have any liability to the Company or its Subsidiaries or any of its or their respective officers, directors, employees, stockholders, representatives or agents, for any such
disclosure. Subject to the foregoing, none of the Company, any of its Subsidiaries or the Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filings and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided, that in the case of clause (i) the Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its
release). Without the prior written consent of the Buyer, the Company shall not disclose the name of the Buyer in any filing, announcement, release or otherwise. 
 (i) Restriction on Redemption and Cash Dividends. Except in connection with any Soft Call of Warrants (as defined below) by the
Company, and in connection with the transactions contemplated hereby, so long as any Notes are outstanding, the Company shall not, directly or indirectly, redeem, purchase, repurchase, retire or otherwise acquire for value, or declare or pay any
cash dividend or distribution on, the Common Stock without the prior express written consent of the holders of Notes representing not less than a majority of the aggregate principal amount of the then outstanding Notes. For purposes of this
Agreement, a “Soft Call of Warrants” means any offer or exchange of additional securities or warrants to the holders of the Company’s publicly traded, registered Class Z warrants (DSTIZ), to induce such holders to redeem or
exchange the Class Z warrants. 
  

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 (j) Additional Notes; Variable Securities; Dilutive Issuances. So long as the Note
is outstanding, the Company will not issue any Notes (other than to the Buyer as contemplated hereby) and the Company shall not issue any other securities that would cause a breach or default under the Note. For the period of one year after the
Closing Date, the Company shall not, in any manner, enter into or effect any Dilutive Issuance (as defined in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Note or exercise
of any Warrant any shares of Common Stock in excess of that number of shares of Common Stock which the Company may issue upon conversion of the Notes and exercise of the Warrants without breaching the Company’s obligations under the rules or
regulations of the Principal Market. 
 (k) Reservation of Shares. The Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less than 130% of the sum of the number of Interest Shares issuable pursuant to the terms of the Notes, shares of Common Stock issuable upon conversion of the Note and shares of
Common Stock issuable upon exercise of the Warrants. 
 (l) Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or regulation of any government or any department or agency thereof or other governmental entity, except where such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect. 
 (m) Other Registration Statements; Additional Issuances of Securities.

 (i) From the date hereof until at least three (3) months after the Effective Date (as defined in the Registration
Rights Agreement), the Company will not, directly or indirectly, file any registration statement with the SEC or draw down on any existing Form S-3 shelf registration statement, other than the Registration Statement (as defined in the
Registration Rights Agreement). 
 (ii) The Company shall notify the Buyer, at least thirty (30) days in advance of its
intention to raise additional capital (other than (i) through a Soft Call of Warrants, (ii) a secondary offering that is an underwritten offering of shares by the Company in which the gross proceeds are not less than $25,000,000 or
(iii) through issuance of options, shares, warrants, phantom stock, stock appreciation rights, restricted stock or other securities (A) pursuant to the Company Employee Incentive Plan or (B) to Consultants in compensation for services
in an amount of up to 50,000 shares of Common Stock). Until the second anniversary of the Closing Date, the Company shall allow Buyer to purchase up to 100% of any debt or equity to be raised in a capital transaction, in an aggregate amount up to
$15,000,000. Regardless of whether the Buyer participates in the transaction, subject to the following sentence, the Company shall use its best efforts to keep the Buyer informed of progress of the transaction. Prior to disclosing to the Buyer the
existence of any such transaction or any of the terms thereof, the Company agrees to request the Buyer to waive the covenant concerning disclosure of non-public information to Buyer to permit the Company to make disclosures to the Buyer pursuant to
this Section 4(m). 
  

 - 20 - 

 (n) Stockholder Approval. The Company shall provide each stockholder entitled to
vote at a special or annual meeting of stockholders of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than November 30, 2006 (the “Stockholder Meeting Deadline”), a
proxy statement, substantially in the form which has been previously reviewed by the Buyer and McDermott Will & Emery LLP, soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions
providing for the Company’s issuance of all of the Securities as described in the Transaction Documents in accordance with applicable law and the rules and regulations of the Principal Market (such affirmative approval being referred to herein
as the “Stockholder Approval”), and the Company shall use its best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they
approve such resolutions. The Company shall be obligated to use its best efforts to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s best efforts, the Stockholder Approval is not obtained on or
prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held every three (3) months thereafter until such Stockholder Approval is obtained, the Notes are no longer outstanding, or
August 30, 2007, whichever occurs first. 
 5. REGISTER; TRANSFER AGENT INSTRUCTIONS. 
 (a) Register. The Company shall maintain at its principal executive office (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Note (and any Notes issued in exchange, transfer or replacement of the Note, which shall collectively be referred to as the “Notes”) and the Warrants in which the
Company shall record the name and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee), the principal amount of Notes held by such Person, the number of Conversion Shares
issuable upon conversion of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours for inspection of the Buyer
or its legal representatives. 
 (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”), registered in the name of the Buyer or its nominee, for the
Conversion Shares, the Interest Shares, if any, and the Warrant Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Notes or exercise of the Warrants in the form of Exhibit D attached
hereto (the “Irrevocable Transfer Agent Instructions”). The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give
effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, and to the
extent provided in this Agreement and the other Transaction Documents. If the Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall permit the transfer and shall promptly instruct its
transfer agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by the Buyer to effect such sale, transfer or assignment. In the event 

  

 - 21 - 

 
that such sale, assignment or transfer involves Conversion Shares, Interest Shares or Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, the transfer agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without any restrictive legend upon receipt of reasonably requested documentation and an opinion
of counsel in a form reasonably satisfactory to the Company. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that the Buyer shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. 
 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. 
 (a) The obligation of the Company hereunder to issue and sell the Note and the related Warrants to the Buyer at the Closing is subject to
the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the
Buyer with prior written notice thereof: 
 (i) The Buyer shall have executed each of the Transaction Documents to which it is
a party and delivered the same to the Company. 
 (ii) The Buyer shall have delivered to the Company the Purchase Price (less
the amounts withheld pursuant to Section 4(f)) for the Note and the Warrants being purchased by the Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided in advance by the Company.

 (iii) The representations and warranties of the Buyer shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date. 
 7. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE. 
 (a) The obligation of the Buyer hereunder to
purchase the Note and the related Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions; provided, that these conditions are for the Buyer’s sole benefit and may be
waived by the Buyer at any time in its sole discretion by providing the Company with prior written notice thereof: 
 (i) The
Company shall have executed and delivered to the Buyer (A) each of the Transaction Documents and (B) the Note and the related Warrants being purchased by the Buyer at the Closing pursuant to this Agreement. 
  

 - 22 - 

 (ii) The Buyer shall have received the opinion of Whiteman Osterman & Hanna LLP,
the Company’s outside counsel, dated as of the Closing Date, in substantially the form of Exhibit E attached hereto. 
 (iii) The Company shall have delivered to the Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached hereto, which instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent. 
 (iv) The Company shall have delivered to the Buyer a certificate evidencing the due
incorporation or formation and good standing of the Company and each of its Subsidiaries in each such entity’s jurisdiction of incorporation or formation, issued by the Secretary of State (or comparable office) of such jurisdiction, as of a
date within ten (10) days of the Closing Date. 
 (v) The Company shall have delivered to the Buyer a certificate
evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business, as of a date within ten (10) days of the
Closing Date. 
 (vi) The Company shall have delivered to the Buyer a certified copy of the Certificate of Incorporation, as
certified by the Secretary of State of the State of Delaware, within ten (10) days of the Closing Date. 
 (vii) The
Company shall have delivered to the Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors
in a form reasonably acceptable to the Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit F. 
 (viii) The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak as of a specific date, which shall be true as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate, executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer in the form attached hereto as Exhibit G. 
 (ix) The Company shall have delivered to the Buyer a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five (5) days of the Closing Date. 
 (x) The Common Stock (I) shall be
designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (A) in writing 

  

 - 23 - 

 
by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market. 
 (xi) The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of
the Securities (other than the Stockholder Approval). 
 (xii) The Company shall have delivered to the Buyer such other
documents relating to the transactions contemplated by this Agreement as the Buyer or its counsel may reasonably request. 
 8.
MISCELLANEOUS. 
 (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement 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. 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, 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. 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 to such party at the address for such 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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.  
 (b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party; provided, that a facsimile signature shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not a facsimile signature. 
 (c)
Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement. 
 (d) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity 

  

 - 24 - 

 
or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other
jurisdiction. 
 (e) Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all
other prior oral or written agreements between the Buyer, the Company, their Affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments
referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least a majority of the aggregate number of Registrable
Securities issued and issuable hereunder, and any amendment to this Agreement made in conformity with the provisions of this Section 8(e) shall be binding on the Buyer and holders of Securities, as applicable. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding. No
consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the parties to the Transaction
Documents, holders of Notes or holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with the Buyer relating to the terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, the Buyer has not made any commitment or promise or has any other obligation to provide any
financing to the Company or otherwise. 
 (f) Notices. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided, confirmation
of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be: 
 If to the Company: 
  

			
	 DayStar Technologies, Inc.

	 13 Corporate Drive

	 Halfmoon, New York 12065

	 Telephone:
	  	(518) 383-4600
	 Facsimile:
	  	(518) 383-7900
	 Attention:
	  	Thomas A. Polich, Esq.
		  	General Counsel/Assistant Secretary

  

 - 25 - 

 With a copy (for informational purposes only) to: 
  

			
	 Whiteman Osterman & Hanna LLP

	
	 One Commerce Plaza

	 Albany, New York 12260

	 Telephone:
	  	(518) 487-7600
	 Facsimile:
	  	(518) 487-7777
	 Attention:
	  	Leslie M. Apple, Esq.

 If to the Transfer Agent: 
  

			
	 U.S. Stock Transfer Corporation

	 1745 Gardena Avenue

	 Glendale, California 91204

	 Telephone:
	  	(818) 502-1404
	 Facsimile:
	  	(818) 502-0674
	 Attention:
	  	Syed Hussaini

 If to the Buyer: 
  

			
	 Castlerigg Master Investments Ltd.

	 c/o Sandell Asset Management Corp.

	 40 West 57th Street, 26th Floor

	 New York, New York 10019

	 Telephone:
	  	(212) 603-5775
	 Facsimile:
	  	(212) 603-5710
	 Attention:
	  	Cem Hacioglu

 with a copy (for informational purposes only) to: 
  

			
	 McDermott Will & Emery LLP

	 340 Madison Avenue

	 New York, New York 10017

	 Telephone:
	  	(212) 547-5400
	 Facsimile:
	  	(212) 547-5444
	 Attention:
	  	Stephen E. Older, Esq.

 or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. 
  

 - 26 - 

 (g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including any purchasers of the Note or the Warrants. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the
holders of at least a majority of the aggregate number of Registrable Securities issued and issuable hereunder, including by way of a Fundamental Transaction (unless the Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Note and the Warrants). The Buyer may assign some or all of its rights hereunder in connection with transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to
be a Buyer hereunder with respect to such assigned rights. 
 (h) No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 
 (i) Survival. The representations and warranties of the Company and the Buyer contained in Sections 2 and 3 and the agreements and
covenants set forth in Sections 4, 5 and 8 shall survive the Closing. 
 (j) Further Assurances. Each party shall do
and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 
 (k)
Indemnification. In consideration of the Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company’s other obligations under the Transaction Documents,
the Company shall defend, protect, indemnify and hold harmless the Buyer and each other holder of the Securities and all of their partners, members, managers, officers, directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or the other Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company
contained in this Agreement or the other Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of this Agreement or the other Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, 

  

 - 27 - 

 
with the proceeds of the issuance of the Securities, (iii) any disclosure made by the Buyer pursuant to Section 4(h), or (iv) the status of
the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 8(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement. 
 (l) Remedies. The Buyer and each holder of the Securities and the Company shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe
or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyer. The Company therefore agrees that the Buyer shall be entitled to seek temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages and without posting a bond or other security. 
 (m)
Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to any of the other Transaction Documents or the Buyer enforces or exercises its rights hereunder or 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, foreign, state or federal law, common law or 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. 
 [Signature Pages Follow] 
  

 - 28 - 

 IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above 
  

			
	COMPANY:
	  
 DAYSTAR TECHNOLOGIES, INC.

