Document:

Secured Convertible Promissory Note

 Exhibit 10.2 
 THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION THEREFROM. 
 SECURED CONVERTIBLE PROMISSORY NOTE 

 

			
	US $150,000	  	January 24, 2011

For value received DayStar Technologies, Inc., a Delaware corporation (“Payor”), promises to pay to
Michael Moretti (the “Lender”), or his heirs or assigns, the principal sum of US $150,000 on the terms set forth below. Interest on the outstanding principal amount shall accrue at the rate of 10% per annum
(“Interest Rate”) or at the Default Rate, as herein defined. Interest shall commence on the date hereof and shall continue on the outstanding principal until paid in full. Interest shall be computed on the basis of a year of 365 days for
the actual number of days elapsed. 
 This secured convertible promissory note (this “Note”) is issued
pursuant to the terms of that certain Purchase Agreement (the “Agreement”) dated as of January 24, 2011 between Payor and Holder. This Note shall be secured by Payor’s grant of a security interest and lien to Holder
of all of Payor’s assets as more fully set forth on Exhibit A to that certain Security Agreement by and between Payor and Holder dated January 24, 2011 (the “Security Agreement”). 

 

	1.	Definitions. The following terms shall have the meanings herein specified: 

“Capital Stock” means any of the current or future authorized class or series of capital stock of
Payor, including but not limited to Common Stock and Preferred Stock. 
 “Common Stock”
means authorized Common Stock, $.01 par value, of Payor, and shall include any other class or series of capital stock of Payor that is not limited to a fixed sum in respect of the rights of the holder thereof to participate in the liquidation or
winding up of Payor. 
 “Conversion Notice” shall have the meaning set forth in
Section 2(a). 
 “Conversion Price” shall mean the per share price(s) at which some
or all of the outstanding principal amount plus all accrued interest thereon is converted or convertible pursuant to Section 2(a), and in all cases as adjusted pursuant to Section 2(d). 

“Conversion Shares” means the shares of Common Stock, or such other shares of Capital Stock,
issuable upon conversion of this Note. 
 “Event of Default” means an event specified in
Section 4 hereof. 

 “Excluded Securities” means (i) securities
issued as a result of any stock split, stock dividend or reclassification of Common Stock or Preferred Stock, distributable on a pro rata basis to all holders of Common Stock or Preferred Stock; (ii) securities issued pursuant to a stock option
plan, deferred compensation plan, or other compensation arrangement approved by the Board of Directors of Payor to consultants (as defined in the Payor’s Equity Incentive Plan)employees or directors of the Payor; or (iii) securities issued
by Payor upon the conversion or exercise of options, warrants, or convertible securities issued by Payor on or before the issuance date of this Note and on or after the payment in full of the principal and interest on the Note. 

“Future Issuance” shall have the meaning set forth in Section 2(a). 

“Holder” means Lender and each endorsee, pledgee, assignee, owner and holder of this Note, as
such; and any consent, waiver or agreement in writing by the then Holder with respect to any matter or thing in connection with this Note, whether altering any provision hereof or otherwise, shall bind all subsequent Holders. Notwithstanding the
foregoing, Payor may treat the registered holder of this Note as Holder for all purposes. 

“Preferred Stock” means authorized Preferred Stock, $.01 par value, of Payor. 

“Share Equivalents” means options, warrants, convertible preferred stock, convertible debt, or
other securities convertible into or exercisable for shares of Capital Stock. 
 Words of one gender include the other gender; the singular
includes the plural; and the plural includes the singular, unless the context otherwise requires. 
  