		
	By:	 	/s/ John R. Tuttle
		 	Name: John R. Tuttle
		 	Title: Chief Executive Officer

 IN WITNESS WHEREOF, the Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written above. 
  

			
	BUYER:
	  
 CASTLERIGG MASTER INVESTMENTS LTD.

		
	By:	 	/s/ Patrick T. Burke
		 	Name: Patrick T. Burke
		 	Title: Senior Managing Director

 EXHIBITS 
  

			
	 Exhibit A
	  	Form of Note
	 Exhibit B-1
	  	Form of Class A Warrant
	 Exhibit B-2
	  	Form of Class B Warrant
	 Exhibit C
	  	Registration Rights Agreement
	 Exhibit D
	  	Irrevocable Transfer Agent Instructions
	 Exhibit E
	  	Form of Outside Company Counsel Opinion
	 Exhibit F
	  	Form of Secretary’s Certificate
	 Exhibit G
	  	Form of Officer’s Certificate

 SCHEDULES 
  

			
	 Schedule 3(a)
	  	Subsidiaries
	 Schedule 3(l)
	  	Absence of Certain Changes
	 Schedule 3(q)
	  	Transactions with Affiliates
	 Schedule 3(n)
	  	Conduct of Business; Regulatory Permits
	 Schedule 3(r)
	  	Equity Capitalization
	 Schedule 3(s)
	  	Indebtedness and Other Contracts
	 Schedule 3(t)
	  	Litigation
	 Schedule 3(z)
	  	Subsidiary Rights
	 Schedule 3(ee)
	  	Ranking of the Note

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(a) Subsidiaries 
 DayStar Solar, LLC, a Colorado limited liability company

 FEIN # 52-2309159 
 DayStar Solar, LLC discontinued operations during the second quarter of 2005. 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(l) Absence of Certain Changes 
 Item (iii) Since the date of the Company’s most recent
audited financial statements (December 31, 2005), the Company has had capital expenditures in excess of $1,500,000. Expenditures that, in the aggregate, exceeded the $1,500,000 threshold since December 31, 2005 are as follows: 
  

							
	Date	  	 Vendor
	  	 Description
	  	Amount
	01/04/2006	  	Metrology Equipment Services	  	see attached quote # 3208	  	5,000.00
	01/06/2006	  	Newark in One	  	Calibrated Fluke	  	4,570.00
	01/07/2006	  	Custom Fabrications	  	Materials for Chamber	  	723.00
	01/10/2006	  	Dell Commercial Credit	  	Optiplex w/ micro Tower	  	862.41
	01/10/2006	  	Dell Commercial Credit	  	Latitude laptop	  	1,887.39
	01/10/2006	  	Dell Commercial Credit	  	Lattitude laptops	  	4,128.98
	01/10/2006	  	Dell Commercial Credit	  	Latitude laptop	  	1,813.64
	01/10/2006	  	PVI	  	Inline Thermal System projected labor and materials cost	  	128,300.00
	01/10/2006	  	Dell Commercial Credit	  	Project 2003 English 6.0, Visio Studio	  	3,435.93
	01/10/2006	  	Dell Commercial Credit	  	Office Professional	  	911.54
	01/12/2006	  	Myers Vacuum	  	Automatic valve sensor	  	7,646.00
	01/13/2006	  	Coy Laboratory Products, inc.	  	3 ft. glove box	  	2,154.00
	01/13/2006	  	Inficon Inc.	  	Crystal retainer and holder	  	1,780.00
	01/13/2006	  	KeyBank - Corporate Card	  	LabTek - High Res Video Camera with Zoom Lense	  	882.00
	01/13/2006	  	Coy Laboratory Products, inc.	  	freight	  	87.94
	01/16/2006	  	The Walters Company	  	Mix Hood	  	5,355.00
	01/18/2006	  	CVD Equipment	  	20% Downpayment on 3 tube furnace	  	171,767.00
	01/18/2006	  	David Franco	  	Three bollards installed at bld 21	  	2,440.00
	01/19/2006	  	GBI Installations	  	50% down payment, 3 bookcases, 2 credenza	  	1,211.71
	01/19/2006	  	McMaster- Carr Supply	  	All SS Assembled Mobile workbench 72"x3"x34", w/lower shelf, 5" H back stop & drawer	  	683.33
	01/19/2006	  	Duniway Stockroom Corp	  	6" air operated SS 6" conflat gate valve	  	1,500.00
	01/19/2006	  	The Walters Company	  	Chemical Evaporator stack install	  	2,490.59
	01/19/2006	  	WaveMetrics	  	IGRO Pro 5 for PC’s software	  	550.00
	01/19/2006	  	WaveMetrics	  	IGRO manual	  	49.00
	01/20/2006	  	VWR International	  	Dry-Keeper Desiccator Cabinet	  	824.87
	01/21/2006	  	Venzon	  	Target Delrin Insulator, Target aluminum blankoff plate, nickel plated	  	16,260.00
	01/21/2006	  	Venzon	  	3-Target Aluminum Door (nickel plated)	  	20,681.00
	01/30/2006	  	Duniway Stockroom Corp	  	6" air operated SS 6" conflate gate valve	  	1,450.00
	01/31/2006	  	The Walters Company	  	fabrication and installation of sheetmetal B vent stack for the Belt furnace	  	2,850.00
	01/31/2006	  	Quartzfab	  	6" tray Liner	  	3,724.00
	01/31/2006	  	Deborah Dzingle	  	Intuit QuickBooks purchase	  	4,239.00
	02/01/2006	  	W.B. Mason	  	Cherry Cabinet, white boards, projection screen	  	3,937.57
	02/01/2006	  	McMaster- Carr Supply	  	Thermoplastic Heater	  	966.20
	02/01/2006	  	Aries Chemical	  	Evaporation system, final payment	  	11,479.61
	02/01/2006	  	SMRT Architects and Engineers	  	Jan ‘06 Professional Services	  	44,655.63
	02/01/2006	  	Hawk Ridge Systems	  	CA Office - SolidWorks, COSMOS Works, PDMWorks	  	33,020.74
	02/02/2006	  	GBI Installations	  	50% down payment, Engineering workstations	  	6,800.00
	02/03/2006	  	MKS Instruments Inc.	  	Power supply	  	1,282.50
	02/03/2006	  	MKS Instruments Inc.	  	Controller to power supply cable	  	49.50
	02/03/2006	  	MKS Instruments Inc.	  	Chapman to controller cable	  	49.50
	02/03/2006	  	MKS Instruments Inc.	  	Power supply to FMC cable	  	148.50
	02/03/2006	  	Phoenix Vacuum Technologies	  	Edwards Mechanical Vacuum pump Edwards E2M80 Fomblin Prep	  	6,900.00
	02/06/2006	  	McMaster- Carr Supply	  	Flammable Cabinet	  	783.57
	02/06/2006	  	Kurt J. Lesker Company	  	Custom Box Chamber	  	24,153.57
	02/06/2006	  	Kurt J. Lesker Company	  	Custom Blank flange package	  	914.00
	02/06/2006	  	Kurt J. Lesker Company	  	10 % down - Custom Thin film dep system	  	64,530.00
	02/06/2006	  	Kurt J. Lesker Company	  	10 % down - Custom Thin film dep system	  	19,000.00
	02/07/2006	  	Azco Corp	  	Moveable blade, staty blade	  	1,319.00
	02/08/2006	  	Dell Commercial Credit	  	Dell Precision tower	  	3,709.66
	02/08/2006	  	Dell Commercial Credit	  	Latitude laptop	  	2,026.57
	02/08/2006	  	Dell Commercial Credit	  	Latitude laptop	  	1,835.07
	02/08/2006	  	Dell Commercial Credit	  	latitude laptop	  	2,416.05
	02/08/2006	  	Dell Commercial Credit	  	precision tower	  	3,009.98
	02/08/2006	  	Dell Commercial Credit	  	Creative Suite 2 for Windows	  	884.89
	02/10/2006	  	CVD Equipment	  	30 % Downpayment - Research Deposition System	  	71,130.00
	02/10/2006	  	Eastern Applied Research	  	X-Ray Fluorescent Element Analyzer for Characterization lab	  	63,000.00

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(l) Absence of Certain Changes 
 Item (iii) (Continued)

  

							
	Date	  	 Vendor
	  	 Description
	  	Amount
	02/13/2006	  	KeyBank - Corporate Card	  	Apple 23" HD Display Flat panel	  	1,426.31
	02/14/2006	  	GBI Installations	  	workstations	  	3,400.00
	02/14/2006	  	GBI Installations	  	stage receiving area	  	115.00
	02/14/2006	  	GBI Installations	  	tax	  	246.05
	02/14/2006	  	CHA Industries	  	Credit for Drive plate assembly and drive latch assy	  	-891.00
	02/14/2006	  	Eastern Applied Research	  	Online UPS power supply	  	895.00
	02/15/2006	  	Northeast Gas Technologies, Ltd	  	773216	  	19.99
	02/16/2006	  	Kurt J. Lesker Company	  	ASA 90 Degree both Flange grooved	  	679.50
	02/16/2006	  	Northeast Gas Technologies, Ltd	  	773374	  	12.80
	02/20/2006	  	Unishippers	  	Pick up @ Phoenix Vacuum Technology delivery to DayStar-Halfmoon	  	539.34
	02/21/2006	  	GBI Installations	  	Remainder on Bookcases and credenzas	  	715.22
	02/23/2006	  	Kurt J. Lesker Company	  	Custom Box Chamber w/ multiple ports	  	23,979.13
	02/24/2006	  	Kurt J. Lesker Company	  	Custom Blank Flange package	  	914.00
	02/24/2006	  	LR Enviromental Equipment Co. Inc.	  	shipping	  	708.00
	02/24/2006	  	LR Enviromental Equipment Co. Inc.	  	Baxter Scientific Vacuum Oven (Refurbish)	  	6,200.00
	02/28/2006	  	SMRT Architects and Engineers	  	Feb ‘06 Professional Services	  	25,217.69
	02/28/2006	  	CADimensions, Inc.	  	assembly and 2 D...	  	7,191.00
	02/28/2006	  	CADimensions, Inc.	  	tax	  	684.67
	03/01/2006	  	W.B. Mason	  	mailroom table for bldg 21	  	829.19
	03/04/2006	  	Jon A. Sharp	  	Module Coaters from SPI supplies	  	835.14
	03/06/2006	  	Semicore Equipment, Inc.	  	30% deposit on high vacuum evaporation system	  	84,210.00
	03/06/2006	  	Eastern Applied Research	  	Vacuum Pump for Seiko 2210A XRF System	  	4,000.00
	03/06/2006	  	Green Mountain Engineering, LLC	  	Solar Simulator Additional Costs	  	9,050.05
	03/06/2006	  	Eastern Applied Research	  	shipping	  	110.00
	03/06/2006	  	MSC Industrial Supply Co.	  	Digital Readout package for 3-axis knee milling machine	  	1,667.60
	03/09/2006	  	GBI Installations	  	Redeliver and install (7) used workstations	  	3,921.55
	03/09/2006	  	Instron Corporation	  	Bluehill 2 reports and graph pack. See attached Quote #DKDMQ2348Details	  	1,500.00
	03/10/2006	  	Dell Commercial Credit	  	Latitude laptop for NY office	  	1,835.07
	03/10/2006	  	Dell Commercial Credit	  	computer for Charlene G.	  	1,347.12
	03/10/2006	  	Dell Commercial Credit	  	computer for Walter O’brien	  	3,651.71
	03/10/2006	  	Dell Commercial Credit	  	Prec Workstation for CA office	  	2,845.14
	03/10/2006	  	Dell Commercial Credit	  	Latitude laptop for CA office	  	2,026.57
	03/10/2006	  	Dell Commercial Credit	  	CA office flat panel	  	662.33
	03/11/2006	  	Dell Business Credit	  	hard drives and monitors	  	3,651.71
	03/11/2006	  	Dell Business Credit	  	CA office - dell computer	  	662.33
	03/11/2006	  	Dell Business Credit	  	2 computers for CA office	  	5,819.63
	03/11/2006	  	Dell Business Credit	  	software for Anglea and Lemanski	  	2,389.31
	03/13/2006	  	Unishippers	  	was heavier than originally thought	  	244.99
	03/13/2006	  	Unishippers	  	Pick-up from Halfmoon deliver to Pentagon Technologies sheet metal part to be cleaned	  	123.92
	03/14/2006	  	PV Measurments, Inc.	  	solar simulator	  	1,014.86
	03/14/2006	  	GraceCom	  	additional phones	  	3,865.16
	03/15/2006	  	KeyBank - Corporate Card	  	staples	  	1,497.99
	03/16/2006	  	Stanley Supply and Services	  	Pace Model 888-0110 Filtration Unit	  	1,200.00
	03/17/2006	  	Kurt J. Lesker Company	  	Thin Film Dep system (25 % due upon drawing issuance)	  	161,325.00
	03/17/2006	  	Quartzfab	  	Isolation tube Q/L dual perf	  	4,148.00
	03/17/2006	  	EMA Design Automation	  	OrCAD	  	3,768.29
	03/18/2006	  	GBI Installations	  	used work stations (engineering)	  	1,038.15
	03/20/2006	  	Jon A. Sharp	  	COO Temporary laptop	  	1,922.35
	03/20/2006	  	GBI Installations	  	Chairs (bld 21) and table for bldg 13	  	1,524.75
	03/20/2006	  	MSC Industrial Supply Co.	  	7x12 Horizontal Cut-off Band Saw	  	899.00
	03/20/2006	  	MSC Industrial Supply Co.	  	shipping charge	  	124.99
	03/21/2006	  	Duniway Stockroom Corp	  	4.5" CF gate valve, pneumatic, 115v	  	1,100.00
	03/21/2006	  	Duniway Stockroom Corp	  	6" CF gate Valve pneumatic, 115	  	1,300.00
	03/22/2006	  	GBI Installations	  	Remainder on bookcases for Bldg 21	  	666.13
	03/23/2006	  	Sigma Instruments	  	EIES -IV Guardian Controller	  	5,915.00
	03/23/2006	  	Sigma Instruments	  	EISE - IV Detector Module	  	12,615.00
	03/24/2006	  	Unishippers	  	Livermore Ca	  	147.49
	03/24/2006	  	Newport Corporation	  	1000 W Xenon of lamp for Oriel Solar Simulator	  	1,540.00
	03/24/2006	  	Newport Corporation	  	shipping	  	4.10

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(l) Absence of Certain Changes 
 Item (iii) (Continued)

  

							
	Date	  	 Vendor
	  	 Description
	  	Amount
	04/18/2006	  	Grainger	  	Black Drafting Stool	  	507.28
	04/19/2006	  	American Rigging	  	CA 95035. ap...	  	3,960.00
	04/19/2006	  	KOM Lamb Inc	  	shipping	  	40.92
	04/20/2006	  	Furniture Associates	  	Office Furniture (cubicles, chairs, workstations) for CA office	  	15,000.00
	04/20/2006	  	ALLWIN21 Corp	  	AW-900 new software and controller with one pentium PC control board for AG610 RTA	  	12,000.00
	04/20/2006	  	SVT Associates, Inc.	  	Reference quote attached # 2005163C Dated 3/10/06	  	43,656.70
	04/20/2006	  	SVT Associates, Inc.	  	source shutter	  	2,100.00
	04/20/2006	  	SVT Associates, Inc.	  	8 - source shutter manifold	  	200.00
	04/20/2006	  	Phoenix Vacuum Technologies	  	Lebold TMP vacuum pump	  	13,000.00
	04/24/2006	  	G & D Clarke Machinery Movers, Inc.	  	off a truck...	  	1,600.00
	04/24/2006	  	OCR Services	  	112185 SH06040506	  	5,720.00
	04/25/2006	  	Grainger	  	CUTTER,PLASMA,27 A	  	1,470.00
	04/25/2006	  	Grainger	  	WELDER,MIG	  	1,435.00
	04/25/2006	  	ALLWIN21 Corp	  	Isolation Tube for heat Pulse 610	  	2,500.00
	04/27/2006	  	Venzon	  	10 % progressive payment	  	64,461.20
	04/27/2006	  	Venzon	  	Balance (70%) CPA4 upgrade	  	80,500.00
	04/27/2006	  	Venzon	  	Balance (70%) CPA 4 Chamber upgrade - group 1	  	80,500.00
	04/28/2006	  	Trinco Trinity Tool Company	  	Split Level Deluxe Cabinet	  	4,222.83
	04/30/2006	  	SMRT Architects and Engineers	  	April Consulting Fees	  	25,577.83
	05/01/2006	  	Landry Drywall	  	Installation of raised floor and ramps for CPA4	  	1,932.00
	05/01/2006	  	Keystone Architectural Services	  	Building Code Review	  	500.00
	05/03/2006	  	FASCIA FLOOR COVERING, INC	  	Carpet and Flooring for Building 5	  	1,906.25
	05/05/2006	  	Allegheny Technologies	  	Packing estimate	  	20.00
	05/05/2006	  	Cortron Business Systems	  	Xerox Work Center, Muratec Fax, Finisher	  	8,901.40
	05/10/2006	  	Grizzly Industrial, Inc.	  	Small downdraft table	  	119.95
	05/10/2006	  	Office Furniture Express	  	50% downpayment on workstations, bookcases, Office Desk	  	7,083.00
	05/10/2006	  	Phoenix Technology, Inc.	  	30% Down on Dryer Furnace and CW Price Screen Printer	  	7,275.00
	05/10/2006	  	C.P. Construction	  	Exhaust Hood	  	4,500.00
	05/10/2006	  	C.P. Construction	  	Acid Bench	  	3,500.00
	05/10/2006	  	C.P. Construction	  	delivery charge	  	250.00
	05/10/2006	  	C.P. Construction	  	CA sales tax	  	831.25
	05/11/2006	  	Besco Metals, Inc.	  	tax	  	784.00
	05/12/2006	  	All Guard Systems, Inc.	  	Downpayment on Security System (50%)	  	11,910.00
	05/15/2006	  	Master Sonics	  		  	17.50
	05/16/2006	  	Advance Energy Industries	  	power supply ...	  	30,000.00
	05/16/2006	  	PVI	  	Payment upon completion of basic vacuum chamber assy	  	75,000.00
	05/16/2006	  	Scott Alarm Systems, Inc.	  	50% Bldg 5 Alarm System	  	2,967.45
	05/19/2006	  	Novellus Systems	  	Conference Table for CA office	  	500.00
	05/19/2006	  	Facilities Logistics	  	Used forklift	  	1,500.00
	05/22/2006	  	Dell Business Credit	  	Laptop Latitude D820 Quote#292845706	  	1,732.86
	05/22/2006	  	Northeast Gas Technologies, Ltd	  	2 Cylinder wall mounted N2 auto changer	  	2,465.00
	05/22/2006	  	Inficon Inc.	  	Transpector XPR 3 Gas Analysts System	  	24,385.00
		  		  		  	 
		  		  		  	2,063,147.45

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(n) Conduct of Business; Regulatory Permits 
 On June 21, 2005, the Company announced that it would
redeem its outstanding Class A public warrants (NASDAQ: DSTIW). As a result, NASDAQ suspended trading on such date for two hours to allow for the information to be disseminated. 
 On April 26, 2006, The NASDAQ Stock Market (“NASDAQ”) verbally communicated that Dr. Tuttle’s appointment to the various committees of the Board of Directors, as reflected in the
Company’s recently filed 10K was in violation of the NASD Rule 4350(c). As a remedy to the infraction, on May 12, 2006, Dr. Tuttle resigned his positions on such committees. Based on conversations, NASDAQ expects to issue a letter
noting that the violation was inadvertent and has been corrected. No penalties will be assessed. NASDAQ verbally indicated they would not be taking further action. 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(q) Transactions with Affiliates 
 The Company has granted options to purchase 321,217
shares of Common Stock to its officers, directors and employees pursuant to its currently effective 2003 Equity Incentive Plan. 
 On
April 10, 2006, upon commencement of his service as Chief Operating Officer of the Company, the Company granted 50,000 shares of restricted common stock to Steven DeLuca pursuant to its currently effective 2003 Equity Incentive Plan. The grant
has a four year vesting schedule. 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(r) Equity Capitalization 
 (i) None. 
 (ii) Outstanding Options and Warrants 
  

			
	  	  	Shares Required
	 Class B Public Warrant
	  	5,115,153
	 Representative Warrants
	  	32,768
	 Consultant Warrants
	  	71,450
	 2003 EIP Plan
	  	
	 Stock Option Grants Outstanding
	  	321,217
	 Available for Grant
	  	2,769

 (iii) Debt and capital leases in schedule 3(s) below 
 (iv) Debt and capital leases in schedule 3(s) below 
 (v) In
addition to the registration rights set forth in the Transaction Documents, the Company has granted registration rights with respect to certain of the consultant warrants listed above. 
 (vi) None 
 (vii) As set forth in the Company’s currently effective Certificate of Incorporation, the
Company’s Class B Common Stock has antidilution protection. There are, however, no shares of Class B Common Stock presently outstanding. 
 (viii)
None. 
 (ix) None 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(s) Indebtedness and Other Contracts 
 Letter of Credit 
 The Company secured a $110,000 letter of credit on May 22, 2006 from a bank, in order to facilitate the acquisition of a Laminator from a Japanese Company. This
required a borrowing / collateral agreement be executed and a restricted depository account for the letter of credit amount be established. 
 Capital
Leases as Disclosed in SEC Documents: 
 Sterling National Bank - $50,000 capital lease dated October 7, 2002; 60 monthly
payments of $1,348.25; secured by CPA Sputtering Equipment acquired under the lease. 
 Key Equipment Finance - $53,687 capital lease
dated December 4, 2002; 60 monthly payments of $1,240.18; secured by CPA Sputtering Equipment acquired under the lease. 
 GE Colonial
Pacific - $26,844 capital lease dated September 26, 2002; 60 monthly payments of $665.56; secured by CPA Sputtering Equipment acquired under the lease. 
 Toshiba American Info Services - $49,000 capital lease dated February 2, 2003; 60 monthly payments of $1,179.95; secured by Comptech 2440 Alumina RF Sputtering System acquired under the lease. 