	2.	Conversion of the Note. 

 a. Election to Convert. Common Stock. Holder may, at its option exercisable by written notice (the “Conversion Notice”) to Payor at any time prior to payment in full
hereof, except as set forth in Section 2(e), elect to convert all or any part of the entire outstanding principal amount of this Note plus the accrued interest on the then outstanding balance (i) into shares of Common Stock at a conversion
price equal to the lesser of (A) $1.55 per share or (B) if between the date hereof and such conversion, Payor issues or sells any shares of Capital Stock, other than Excluded Securities (a “Future Issuance”), then
into shares of Common Stock at a per share price equal to the lowest per share price at which any such shares are issued or sold in such Future Issuance (subject to adjustment in the event of any stock splits, stock dividends or other
recapitalization of Common Stock subsequent to the date of such sale or issuance), or (ii) if between the date hereof and before any such conversion, there is a Future Issuance, then into shares of such class or series of Capital Stock issued
or sold in such Future Issuance at a per share price equal to the lowest per share price at which any such shares are issued or sold in such Future Issuance (subject to adjustment in the event of any stock splits, stock dividends or other
recapitalization of such class or series of Capital Stock subsequent to the date of such sale or issuance); provided that Holder will only be permitted to convert that portion of the outstanding principal amount of this Note plus the accrued
interest on the then outstanding balance that will not result in the issuance of more than 96,775 shares of Common Stock (subject to adjustment in the event of any 

  
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stock splits, stock dividends or other recapitalization of such class or series of Capital Stock subsequent to the date of such sale or issuance) pursuant to (i) above, or upon conversion of
any securities that may be issued pursuant to (ii) above. For purposes of this Section, the issuance or sale of any Share Equivalents shall be deemed to be an issuance or sale of such class or series of Capital Stock issuable upon exercise or
conversion thereof, at a per share price equal to a fraction, the numerator of which is equal to the sum of (i) the total amount received or receivable by Payor as consideration for such issuance of the Share Equivalent, plus (ii) the
minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to Payor upon the exercise,
conversion or exchange of such Share Equivalent, and the denominator of which is equal to the total number of shares of Capital Stock issuable upon the exercise, conversion or exchange of such Share Equivalents. If Payor issues or sells any Capital
Stock or Share Equivalents for consideration other than cash, the amount of the consideration other than cash received by Payor shall be deemed to be the fair value of such consideration as reasonably determined by Payor’s Board of Directors in
good faith with the advice of Payor’s investment banker. If Payor sells units consisting of two or more different securities at a single per unit price, Payor’s Board of Directors shall in good faith, with the advice of Payor’s
investment banker, make a reasonable allocation of the per unit price among such different securities, and each security included in such unit shall be deemed to have been sold at such allocated price for purposes of this Section. 

b. Delivery of Conversion Shares. The Conversion Shares shall be delivered as follows: 

1. As promptly as practicable after conversion, Payor shall deliver to Holder, or to such person or persons as are
designated by Holder in the Conversion Notice, (1) a certificate or certificates representing the number of shares of Capital Stock into which this Note or portion thereof is to be converted, in such name or names as are specified in the
Conversion Notice and (2) in the case of conversion of the entire remaining principal balance plus accrued unpaid interest hereof, any cash payable in respect of a fractional share. Such conversion shall be deemed to have been effected at the
close of business on the date when this Note shall have been surrendered to Payor for conversion, so that the person entitled to receive such Conversion Shares shall be treated for all purposes as having become the record holder of such Conversion
Shares at such time. 
 2. In the event that less than the entire outstanding principal and accrued unpaid
interest of this Note is converted hereunder pursuant to subsection (a) above, this Note shall not be surrendered for cancellation but shall have the fact and amount of conversion recorded on the face of this Note by writing acknowledged by
Holder and Payor. If less than the entire principal balance of this Note is converted, the amount of principal converted shall be reduced to the nearest amount that results in no fractional shares. 

  
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 c. Reservation of Shares. Payor agrees that, during the period within which this
Note may be converted, Payor will at all times have authorized and in reserve, and will keep available solely for delivery upon the conversion of this Note, a sufficient number of shares of Capital Stock and other securities and properties as from
time to time shall be receivable upon the conversion of this Note, free and clear of all restrictions on issuance, sale or transfer other than those imposed by law and free and clear of all pre-emptive rights. Payor agrees that the Conversion Shares
shall, at the time of such delivery, be validly issued and outstanding, fully paid and non-assessable, and Payor will take all such action as may be necessary to assure that the stated value or par value per share of the Conversion Shares is at all
times equal to or less than the Conversion Price. 
 d. Protection Against Dilution. 