GE Capital Corporation - $25,000 capital lease dated April 14, 2003; 60 monthly payments of $577.42; secured by 3K Advanced Energy Power
Supplies acquired under the lease. 
 GE Capital Corporation - $35,000 capital lease dated May 9, 2003; 60 monthly payments of
$1,087.72; secured by 5K Advanced Energy Power Supplies acquired under the lease. 
 GE Capital Corporation - $38,595 capital lease
dated February 18, 2005; 49 monthly payments of $994.32; secured by Perkin Elmer Optima Spectrometer acquired under the lease. 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(s) Indebtedness and Other Contracts (Continued) 
 Notes Payable as Disclosed in SEC Documents:

 LMDC – $500,000 note payable finalized in January 2005, to complete the acquisition of several pieces of equipment from the
vendor. The Company paid $120,000 in 2004 as a down payment and took possession of the equipment. Under the agreement, the Company will have 30 monthly payments of $5,323 followed by another 30 monthly payments of $16,339. The note is secured by the
following equipment acquired under the note: (a) Alcatel; (b) Semitool Spin Dryer (2); (c) Branson Washer w/ DI Heater; (d) Diffusion Pumps; (e) Screen Printer; and (f) V2000 – CPA 3. 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(t) Litigation 
 None 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(z) Subsidiary Rights 
 None 

 SECURITIES PURCHASE AGREEMENT 
 Schedule 3(ee) Ranking of the Note 
 All Indebtedness of the Company is listed on Schedule 3(s).Form of Senior Convertible Note

 EXECUTION COPY 
 Exhibit 10.15 
 SENIOR CONVERTIBLE NOTE 
 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE 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 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, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR THE SECURITIES MAY BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTIONS 3(c)(iii) AND 19(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF
THIS NOTE. 
 DAYSTAR TECHNOLOGIES, INC. 
 SENIOR CONVERTIBLE NOTE 
  

			
	Issuance Date: May 25, 2006	 	Principal: U.S. $15,000,000

 FOR VALUE RECEIVED, DayStar Technologies, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to the order of CASTLERIGG MASTER INVESTMENTS LTD. or registered assigns (“Holder”) the amount set out above as the Principal (as reduced pursuant to the terms hereof pursuant to
redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), on any Installment Date with respect to the Installment Amount due on such Installment Date (each, as defined
herein), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at a rate equal to 7.5% per annum (the “Interest
Rate”), from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon an Interest Date (as defined below), any Installment Date or the Maturity Date,
acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Convertible Note (this “Note”) is the Senior Convertible Note issued pursuant to the Securities Purchase Agreement (as
defined below) on the Closing Date. This Note and any Senior Convertible Note issued in exchange, transfer or replacement hereof shall be collectively referred to herein as the 

 
“Notes” and any such other Senior Convertible Notes, shall be referred to herein as the “Other Notes”. Certain capitalized
terms used herein are defined in Section 29. 
 (1) PAYMENTS OF PRINCIPAL. On each Installment Date, the Company shall pay to the
Holder an amount equal to the Installment Amount due on such Installment Date in accordance with Section 8. The “Maturity Date” shall be the eight (8) month anniversary of the Initial Maturity Date as may be extended at
the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing or any event shall have occurred and be continuing which with the passage of time
and the failure to cure would result in an Event of Default and (ii) through the date that is ten (10) days after the consummation of a Change of Control in the event that a Change of Control is publicly announced or a Change of Control
Notice (as defined in Section 5(b)) is delivered prior to the Maturity Date. 
 (2) INTEREST; INTEREST RATE. Interest on this
Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 365-day year and actual days elapsed and shall be payable in arrears for each Payment Quarter on the first day of the succeeding Payment Quarter during the
period beginning on the Issuance Date and ending on, and including, the Maturity Date (each, an “Interest Date”) with the first Interest Date being July 1, 2006. Interest shall be payable on each Interest Date, to the record
holder of this Note on the applicable Interest Date, and to the extent that any Principal amount of this Note is converted prior to such Interest Date, accrued and unpaid Interest with respect to such converted Principal amount and accrued and
unpaid Late Charges with respect to such Principal and Interest shall be paid through the Conversion Date (as defined below) on the next succeeding Interest Date to the record holder of this Note on the applicable Conversion Date, in cash
(“Cash Interest”) or, at the option of the Company, in shares of Common Stock (“Interest Shares”) or a combination thereof, provided that the Interest which accrued during any period may be payable in Interest
Shares if, and only if, the Company delivers written notice (each, an “Interest Election Notice”) of such election to each holder of the Notes on or prior to the tenth (10th) Trading Day prior to the Interest Date (each, an “Interest Notice Due Date”); provided, further, that if the Stockholder Approval (as
defined in the Securities Purchase Agreement) has not been obtained by the Stockholder Meeting Deadline (as defined in the Securities Purchase Agreement), the Company may not elect to pay Interest in Interest Shares and must pay all Interest due
hereunder as Cash Interest until such time as the Stockholder Approval has been obtained. Each Interest Election Notice must specify the amount of Interest that shall be paid as Cash Interest, if any, and the amount of Interest that shall be paid in
Interest Shares. Interest to be paid on an Interest Date in Interest Shares shall be paid in a number of duly authorized, validly issued, fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a))
of Common Stock equal to the quotient of (a) the amount of Interest payable on such Interest Date less any Cash Interest paid and (b) the Interest Conversion Price in effect on the applicable Interest Date. If any Interest Shares are to be
paid on an Interest Date, then the Company shall (X) provided that the Company’s transfer agent (the “Transfer Agent”) is participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program and such action is not prohibited by applicable law or regulation or any applicable policy of DTC, credit such aggregate number of Interest Shares to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the foregoing shall not apply, issue and deliver on the applicable Interest Date, 

  

 - 2 - 

 
to the address set forth in the register maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as
specified by the Holder in writing to the Company at least two Business Days prior to the applicable Interest Date, a certificate, registered in the name of the Holder or its designee, for the number of Interest Shares to which the Holder shall be
entitled. Notwithstanding the foregoing, the Company shall not be entitled to pay Interest in Interest Shares and shall be required to pay such Interest in cash as Cash Interest on the applicable Interest Date if, unless consented to in writing by
the Holder, during the period commencing on the applicable Interest Notice Due Date through the applicable Interest Date the Equity Conditions have not been satisfied. Prior to the payment of Interest on an Interest Date, Interest on this Note shall
accrue at the Interest Rate. Upon the occurrence and during the continuance of an Event of Default, the Interest Rate shall be increased to ten percent (10%). In the event that such Event of Default is subsequently cured, the adjustment referred to
in the preceding sentence shall cease to be effective as of the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default through and including the date of cure of such Event of Default. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of Interest
Shares; provided that the Company shall not be required to pay any tax that may be payable in respect of any issuance of Interest Shares to any Person other than the Holder or with respect to any income tax due by the Holder with respect to
such Interest Shares. 
 (3) CONVERSION OF NOTES. This Note shall be convertible into shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), on the terms and conditions set forth in this Section 3. 
 (a) Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined
below) into duly authorized, validly issued, fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock
upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all taxes that
may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. 
 (b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the
“Conversion Rate”). 
 (i) “Conversion Amount” means the portion of the Principal to be
converted, redeemed or otherwise with respect to which this determination is being made. 
 (ii) “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination, $11.50, subject to adjustment as provided herein. 
  

 - 3 - 

 (c) Mechanics of Conversion. 
 (i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion
Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I
(the “Conversion Notice”) to the Company and (B) if required by Section 3(c)(iii), surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification
undertaking with respect to this Note in the case of its loss, theft or destruction). The Conversion Notice shall include notification to the Company of any restriction upon issuances to the Holder pursuant to Section 3(d)(i) hereof of which
the Holder is aware. On or before the first (1st) Business Day following the date of receipt of a Conversion
Notice, the Company shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Holder and the Transfer Agent. On or before the second Business Day following the date of confirmed receipt of a Conversion Notice (the
“Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder
shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is
physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and
in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note (in accordance with Section 19(d)) representing the outstanding Principal not converted. The
Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. In the event of a
partial conversion of this Note pursuant hereto, the principal amount converted shall be deducted from the Installment Amounts relating to the Installment Dates as set forth in the Conversion Notice. 
 (ii) Company’s Failure to Timely Convert. If within three (3) Trading Days after the Company’s confirmed receipt of
the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such
holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by
the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business 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 Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates
representing 

  

 - 4 - 

 
such Common Stock 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, and (B) the Closing Bid Price on the Conversion Date. 
 (iii) Book-Entry. Notwithstanding
anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The
Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require
physical surrender of this Note upon conversion. 
 (iv) Pro Rata Conversion; Disputes. In the event that the Company
receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall
convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by
such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the
Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 24. 
 (d) Limitations on Conversions. 
 (i) Beneficial Ownership. The Company shall
not effect any conversion of this Note, and the Holder of this Note shall not have the right to convert any portion of this Note pursuant to Section 3(a), to the extent that after giving effect to such conversion, the Holder (together with the
Holder’s affiliates) would beneficially own in the aggregate, including all shares of stock of the Company issued to the Holder in connection with the Transaction Documents, in excess of 4.99% (the “Maximum Percentage”) of the
number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the
number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of
the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without
limitation, any Other Notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 3(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Section 3(d)(i), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB or Form 8-K, as the case may be
(y) a more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common 

  

 - 5 - 

 
Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one Business Day confirm orally and
in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company,
including this Note, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Notes. 
 (ii) Principal Market Regulation. The Company shall not be obligated to issue any shares of Common Stock upon conversion of this
Note if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion or exercise, as applicable, of the Notes and Warrants without breaching the Company’s
obligations under the rules or regulations of the Principal Market (the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably
satisfactory to the Required Holders. Until such approval or written opinion is obtained, the purchaser of this Note pursuant to the Securities Purchase Agreement (the “Purchaser”) shall not be issued in the aggregate, upon
conversion or exercise, as applicable, of the Notes or the Warrants, shares of Common Stock in an amount greater than the Exchange Cap. In the event that the Purchaser shall sell or otherwise transfer any of this Note, the transferee shall be
allocated a pro rata portion of the Exchange Cap, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap allocated to such transferee (the “Exchange Cap
Allocation”). In the event that any holder of Notes shall convert all of such holder’s Notes into a number of shares of Common Stock which, in the aggregate, is less than such holder’s Exchange Cap Allocation, then the difference
between such holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis in
proportion to the aggregate principal amount of the Notes then held by each such holder. 
 (iii) Cap on Total Shares
Issued. The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would, when aggregated with all other shares of Common Stock issued by the Company upon
conversion of this Note (excluding any Interest Shares, shares of Common Stock issued or issuable upon exercise of any of the Warrants and any other shares issued or issuable pursuant to the Transaction Documents), exceed 1,968,216 shares of Common
Stock (subject to adjustment for stock splits, combinations and like events) (the “Issuance Cap”). 

  

 - 6 - 

 
The Purchaser of this Note pursuant to the Securities Purchase Agreement shall not be issued in the aggregate, upon conversion of the Notes shares of Common
Stock in an amount greater than the Issuance Cap. In the event that the Purchaser shall sell or otherwise transfer any of this Note, the transferee shall be allocated a pro rata portion of the Issuance Cap, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the Issuance Cap allocated to such transferee (the “Issuance Cap Allocation”). In the event that any holder of Notes shall convert all of such holder’s Notes into a
number of shares of Common Stock which, in the aggregate, is less than such holder’s Issuance Cap Allocation, then the difference between such holder’s Issuance Cap Allocation and the number of shares of Common Stock actually issued to
such holder shall be allocated to the respective Issuance Cap Allocations of the remaining holders of Notes on a pro rata basis in proportion to the aggregate principal amount of the Notes then held by each such holder. 
 (4) RIGHTS UPON EVENT OF DEFAULT. 
 (a) Event of Default. Each of the following events shall constitute an “Event of Default”: 
 (i) the failure of the applicable Registration Statement required to be filed pursuant to the Registration Rights Agreement to be declared effective by the SEC on or prior to the date that is sixty (60) days
after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement), or, while the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to any holder of the Notes for sale of all of such holder’s Registrable Securities (as
defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of twenty (20) consecutive days or for more than an aggregate of sixty
(60) days in any 365-day period (other than days during an Allowable Grace Period (as defined in the Registration Rights Agreement)); 
 (ii) the suspension from trading or failure of the Common Stock to be listed on an Eligible Market for a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day
period; 
 (iii) the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares
of Common Stock within ten (10) Business Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including by way of public announcement or through any of its agents, at any time, of its
intention not to comply with a request for conversion of any Notes into shares of Common Stock that are tendered in accordance with the provisions of the Notes, other than pursuant to Section 3(d); 
 (iv) at any time following the tenth (10th) consecutive Business Day that the Holder’s Authorized Share Allocation (as defined below) is less than the number of shares of Common Stock that the Holder would be entitled to receive upon
a conversion of the 

  

 - 7 - 

 
full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise); 
 (v) the Company’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under
this Note (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document,
certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Holder is a party, except in the case of a failure to pay Interest and Late Charges when and as due, in which case only if
such failure continues for a period of at least five (5) Business Days; 
 (vi) any default under, redemption of or
acceleration prior to maturity of any Indebtedness (as defined in Section 3(s) of the Securities Purchase Agreement) of the Company or any of its Subsidiaries (as defined in Section 3(a) of the Securities Purchase Agreement) other than
with respect to any Other Notes; 
 (vii) the Company or any of its Subsidiaries, pursuant to or within the meaning of Title
11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an
involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors or (E) admits in
writing that it is generally unable to pay its debts as they become due; 
 (viii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that (A) is for relief against the Company or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders the liquidation of
the Company or any of its Subsidiaries; 
 (ix) a final judgment or judgments for the payment of money aggregating in excess
of $500,000 are rendered against the Company or any of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days
after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $500,000 amount set forth above so long as the Company provides
the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company will receive the
proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment; 
 (x) the Company
breaches any representation, warranty, covenant or other term or condition of any Transaction Document (as defined in the Securities Purchase Agreement), except, in the case of a breach of a covenant or other term or condition of any Transaction
Document which is curable, only if such breach continues for a period of at least ten (10) consecutive Business Days; 
  

 - 8 - 

 (xi) any breach or failure in any respect to comply with either of Sections 8, 10 or 15
of this Note; or 
 (xii) any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

 (b) Redemption Right. Promptly after the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall deliver written notice thereof via facsimile and overnight courier (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt of an Event of Default Notice and
the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which
Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a
price equal to the greater of (i) the product of (x) the sum of the Conversion Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late Charges with respect to such
Conversion Amount and Interest and (y) the Redemption Premium and (ii) the product of (A) the Conversion Rate with respect to such sum of the Conversion Amount together with accrued and unpaid Interest with respect to such Conversion
Amount and accrued and unpaid Late Charges with respect to such Conversion Amount and Interest in effect at such time as the Holder delivers an Event of Default Redemption Notice and (B) the Closing Sale Price of the Common Stock on the date
immediately preceding such Event of Default (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 13. In the event of a partial
redemption of this Note pursuant hereto, the principal amount redeemed shall be deducted from the Installment Amounts relating to the applicable Installment Dates as set forth in the Event of Default Redemption Notice. 
 (5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL. 
 (a) Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity
assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) 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 Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts and the interest rates of the Notes held by such holder and having similar ranking to
the Notes, and satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market (a “Public
Successor Entity”). 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 Note referring to
the “Company” shall refer 

  

 - 9 - 

 
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
Note 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 Holder confirmation that there shall be issued upon conversion or
redemption of this Note at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Company’s Common Stock (or other securities, cash, assets or other property) purchasable upon the conversion or redemption
of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity), as adjusted in accordance with the provisions of this Note. The provisions
of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption of this Note. 
 (b) Redemption Right. No sooner than fifteen (15) days nor later than ten (10) days prior to the consummation of a Change
of Control, but not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Change of Control Notice”); provided, that
the Holder hereby waives its right not to receive any material non-public information that may be set forth in any such Change of Control Notice. At any time during the period beginning after the Holder’s receipt of a Change of Control Notice
and ending on the date of the consummation of such Change of Control (or, in the event a Change of Control Notice is not delivered at least ten (10) days prior to a Change of Control, at any time on or after the date which is ten (10) days
prior to a Change of Control and ending ten (10) days after the consummation of such Change of Control), the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change of
Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5
shall be redeemed by the Company at a price equal to the greater of (i) the product of (x) 125% of the sum of the Conversion Amount being redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued
and unpaid Late Charges with respect to such Conversion Amount and Interest and (y) the quotient determined by dividing (A) the Closing Sale Price of the Common Stock immediately following the public announcement of such proposed Change of
Control by (B) the Conversion Price and (ii) 125% of the sum of the Conversion Amount being redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late Charges with respect to such
Conversion Amount and Interest (the “Change of Control Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 13 and shall have priority to payments to
stockholders in connection with a Change of Control. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price (together with any interest thereon) is paid in
full, the Conversion Amount submitted for redemption under this Section 5(c) (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of a partial
redemption of this Note pursuant hereto, the principal amount redeemed shall be deducted from the Installment Amounts relating to the applicable Installment Dates as set forth in the Change of Control Redemption Notice. 
  

 - 10 - 

 (6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS. 
 (a) Purchase Rights. 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 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 conversion of this Note (without taking into account any limitations or restrictions on the
convertibility of this Note) 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 Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights. 
 (b) Other Corporate Events. 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 Holder will thereafter have the right to receive upon a conversion of this Note, (i) in addition to the shares of Common Stock
receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the
holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such
consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required
Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note. 
 (7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES. 
 (a) Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 7(a) is deemed to have
issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in
connection with any Excluded Security) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Conversion Price in effect immediately prior to such issue or
sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to a price (calculated to the nearest one-hundredth of a cent) determined in accordance
with the following formula: 
 CP2 = CP1 * (A + B) ÷ (A + C). 
  

 - 11 - 

 For purposes of the foregoing formula, the following definitions shall apply: 
 (i) “CP2” shall mean the Conversion Price in effect immediately after such Dilutive Issuance; 
 (ii) “CP1” shall mean the Conversion Price in effect immediately prior to such Dilutive Issuance; 
 (iii) “A” shall mean the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance
(treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of “in-the-money” Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the
Notes) outstanding (assuming exercise of any outstanding Options therefor immediately prior to such issue); 
 (iv)
“B” shall mean the number of shares of Common Stock that would have been issued in such Dilutive Issuance if shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and 
 (v) “C”
shall mean the number of shares of Common Stock issued or deemed to be issued in such Dilutive Issuance. 
 For purposes of determining the
adjusted Conversion Price under this Section 7(a), the following shall be applicable: 
 (i) Issuance of Options.
If the Company in any manner grants or sells any Options, other than Excluded Securities, and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise
of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or
sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise
of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities. 
  

 - 12 - 

 (ii) Issuance of Convertible Securities. If the Company in any manner issues or
sells any Convertible Securities, other than Excluded Securities, and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share
of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance of sale of such Convertible Securities for such price per share. For the purposes of this Section 7(a)(ii), the
“price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of
such Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are
to be made pursuant to other provisions of this Section 7(a), no further adjustment of the Conversion Price shall be made by reason of such issue or sale. 
 (iii) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, other than Excluded
Securities, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common
Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of
the Subscription Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been
issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect. 
 (iv) Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $.01. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration 

  

 - 13 - 

 
received by the Company will be the Closing Sale Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required
Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five
(5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 (v) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be
the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case
may be. 
 (b) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any
time on or after the Subscription 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 Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Subscription 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 Conversion Price in effect immediately prior to such combination will be proportionately increased. 
 (c) Other Events. If any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 7. 
 (8)
COMPANY INSTALLMENT CONVERSION OR REDEMPTION. 
 (a) General. Beginning on the Initial Maturity Date, on each
applicable Installment Date, the Company shall pay to the Holder of this Note the Installment Amount as of 

  

 - 14 - 

 
such Installment Date by the combination of any of the following, but subject to and in accordance with the terms of this Section 8, (i) provided
that during the period commencing with the Company Installment Notice (as defined below) through the applicable Installment Date, the Equity Conditions have been satisfied (or waived in writing by the Holder), by requiring the conversion of a
portion of the applicable Installment Amount, in whole or in part, in accordance with this Section 8 (a “Company Conversion”) and/or (ii) by redeeming the applicable Installment Amount, in whole or in part, in accordance
with this Section 8 (a “Company Redemption”); provided that all of the outstanding applicable Installment Amount as of each such Installment Date must be converted and/or redeemed by the Company on the applicable Installment
Date, subject to the provisions of this Section 8. Notwithstanding the foregoing, the Company may not effect a Company Conversion under this Section 8(a), (x) in excess of 15% of the aggregate dollar trading volume (as reported on
Bloomberg) of the Common Stock on the Principal Market over the twenty (20) consecutive Trading Day period prior to the applicable Installment Notice Due Date, (y) so long as the Stockholder Approval has not been obtained, for a number of
shares in excess of the Maximum Installment Share Number and (z) even if Stockholder Approval has been obtained, in excess of the Issuance Cap. On or prior to the date which is the tenth (10th) Trading Day prior to each Installment Date (each, an “Installment Notice Due Date”), the Company shall deliver written notice (each, a
“Company Installment Notice”), to the Holder which Company Installment Notice shall state (i) the portion, if any, of the applicable Installment Amount which the Company elects to convert pursuant to a Company Conversion, which
amount when added to the Company Redemption Amount must equal the applicable Installment Amount (the “Company Conversion Amount”), (ii) the portion, if any, of the applicable Installment Amount which the Company elects to
redeem pursuant to a Company Redemption (the “Company Redemption Amount”), which amount when added to the Company Conversion Amount must equal the applicable Installment Amount and (iii) if the Company has elected, in whole or
in part, a Company Conversion, then the Company Installment Notice shall certify that the Equity Conditions have been satisfied as of the date of the Company Installment Notice. Each Company Installment Notice shall be irrevocable. If the Company
does not timely deliver a Company Installment Notice in accordance with this Section 8, then the Company shall be deemed to have delivered an irrevocable Company Installment Notice electing a Company Conversion and shall be deemed to have
certified that the Equity Conditions in connection with any such conversion have been satisfied. Except as expressly provided in this Section 8(a), the Company shall redeem and convert the applicable Installment Amount of this Note pursuant to
this Section 8 and the corresponding Installment Amounts of the Other Notes pursuant to the corresponding provisions of the Other Notes in the same ratio of the Installment Amount being redeemed and converted hereunder. The Company Redemption
Amount shall be redeemed in accordance with Section 8(b) and the Company Conversion Amount (whether set forth in the Company Installment Notice or by operation of this Section 8) shall be converted in accordance with Section 8(c).

 (b) Mechanics of Company Redemption. If the Company elects a Company Redemption in accordance with
Section 8(a), then the Company Redemption Amount, if any, which is to be paid to the Holder on the applicable Installment Date shall be redeemed by the Company on such Installment Date, and the Company shall pay to the Holder on such
Installment Date, by wire transfer of immediately available funds, an amount in cash (the “Company Installment Redemption Price”) equal to 100% of the Company Redemption Amount. If the Company fails to redeem the Company Redemption
Amount on the applicable 

  

 - 15 - 

 
Installment Date by payment of the Company Installment Redemption Price on such date, then at the option of the Holder designated in writing to the Company
(any such designation, “Conversion Notice” for purposes of this Note), the Holder may require the Company to convert all or any part of the Company Redemption Amount at the Company Conversion Price. Conversions required by this
Section 8(b) shall be made in accordance with the provisions of Section 3(c). Notwithstanding anything to the contrary in this Section 8(b), but subject to Section 3(d), until the Company Installment Redemption Price (together
with any interest thereon) is paid in full, the Company Redemption Amount (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event the Holder elects to
convert all or any portion of the Company Redemption Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Redemption Amount so converted shall be deducted from the Installment Amounts
relating to the applicable Installment Dates as set forth in the applicable Conversion Notice. 
 (c) Mechanics of Company
Conversion. Subject to Section 3(d), if the Company delivers a Company Installment Notice and elects, or is deemed to have elected, in whole or in part, a Company Conversion in accordance with Section 8(a), then the applicable Company
Conversion Amount, if any, which remains outstanding shall be converted as of the applicable Installment Date by converting on such Installment Date such Company Conversion Amount at the Company Conversion Price; provided that the Equity Conditions
have been satisfied (or waived in writing by the Holder) on such Installment Date. If the Equity Conditions are not satisfied (or waived in writing by the Holder) on such Installment Date, then at the option of the Holder designated in writing to
the Company, the Holder may require the Company to do any one or more of the following: (i) the Company shall redeem all or any part designated by the Holder of the unconverted Company Conversion Amount (such designated amount is referred to as
the “First Redemption Amount”) on such Installment Date and the Company shall pay to the Holder on such Installment Date, by wire transfer of immediately available funds, an amount in cash equal to such First Redemption Amount or
(ii) the Company Conversion shall be null and void with respect to all or any part designated by the Holder of the unconverted Company Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to
such amount of the Company Conversion Amount; provided, however, that the Conversion Price for such unconverted Company Conversion Amount shall thereafter be adjusted to equal the lesser of (A) the Company Conversion Price as in effect on the
date on which the Holder voided the Company Conversion and (B) the Company Conversion Price as in effect on the date on which the Holder delivers a Conversion Notice relating thereto. If the Company fails to redeem any First Redemption Amount
on or before the applicable Installment Date by payment of such amount on the applicable Installment Date, then the Holder shall have the rights set forth in Section 13(a) as if the Company failed to pay the applicable Company Redemption Price
and all other rights under this Note (including, without limitation, such failure constituting an Event of Default described in Section 4(a)(xi)). Notwithstanding anything to the contrary in this Section 8(c), but subject to
Section 3(d), until the Company delivers Common Stock representing the Company Conversion Amount to the Holder, the Company Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. In the event that the
Holder elects to convert the Company Conversion Amount prior to the applicable Installment Date as set forth in the immediately preceding sentence, the Company Conversion Amount so converted shall be deducted from the Installment Amounts relating to
the applicable Installment Dates as set forth in the applicable Conversion Notice. 
  