1. In the event of any consolidation with or merger of Payor with or into another corporation (other than a merger or
consolidation in which Payor is the surviving or continuing corporation) or any sale, lease or conveyance to another corporation of the property of Payor as an entirety or substantially as an entirety, in either case while any principal or accrued
interest remains outstanding under this Note, then Payor shall use its reasonable best efforts to cause such successor, leasing or purchasing corporation, as the case may be, to (i) execute with Holder an agreement providing that Holder shall
have the right thereafter to receive upon conversion of this Note solely the kind and amount of shares of stock and other securities, property, cash or any combination thereof receivable upon such consolidation, merger, sale, lease or conveyance by
a holder of the number of shares of Capital Stock for which this Note might have been converted immediately prior to such consolidation, merger, sale, lease or conveyance, (ii) make effective provision in its articles of association or
otherwise, if necessary, in order to effect such agreement, and (iii) set aside or reserve, for the benefit of Holder, the stock, securities, property and cash to which Holder would be entitled upon conversion of this Note. In the event Payor
is not able to cause such events in (i) – (iii) above to occur, then the provisions of Section 3(b) shall apply. 
 2. In the event of any reclassification or change of the Capital Stock into which this Note may be converted (other than a change in par value or from no par value to a specified par value, or as a result
of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), or in the event of any consolidation or merger of another corporation into Payor in which Payor is the continuing corporation and
in which there is a reclassification or change (including a change to the right to receive cash or other property) of the Capital Stock into which this Note may be converted (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), in either case while any principal or accrued interest remains outstanding under this Note, then Holder
shall have the right thereafter to receive upon conversion of this Note solely the kind and amount of shares of stock and other securities, property, cash or any combination thereof receivable upon such reclassification, change, consolidation or
merger by a holder of the number of shares of Capital Stock for which this Note might have been converted immediately prior to such reclassification, change, consolidation or merger. 

  
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 3. If Payor, subsequent to any Future Issuance of Capital Stock upon which
the calculation of the Conversion Price is based and while any principal or accrued interest remains outstanding under this Note, distributes to holders of such class or series of Capital Stock (and not to Holders) any debt securities or any rights
or warrants to purchase debt securities, assets or other securities, or issues rights, options or warrants to all holders of Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share (the “Subscription
Price”) less than the volume weighted average closing price of the Payor’s Common Stock for the five day trading period up to and including the date of such transaction (the “VWAP”) at the record date mentioned below, then the
Conversion Price shall be adjusted in accordance with the formula: 
  

					
	C1 =	  		  	    C x [O + M]
	  	  	O + I    

 where: 
 C1 = the adjusted Conversion Price. 

C = the Conversion Price prior to adjustment pursuant to this subsection. 

I = the number of additional shares of Common Stock offered for subscription or purchase. 

O = the number of shares of such class or series of Capital Stock outstanding on the date of issuance. 

M = [the Subscription Price ÷ VWAP] x I 
 If the Company issues assets (excluding cash dividends) to holders of such class or series of Capital Stock (and not to Holders), then the Conversion Price will be adjusted to the fair market value of the
assets on a per share basis. 
 The adjustment shall be made successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of stockholders entitled to receive the distribution. 
 The
above provisions of this Section 2 shall similarly apply to successive reclassifications and changes of Capital Stock and to successive consolidations, mergers, sales, leases or conveyances. 

Notice of such consolidation, merger, sale, distribution, reclassification or reorganization and of such provisions so proposed to be
made, shall be mailed to Holder as soon as practicable, but not less than fifteen (15) days prior to such event. 
 e.
Stockholder Approval. Holder may not convert all or any part of the outstanding principal amount of this Note and accrued interest on the then outstanding balance 

  
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pursuant to Section 2(a) in an amount that in the aggregate would exceed 19.99% of Payor’s then outstanding shares of Capital Stock (the “Exchange Cap”), unless Payor
determines in its sole discretion that: (i) such conversion does not require Payor to obtain stockholder approval, or (ii) stockholders have approved the issuance of shares of Common Stock to Holder upon conversion under this Note. Unless
and until such approval or written consent is obtained, the Holder shall not be issued shares of Common Stock in an amount greater than the Exchange Cap. 
 f. Limitation on Cash Payment. If Holder elects to convert this Note prior to the Maturity Date at a price less than $1.55 per share, and on the Maturity Date Payor’s VWAP is less than $1.55
and Holder by this conversion has not been compensated for the original principal amount of the Note plus interest accrued thereon, Payor will make a cash payment to Holder of any unpaid principal amount of the Note plus any accrued and unpaid
interest based upon the following calculation: ($1.55 – VWAP)*96,775. 
  