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 (d) Deferred Installment Amount. Notwithstanding any provision of this
Section 8 to the contrary, the Holder may, at its option and in its sole discretion, deliver a notice to the Company at least five (5) Trading Days prior to any applicable Installment Date electing to have all or any portion of the
Installment Amount payable on such Installment Date deferred (such amount, the “Deferral Amount”), provided, that such Deferral Amount shall not exceed $7,500,000 in the aggregate. Any notice delivered by the Holder pursuant to this
Section 8(d) shall set forth (A) the Deferral Amount and (B) the date such Deferral Amount shall now be payable, which date shall be a date selected by such Holder not to exceed twenty four (24) months from the date of the
original Installment Date. 
 (e) Cancellation of Installment Amount. Notwithstanding any provision of this
Section 8 to the contrary, in the event that the Weighted Average Price of the Common Stock equals or exceeds 150% of the applicable Conversion Price for each of the five (5) consecutive Trading Days immediately preceding the Installment
Notice Due Date, then the Installment Amount payable on such Installment Date shall be deferred to the Maturity Date. 
 (9)
COMPANY’S RIGHT OF MANDATORY CONVERSION. 
 (a) Mandatory Conversion. If at any time from and after the
Effective Date (as defined in the Registration Rights Agreement) (the “Mandatory Conversion Eligibility Date”), (i) the Closing Sale Price of the Common Stock for each Trading Day of any twenty (20) consecutive Trading Day
period following the applicable Mandatory Conversion Eligibility Date (the “Mandatory Conversion Measuring Period”) equals or exceeds either (x) 135% (the “First Conversion Threshold”) or (y) 150% (the
“Second Conversion Threshold”) of the Conversion Price on the Closing Date (subject to appropriate adjustments for stock splits, stock dividends, stock combinations and other similar transactions after the Subscription Date) and
(ii) the Equity Conditions shall have been satisfied (or waived in writing by the Holder) during the period commencing on the Mandatory Conversion Notice Date through the applicable Mandatory Conversion Date (each, as defined below), the
Company shall have the right to require the Holder to convert (1) if the First Conversion Threshold has been met, up to the First Conversion Threshold Conversion Amount or (2) if the Second Conversion Threshold has been met, all, but not
less than all, of the Conversion Amount then remaining under this Note, in each case as designated in the Mandatory Conversion Notice (as defined below) into fully paid, validly issued and nonassessable shares of Common Stock in accordance with
Section 3(c) hereof at the Conversion Rate as of the Mandatory Conversion Date (as defined below) (a “Mandatory Conversion”). The Company may exercise its right to require conversion under this Section 9(a) by delivering
within not more than two (2) Trading Days following the end of such Mandatory Conversion Measuring Period a written notice thereof by facsimile and overnight courier to all, but not less than all, of the holders of Notes and the Transfer Agent
(the “Mandatory Conversion Notice” and the date all of the holders received such notice by facsimile is referred to as the “Mandatory Conversion Notice Date”). The Mandatory Conversion Notice shall be irrevocable.
The Mandatory Conversion Notice shall state (i) the Trading Day selected for the Mandatory Conversion in accordance with Section 9(a), which Trading Day shall be at least ten (10) Business Days but not more than sixty
(60) Business Days following the Mandatory Conversion Notice Date (the “Mandatory Conversion Date”), (ii) the aggregate Conversion Amount, including any applicable First Conversion Threshold Conversion Amount, of the Notes
subject to mandatory conversion from the Holder and all of the holders of 

  

 - 17 - 

 
the Notes pursuant to this Section 9 (and analogous provisions under the Other Notes), provided, however, that the Company shall not redeem a Conversion
Amount under this Section in excess of 20% of the aggregate dollar trading volume (as reported on Bloomberg) of the Common Stock over the Mandatory Conversion Measuring Period, and (iii) the number of shares of Common Stock to be issued to such
Holder on the Mandatory Conversion Date. The Company may not effect more than one Mandatory Conversion during any consecutive thirty (30) Trading Day period. Any shares of Common Stock delivered in connection with a Mandatory Conversion
hereunder shall be accompanied by any accrued and unpaid Interest with respect to such Conversion Amount subject to such Mandatory Conversion and accrued and unpaid Late Charges with respect to such Conversion Amount and Interest. 
 (b) Pro Rata Conversion Requirement. If the Company elects to cause a conversion of any Conversion Amount of this Note pursuant to
Section 9(a), then it must simultaneously take the same action in the same proportion with respect to the Other Notes. All Conversion Amounts converted by the Holder after the Mandatory Conversion Notice Date shall reduce the Conversion Amount
of this Note required to be converted on the Mandatory Conversion Date. If the Company has elected a Mandatory Conversion, the mechanics of conversion set forth in Section 3(c) shall apply, to the extent applicable, as if the Company and the
Transfer Agent had received from the Holder on the Mandatory Conversion Date a Conversion Notice with respect to the Conversion Amount being converted pursuant to the Mandatory Conversion. 
 (c) Additional Warrant Issuance. In the event of any Mandatory Conversion, if the number of Warrant Shares underlying the Class B
Warrants (as defined in the Securities Purchase Agreement) that become exercisable in the aggregate by virtue of such Mandatory Conversion is less than 60% of quotient of (x) the Conversion Amount of such Mandatory Conversion divided by
(y) the arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) consecutive Trading Days immediately preceding the Mandatory Conversion Notice Date (the “Uncovered Mandatory Conversion
Shares”), then the Company shall issue to the Holder an additional Class B Warrant exercisable for a number of Warrant Shares (the “Additional Warrant Shares”) equal to the applicable number of Uncovered Mandatory
Conversion Shares, which Additional Warrant Shares shall be subject to registration rights identical to the registration rights set forth in the Registration Rights Agreement with the Additional Warrant Shares being deemed the Registrable Securities
(as defined in the Registration Rights Agreement) thereunder and the “Closing Date” (as used in the Registration Rights Agreement) meaning the issuance date of such additional Class B Warrant. 
 (10) HOLDER’S RIGHTS OF OPTIONAL REDEMPTION. 
 (a) At any time after the Initial Maturity Date, the Holder shall have the right, in its sole discretion, to require that the Company redeem up to an amount equal to the product of (X) the number of shares of
Common Stock that is 20% of the aggregate trading volume (as reported by Bloomberg) of the Common Stock over the prior twenty (20) Trading Day period, multiplied by (Y) the Holder Optional Conversion Price (the “Optional
Redemption Amount”) by delivering written notice thereof (a “Holder Optional Redemption Notice”) to the Company. The Holder Optional Redemption Notice shall indicate (i) the Optional Redemption Amount and (ii) the
date of such redemption (the “Optional Redemption 

  

 - 18 - 

 
Exercise Date”); provided, however, that such Optional Redemption Exercise Date shall not be less than ten (10) Business Days after the date
of delivery of such Holder Optional Redemption Notice. The Company shall have the option to redeem the Optional Redemption Amount in cash (a “Holder Optional Cash Redemption”) and/or in Common Stock (a “Holder Optional
Common Stock Conversion”). Within one (1) Business Day of the date of the Holder Optional Redemption Notice, the Company shall respond (such response, the “Company Optional Redemption Response Notice”) to the Holder
Optional Redemption Notice and notify the Holder of (i) the portion, if any, of the applicable Optional Redemption Amount which the Company elects to convert pursuant to a Holder Optional Common Stock Conversion, which amount when added to the
Holder Optional Cash Redemption Amount must equal the applicable Optional Redemption Amount (the “Holder Optional Common Stock Conversion Amount”), (ii) the portion, if any, of the applicable Optional Redemption Amount which
the Company elects to redeem pursuant to a Holder Optional Cash Redemption (the “Holder Optional Cash Redemption Amount”), which amount when added to the Holder Optional Common Stock Conversion Amount must equal the applicable
Optional Redemption Amount and (iii) if the Company has elected, in whole or in part, a Holder Optional Common Stock Conversion, then the Company Optional Redemption Response Notice shall certify that the Equity Conditions have been satisfied
as of the date of the Company Optional Redemption Response Notice. The portion of this Note subject to redemption pursuant to this Section 10 shall be redeemed by the Company on the applicable Optional Redemption Date in either cash at a price
equal to the Holder Optional Cash Redemption Amount being redeemed (the “Holder Optional Cash Redemption Price”) or in Common Stock in an amount equal to the Holder Optional Common Stock Conversion Amount. 
 (b) Mechanics of a Holder Optional Cash Redemption. If the Company elects a Holder Optional Cash Redemption in accordance with
Section 10(a), then the Holder Optional Cash Redemption Amount which is to be paid to the Holder on the applicable Optional Redemption Exercise Date shall be redeemed by the Company on such Optional Redemption Exercise Date, and the Company
shall pay to the Holder on such Optional Redemption Exercise Date, by wire transfer of immediately available funds, an amount in cash equal to 100% of the Holder Optional Cash Redemption Price. If the Company fails to redeem the Holder Optional Cash
Redemption Amount on the applicable Optional Redemption Exercise Date by payment of the Holder Optional Cash Redemption Price on such date, then at the option of the Holder designated in writing in a Conversion Notice to the Company, the Holder may
require the Company to convert all or any part of the Holder Optional Cash Redemption Amount at the Holder Optional Conversion Price. Conversions required by this Section 10(b) shall be made in accordance with the provisions of
Section 3(c). Notwithstanding anything to the contrary in this Section 10(b), but subject to Section 3(d), until the Holder Optional Cash Redemption Price (together with any interest thereon) is paid in full, the Holder Optional Cash
Redemption Amount (together with any interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. 
 (c) Mechanics of a Holder Optional Common Stock Conversion. Subject to Section 3(d), if the Company delivers a Company Optional Redemption Response Notice and elects, or is deemed to have elected, in whole
or in part, a Holder Optional Common Stock Conversion in accordance with Section 10(a), then the applicable Holder Optional Common Stock Conversion Amount shall be converted as of the applicable Optional Redemption Exercise 

  

 - 19 - 

 
Date by converting on such Optional Redemption Exercise Date such Holder Optional Common Stock Conversion Amount at the Holder Optional Conversion Price;
provided that the Equity Conditions have been satisfied (or waived in writing by the Holder) on such Optional Redemption Exercise Date. If the Equity Conditions are not satisfied (or waived in writing by the Holder) on such Optional Redemption
Exercise Date, then at the option of the Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following: (i) the Company shall redeem all or any part designated by the Holder of the
unconverted Holder Optional Common Stock Conversion Amount (such designated amount is referred to as the “Common Stock Optional Redemption Amount”) on such Optional Redemption Exercise Date and the Company shall pay to the Holder on
such Optional Redemption Exercise Date, by wire transfer of immediately available funds, an amount in cash equal to such Common Stock Optional Redemption Amount or (ii) the Holder Optional Common Stock Conversion shall be null and void with
respect to all or any part designated by the Holder of the unconverted Holder Optional Common Stock Conversion Amount and the Holder shall be entitled to all the rights of a holder of this Note with respect to such amount of the Holder Optional
Common Stock Conversion Amount; provided, however, that the Conversion Price for such unconverted Holder Optional Common Stock Conversion Amount shall thereafter be adjusted to equal the lesser of (A) the Holder Optional Conversion Price as in
effect on the date on which the Holder voided the Holder Optional Common Stock Conversion (calculated based on the immediately preceding five (5) consecutive Trading Days) and (B) the Holder Optional Conversion Price as in effect on the
date on which the Holder delivers a Holder Optional Redemption Notice relating thereto. If the Company fails to redeem any Common Stock Optional Redemption Amount on or before the applicable Optional Redemption Exercise Date by payment of such
amount on the applicable Optional Redemption Exercise Date, then the Holder shall have the rights set forth in Section 13(a) as if the Company failed to pay the applicable Company Redemption Price and all other rights under this Note
(including, without limitation, such failure constituting an Event of Default described in Section 4(a)(xi)). Notwithstanding anything to the contrary in this Section 10(c), but subject to Section 3(d), until the Company delivers
Common Stock representing the Holder Optional Common Stock Conversion Amount to the Holder, the Holder Optional Common Stock Conversion Amount may be converted by the Holder into Common Stock pursuant to Section 3. 
 (d) Asset Sale Triggered Redemption. In the event that after the Issuance Date the Company sells in the aggregate more than
$10,000,000 of assets outside the ordinary course of its business as conducted on the Issuance Date (an “Optional Asset Sale Redemption Date”), the Holder shall have the right, in its sole discretion, to require that the Company
redeem (each a “Holder Optional Asset Sale Redemption”) up to all of the Principal amount of the Note plus accrued and unpaid Interest with respect to such Principal and accrued and unpaid Late Charges with respect to such Principal
and Interest (the “Optional Asset Sale Redemption Amount”); provided, that the Optional Asset Sale Redemption Amount shall not exceed fifty percent (50%) of the proceeds received by the Company pursuant to the applicable
asset sale(s). The Holder may exercise its redemption rights pursuant to this Section 10(d) by delivering written notice thereof (a “Holder Optional Asset Sale Redemption Notice” and, collectively with the Event of Default
Redemption Notice, the Change of Control Redemption Notice and the Holder Optional Redemption Notice, the “Redemption Notices” and each a “Redemption Notice”) to the Company no later than twenty (20) Business
Days after the applicable Optional Asset Sale Redemption Date. The Holder Optional Asset Sale Redemption Notice shall indicate 

  

 - 20 - 

 
the amount of the applicable Optional Asset Sale Redemption Amount the Holder is electing to have redeemed on such Optional Asset Sale Redemption Exercise
Date (the “Holder Optional Asset Sale Redemption Amount”) and the date of such redemption (the “Optional Asset Sale Redemption Exercise Date”); provided, however, that such Optional Asset Sale
Redemption Exercise Date shall not be less than twenty (20) Business Days after the date of delivery of such Holder Optional Asset Sale Redemption Notice. The portion of this Note subject to redemption pursuant to this Section 10 shall be
redeemed by the Company in cash on the applicable Optional Asset Sale Redemption Date at a price equal to the Holder Optional Asset Sale Redemption Amount being redeemed (the “Holder Optional Asset Sale Redemption Price” and,
collectively with the Event of Default Redemption Price, the Change of Control Redemption Price, the Company Installment Redemption Price and the Holder Optional Cash Redemption Price, the “Redemption Prices” and, each a
“Redemption Price”). 
 (11) 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 Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. 
 (12) RESERVATION OF AUTHORIZED SHARES. 
 (a) Reservation. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to 130% of the Conversion Rate with respect to
the Conversion Amount of each such Note as of the Issuance Date, including the maximum number of Interest Shares that may be issued under each such Note. So long as any of the Notes are outstanding, the Company shall take all action necessary to
reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the
conversion of all of the Notes then outstanding pursuant to Sections 2 and 3; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without
regard to any limitations on conversions) (the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated
pro rata among the holders of the Notes based on the principal amount of the Notes held by each holder at the Closing (as defined in the Securities Purchase Agreement) or increase in the number of reserved shares, as the case may be (the
“Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation.
Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders. 
 (b) Insufficient Authorized Shares. If at any time while any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and 

  

 - 21 - 

 
unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock
equal to 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 Notes 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 ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall 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 best 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. 
 (13) HOLDER’S REDEMPTIONS. 
 (a) Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within five Business Days
after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change of Control Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of
Control Redemption Price to the Holder concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and within five (5) Business Days after the Company’s
receipt of such notice otherwise. The Company shall deliver the applicable Company Installment Redemption Price to the Holder on the applicable Installment Date. In the event of a redemption of less than all of the Conversion Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 19(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the
applicable Redemption Price to the Holder within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall have the option, in lieu of redemption, to require the Company to
promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges thereon) has not been paid. Upon the
Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with
Section 19(d)) to the Holder representing the sum of such Conversion Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and accrued and unpaid Late Charges with respect to such Conversion
Amount and Interest and (z) the Conversion Price of this Note or such new Notes shall be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided and (B) the
lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable Redemption Notice
is voided. The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges 

  

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which have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice. 
 (b) Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for
redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b), Section 5(b) or Section 10 (each, an “Other Redemption Notice”), the Company
shall immediately forward to the Holder by facsimile a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which
is three (3) Business Days prior to the Company’s receipt of the Holder’s Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s Redemption
Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro
rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven
Business Day period. 
 (14) VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by
law, including, but not limited to, the General Corporation Law of the State of Delaware, and as expressly provided in this Note. 
 (15)
COVENANTS. 
 (a) Rank. All payments due under this Note (a) shall rank pari passu with all Other
Notes and (b) shall be senior to all other Indebtedness of the Company and its Subsidiaries, other than Senior Indebtedness. 
 (b) Incurrence of Indebtedness. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any
Indebtedness, other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) Permitted Indebtedness. 
 (c) Existence of Liens. So long as this Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens. 
 (d) Restricted Payments. The Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or
indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or
any portion of any Permitted Indebtedness (other than the Senior Indebtedness consisting of revolving credit loans), whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such
payment is due or is 

  

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otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an
Event of Default has occurred and is continuing. 
 (e) Escrow Agreement; Escrowed Funds. 
 (i) If, at any time following the issuance date of this Note, the Closing Sale Price of the Company’s Common Stock is less than $9.00
(subject to adjustment for stock splits, combinations and like events) for ten (10) consecutive Trading Days, the Company shall promptly, and in any event no later than the next Trading Day, deposit into an escrow account immediately available
funds equal to thirty percent (30%) (subject to Section 15(e)(v) below) of the then outstanding Principal (the “Escrowed Funds”) with an escrow agent mutually agreeable to the Company and the Holder, as Escrow Agent,
pursuant to the Escrow Agreement (the “Escrow Agreement”) of even date herewith among the Company, the Holder and the Escrow Agent. 
 (ii) As the outstanding Principal is reduced, a pro-rata portion of the Escrowed Funds shall be released from the escrow account to the Company. 
 (iii) The Escrowed Funds shall be held, administered and released from the escrow account by the Escrow Agent in accordance with the terms
of this Note and the Escrow Agreement. 
 (iv) The Escrowed Funds shall be released to the Company at any time after deposit
if the Closing Sale Price of the Company’s Common Stock exceeds $10.00 (subject to adjustment for stock splits, combinations and like events) for ten (10) consecutive Trading Days; provided that, once released to the Company, the
provisions of Section 15(e)(i) above shall again apply. 
 (v) In no event shall the Escrowed Funds exceed $3,000,000.

 (vi) Upon the indefeasible payment in full of this Note and the Other Notes, the Escrow Agreement shall terminate.

 (16) PARTICIPATION. The Holder, as the holder of this Note, shall be entitled to receive such dividends paid and distributions made
to the holders of Common Stock to the same extent as if the Holder had converted this Note into Common Stock (without regard to any limitations on conversion herein or elsewhere) and had held such shares of Common Stock on the record date for such
dividends and distributions. Payments under the preceding sentence shall be made concurrently with the dividend or distribution to the holders of Common Stock. 
 (17) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any
change or amendment to this Note or the Other Notes. 
  

 - 24 - 

 (18) TRANSFER. Subject to compliance with applicable securities laws, this Note and any shares of
Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject only to the provisions of Section 2(f) of the Securities Purchase Agreement.
Notwithstanding the foregoing, the Note may not, without the consent of the Company, be offered, sold, transferred or assigned to a Competitor of the Company. 
 (19) REISSUANCE OF THIS NOTE. 
 (a) Transfer. If this Note is to be
transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 19(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Section 19(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding
Principal represented by this Note may be less than the Principal stated on the face of this Note. 
 (b) Lost, Stolen or
Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, 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 Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 19(d)) representing the outstanding
Principal. 
 (c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof
by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 19(d) and in principal amounts of at least $100,000) representing in the aggregate the outstanding Principal of this Note, and each such
new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender. 
 (d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of
such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 19(a) or Section 19(c), the Principal designated by the Holder which, when added to the principal represented by the other
new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new
Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued Interest and Late Charges on the Principal and Interest of this Note, from the Issuance
Date. 
  

 - 25 - 

 (20) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). 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
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. 
 (21) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of
the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements. 
 (22)
HEADINGS. The headings of this Note are for convenience of reference only and shall not form part of, or affect the interpretation of, this Note. 
 (23) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder or the Company, in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 
 (24) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Closing Bid Price, the Closing Sale Price or the Weighted Average Price or the arithmetic calculation of the Conversion Rate or
the Redemption Price, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within three (3) Business Days of receipt, or deemed receipt, of the Conversion Notice or Redemption Notice or other event
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 within five (5) Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within two Business Days submit via facsimile (a) the disputed determination of the Closing Bid Price, the Closing Sale Price or the Weighted Average Price to an independent, reputable
investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Conversion Rate or the Redemption Price to the Company’s independent, outside accountant. The Company and the Holder shall
cause the investment bank or the accountant, as the case may be, to perform the determinations or 

  

 - 26 - 

 
calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the 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. The Company and the Holder shall each pay one-half of the
expenses of the investment banker or the accountant, as the case may be. 
 (25) NOTICES; PAYMENTS. 
 (a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given
in accordance with Section 10(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and
the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least twenty (20) 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 Common Stock, (B) with respect
to any pro rata subscription offer to holders of Common Stock 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. 
 (b) Payments. Whenever any payment
of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person
at such address as previously provided to the Company in writing (which address, in the case of each of the Purchasers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement); provided that the
Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount
expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which this
Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date. Any amount of Principal or other amounts due under the Transaction Documents, other than
Interest, which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of ten percent (10%) per annum from the date such amount was due until the
same is paid in full (“Late Charge”). 
 (26) CANCELLATION. After all Principal, accrued Interest and other amounts
at any time owed on this Note have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued. 
 (27) WAIVER OF NOTICE. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in
connection with the 

  

 - 27 - 

 
delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement. 
 (28) GOVERNING LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note 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. 
 (29) CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings: 
 (a) “Approved
Stock Plan” means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the
Company. 
 (b) “Bloomberg” means Bloomberg Financial Markets. 
 (c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed. 
 (d) “Change of Control” means any Fundamental
Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Shares in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or entities or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company. 
 (e) “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 Principal Market, as reported by Bloomberg, or, if the Principal 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., New York Time, as reported by Bloomberg, or, if the Principal 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 

  

 - 28 - 

 
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 Section 24. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. 
 (f) “Closing Date” has the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued Notes pursuant to the terms of the Securities Purchase Agreement.

 (g) “Company Conversion Price” means, the lower of (i) that price which shall be computed as 86.5% of
the arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) consecutive Trading Days immediately preceding the applicable Installment Date (each such period, a “Company Conversion Measuring
Period”) and (ii) the applicable Conversion Price. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction that proportionately decreases or increases the
Common Stock the applicable such Company Conversion Measuring Period. 
 (h) “Competitor” means any person
engaged in the research, development, manufacturing, sales, distribution, re-selling, packaging, either directly or indirectly of photovoltaic energy technologies. 
 (i) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into
or exercisable or exchangeable for Common Stock. 
 (j) “Eligible Market” means the Principal Market, The New
York Stock Exchange, Inc., the American Stock Exchange, The NASDAQ National Market or the NASD OTC Bulletin Board. 
 (k)
“Equity Conditions” means that each of the following conditions is satisfied on each day during the period beginning with the date of the applicable Conversion Notice and ending on the applicable Conversion Date (the “Equity
Conditions Measuring Period”), (i) either (x) the Registration Statement filed pursuant to the Registration Rights Agreement shall be effective and available for the resale of all remaining Registrable Securities in accordance
with the terms of the Registration Rights Agreement or (y) all shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants shall be eligible for sale without restriction and without the need for registration under
any applicable federal or state securities laws; (ii) the Common Stock is designated for quotation on the Principal Market and during the Equity Conditions Measuring Period, has not been suspended from trading on such exchange or market and
delisting or suspension by such exchange or market has not been threatened or pending either (A) in writing by such exchange or market or (B) by falling below 

  

 - 29 - 

 
the then effective minimum listing maintenance requirements of such exchange or market; (iii) any applicable shares of Common Stock to be issued in
connection with the event requiring determination may be issued in full without violating Section 3(d) hereof and the rules or regulations of the Principal Market; (iv) during the Equity Conditions Measuring Period, there shall not have
occurred either (A) the public announcement of a pending, proposed or intended Fundamental Transaction which has not been abandoned, terminated or consummated, or (B) an Event of Default or (v) an event that with the passage of time
or giving of notice would constitute an Event of Default; (vi) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and
available for the resale of all remaining Registrable Securities in accordance with the terms of the Registration Rights Agreement or (y) any shares of Common Stock issuable upon conversion of the Notes and shares of Common Stock issuable upon
exercise of the Warrants not to be eligible for sale without restriction pursuant to Rule 144(k) and any applicable state securities laws. 
 (l) “Excluded Securities” means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan; (ii) upon conversion of the Notes or the exercise of the Warrants;
(iii) pursuant to a bona fide firm commitment underwritten public offering with a nationally recognized NASD registered underwriter which generates gross proceeds to the Company in excess of $25,000,000 (other than an “at-the-market
offering” as defined in Rule 415(a)(4) under the 1933 Act and “equity lines”); (iv) in connection with the payment of any shares on the Notes or upon exercise of the Warrants; (v) in connection with any acquisition by the
Company, whether through an acquisition of stock or a merger of any business, assets or technologies the primary purpose of which is not to raise equity capital in an amount not to exceed, in the aggregate, 20% of the outstanding shares of Common
Stock in any calendar year; (vi) upon conversion of any Options or Convertible Securities which are outstanding on the day immediately preceding the Subscription Date, provided that the terms of such Options or Convertible Securities are not
amended, modified or changed on or after the Subscription Date; (vii) upon exercise of warrants issued to consultants prior to the Subscription Date, upon exercise of additional warrants issued or issuable to consultants, in an amount not to
exceed, in the aggregate, 50,000 shares of Common Stock, and upon exercise of warrants issued to Ardour Capital in connection with the transactions contemplated by the Transaction Documents; (viii) upon issuance or exercise of Options or
Convertible Securities in connection with a Soft Call of Warrants (as defined in the Securities Purchase Agreement) by the Company and (ix) in connection with a Strategic Financing (as defined below). 
 (m) “First Conversion Threshold Conversion Amount” means an amount equal to (x) 50% of the Conversion Amount of this
Note on the Issuance Date minus (y) the aggregate Conversion Amount of this Note converted or redeemed pursuant to the terms of this Note. 
 (n) “Fiscal Quarter” means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company’s fiscal year that ends on December 31, or such
other fiscal quarter adopted by the Company for financial reporting purposes in accordance with GAAP. 
  

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 (o) “Fundamental Transaction” means that 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 (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person, or (iii) become subject to a purchase, tender or exchange offer by another Person that is accepted by the holders of more than the 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 agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business
combination), (v) reorganize, recapitalize or reclassify its Common Stock or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is
or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of 50% or more of the aggregate voting stock of the Company. 
 (p) “GAAP” means United States generally accepted accounting principles, consistently applied. 
 (q) “Holder Optional Conversion Price” means, the lower of (i) that price which shall be computed as 86.5% of the
arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) consecutive Trading Days immediately preceding the date on which the Holder delivers a Holder Optional Redemption Notice (each such period, a
“Holder Optional Conversion Measuring Period”) and (ii) the applicable Conversion Price. All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction
that proportionately decreases or increases the Common Stock the applicable such Holder Optional Conversion Measuring Period. 
 (r) “Initial Maturity Date” means the date which is the earlier of (i) two weeks after the Registration Statement filed pursuant to the Registration Rights Agreement shall be declared effective by the SEC and
(ii) the four-month anniversary of the Closing Date. 
 (s) “Installment Amount” means with respect to
any Installment Date, the lesser of (A) $1,875,000 and (B) the Principal amount (plus the sum of any accrued and unpaid Interest with respect to such Principal amount and accrued and unpaid Late Charges with respect to such Principal
amount and Interest any accrued and unpaid interest thereon) under this Note as of such Installment Date, as any such Installment Amount may be reduced pursuant to the terms of this Note, whether upon conversion, redemption or otherwise. For the
avoidance of doubt, any accrued and unpaid interest which may be paid pursuant to this definition shall be deducted from the total interest to be paid on any subsequent Interest Payment Date. In the event the Holder shall sell or otherwise transfer
any portion of this Note, the transferee shall be allocated a pro rata portion of the each unpaid Installment Amount hereunder. 
  

 - 31 - 

 (t) “Installment Date” means (i) each monthly anniversary of the
Initial Maturity Date, for a period of eight (8) months and (ii) any other Installment Date scheduled by the Holder in connection with a Deferral Amount pursuant to Section 8(d) hereof. 
 (u) “Interest Conversion Price” means, with respect to any Interest Date, that price which shall be computed as 86.5% of
the arithmetic average of the Weighted Average Price of the Common Stock on each of the five (5) consecutive Trading Days immediately preceding the applicable Interest Date (each, an “Interest Measuring Period”). All such
determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during such period. 
 (v) “Maximum Installment Share Number” means 75% of the number of shares of Common Stock resulting from the following formula: (i) 20% of the number of shares of Common Stock outstanding on the
Issuance Date; minus (ii) the aggregate number of shares of Common Stock issued as Interest Shares on all Notes, upon conversion (including any Company Conversions) of any Notes and upon exercise of any Warrants; minus (iii) the aggregate
number of shares of Common Stock issuable upon conversion of any outstanding Notes at the then applicable Conversion Price (without regard to any limitations on the conversion of the Notes) and upon exercise of any outstanding Warrants at the then
applicable Exercise Price (as defined in the Warrants) (without regard to any limitations on the exercise of the Warrants) divided by eight) plus the number of Conversion Shares underlying the Installment Amount. 
 (w) “Measuring Period” means any of the Interest Measuring Period or Company Conversion Measuring Period, as applicable.

 (x) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities. 
 (y) “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 an Eligible 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. 
 (z) “Payment Quarter” means
each of: the period beginning on and including July 1, 2006 and ending on and including September 30, 2006; the period beginning on and including October 1, 2006 and ending on and including December 31, 2006; the period beginning
on and including January 1, 2007 and ending on and including March 31, 2007; and the period beginning on and including April 1, 2007 and ending on and including June 30, 2007. 
 (aa) “Permitted Indebtedness” means trade payables, leases or loans for capital equipment, computer equipment, furniture,
fixtures and equipment and leases for real property, in each case entered into in the ordinary course of business of the Company, consistent with past practices; provided, however, that in no event shall Permitted Indebtedness include
indebtedness for borrowed money. 
  

 - 32 - 

 (bb) “Permitted Liens” means (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with
respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) any Lien incurred to secure Senior Indebtedness and (v) Liens securing the Company’s obligations under the Notes.

 (cc) “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. 
 (dd) “Principal Market” means the NASDAQ Capital Market. 
 (ee) “Redemption
Premium” means (i) in the case of the Events of Default described in Section 4(a)(i)-(vi) and (ix)-(xii), 115% or (ii) in the case of the Events of Default described in Section 4(a)(vii)-(viii), 100%. 
 (ff) “Registration Rights Agreement” means that certain registration rights agreement dated as of the Subscription Date
by and among the Company and the initial holder of the Note relating to, among other things, the registration of the resale of the Common Stock issuable upon conversion of the Notes and exercise of the Warrants. 
 (gg) “Required Holders” means the holders of Notes representing at least a majority of the aggregate principal amount of
the Notes then outstanding. 
 (hh) “SEC” means the United States Securities and Exchange Commission.

 (ii) “Securities Purchase Agreement” means that certain securities purchase agreement dated as of the
Subscription Date by and among the Company and the initial holders of the Notes pursuant to which the Company issued the Notes. 
 (jj) “Senior Indebtedness” means the principal of (and premium, if any), interest on, and all fees and other amounts (including, without limitation, any reasonable out-of-pocket costs, enforcement expenses (including
reasonable out-of-pocket legal fees and disbursements), collateral protection expenses and other reimbursement or indemnity obligations relating thereto and all reimbursement or payment obligations with respect to letters of credit) payable by
Company under or in connection with any Indebtedness of the Company which ranks senior to the Notes. 
 (kk)
“Strategic Financing” means an investment in the Company by an unaffiliated operating company engaged in a business similar or complementary to that of the Company where the principal purpose is not to raise additional equity
capital for the Company. 
 (ll) “Subscription Date” means May 25, 2006. 
  

 - 33 - 

 (mm) “Successor Entity” means the Person, which may be the Company,
formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity
security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person’s Parent Entity. 
 (nn) “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange
or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at
4:00 p.m., New York Time). 
 (oo) “Warrants” has the meaning ascribed to such term in the Securities
Purchase Agreement, and shall include all warrants issued in exchange therefor or replacement thereof. 
 (pp)
“Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30 a.m., New York Time (or such other time as the
Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its
“Volume at Price” functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at
9:30 a.m., New York Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as such market publicly announces is the official close of trading) as
reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted
Average Price 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 Section 24. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. 
 (30) DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly
disclose such material, nonpublic information on a Current Report on 

  

 - 34 - 

 
Form 8-K or otherwise. In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its
Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its Subsidiaries. 
 [Signature Page Follows] 
  

 - 35 - 

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

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	 /s/ John R. Tuttle

		 	 Name: John R. Tuttle

		 	 Title: Chief Executive Officer

 EXHIBIT I 
 DAYSTAR TECHNOLOGIES, INC. 
 CONVERSION NOTICE 
 Reference is made to the Senior Convertible Note (the “Note”) issued to the undersigned by DayStar Technologies, Inc. (the
“Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.01 per share (the
“Common Stock”) of the Company, as of the date specified below. 
  

			
	 Date of Conversion: 
	  	  

			
		
	 Aggregate Conversion Amount to be converted: 
	  	  

 Please confirm the following information: 
  

			
	 Conversion Price: 
	  	  

			
		
	 Number of shares of Common Stock to be issued: 
	  	  

 Please issue the Common Stock into which the Note is being converted in the following name and to the following
address: 
  

			
		
	 Issue to: 
	  	  
		
		  	  
		
		  	  

			
		
	 Facsimile Number: 
	  	  

			
		
	 Authorization: 
	  	  

			
		
	 By: 
	  	  

			
		
	 Title: 
	  	  

			
		
	 Dated: 
	  	  

			
		
	 Broker Name: 
	  	  

			
	
	 (if electronic DWAC Transaction)

		
	 Broker DTC#: 
	  	  

			
	
	 (if electronic DWAC Transaction)

  

			
		
	Installment Amounts to be reduced and amount of reduction: 	  	  

			
		
	Any restriction upon issuances to the Holder pursuant to Section 3(d)(i) of the Note of which the Holder is aware: 	  	  

 ACKNOWLEDGMENT 
 The Company hereby acknowledges this Conversion Notice and hereby directs U.S. Stock Transfer Corporation to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent
Instructions dated May 25, 2006 from the Company and acknowledged and agreed to by U.S. Stock Transfer Corporation. 
  

			
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	  
		 	 Name:

		 	 Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]