	3.	Payment of the Note – Principal and Interest  

a. Term. All principal and all unpaid accrued interest that has not been converted into Capital Stock pursuant
to Section 2 above shall be due and payable on or before the 180th day after the date of this Note (the “Maturity Date”). The Maturity Date may be extended by Holder, at the option of Holder and in its sole discretion, effective upon written
notice of such extension by Holder to Payor not less than 15 calendar days prior to the original Maturity Date. At any time after the Maturity Date (as it may be extended pursuant to this Section 3(a)), Holder may proceed to collect such
unconverted principal and accrued interest. All payments of interest and principal shall be in lawful money of the United States of America and shall be made to Holder at the address stated in Section 9 below. All payments shall be applied
first to accrued interest, and thereafter to principal. 
 b. Payment on Event of Merger or Acquisition. Regardless of
whether Payor causes the events to occur in Section 2.d.1 above, if any consolidation with or merger of Payor with or into another corporation (other than a merger or consolidation in which Payor is the surviving or continuing corporation) or
any sale, lease or conveyance to another corporation of the property of Payor as an entirety or substantially as an entirety, in either case while any principal or accrued interest remains outstanding under this Note for a sales price equivalent to
less than $0.75 per share of Capital Stock (“Sale Price”), then at Holder’s election, the Payor within a reasonable time after the completion of consolidation or merger (not to exceed 30 days) shall pay to Holder an additional sum of
($0.75 – Sales Price)*96,775 (which represents the maximum shares of Capital Stock issuable upon conversion of the Note) (subject to adjustment in the event of any stock splits, stock dividends or other recapitalization of such class or series
of Capital Stock subsequent to the date of such sale or issuance) up to a maximum of $75,000 in addition to any cash amounts payable for principal or accrued interest after conversion of the Note. This payment is to make Holder whole for its lost
expectation of profit if Payor had continued as an independent entity. Payment under this Section 3.b is not considered to be the contracting for, charge or receipt of interest as contemplated in Section 12 below. 

c. Payment on Event of Default. If any Event of Default occurs hereunder, then, at the option and upon the declaration of Holder
of this Note and upon written notice to Payor 

  
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(which election and notice shall not be required in the case of an Event of Default under Section 4(c) or 4(d) or in a re-occurring Event of Default under Section 4(a) or 4(b)) and
Payor’s subsequent failure to cure any such Event of Default under Section 4(d) within the referenced 60-day period, this Note shall accelerate and all principal and unpaid accrued interest that has not been converted into Common Stock
pursuant to Section 2 above shall become due and payable, and, at any time thereafter, Holder may proceed to collect such unconverted principal and accrued interest and/or proceed with its remedies under any collateral document. 

d. Default Interest Rate. In the event Payor fails to pay the entire unpaid principal balance when due or interest when due, Payor
shall pay a default penalty (the “Default Penalty”) in an amount equal to 6% of the then outstanding principal and accrued and outstanding interest under this Note and the entire unpaid principal balance, accrued and
outstanding interest, and the Default Penalty (if not paid) shall thereafter bear interest at a default interest rate equal to the lower of 16% per annum or the highest rate permitted by law (the “Default Rate”).

 e. Prepayment. Payor may prepay this Note at any time after one month following the date hereof; provided that Payor
shall give Holder at least 30 calendar days advance written notice of Payor’s intent so to prepay and Holder shall have the right to convert all or any portion of this Note, as applicable, pursuant to Section 2(b) at any time during such
30 calendar day period. 
 f. Attorney’s Fees. If an Event of Default shall occur hereunder, Payor shall pay all
reasonable attorneys’ fees and court costs incurred by Holder in enforcing and collecting this Note. 
 4. Events of Default.
The occurrence of any one or more of the following, if uncured within twenty (20) days from written notice thereof with respect to subsections (a) and (b) only and only in the first instance of such failure or breach and any instance
thereafter, upon the occurrence, shall constitute an “Event of Default”: 
 a. Payor fails to pay timely
any of the principal amount due under this Note on the date the same becomes due and payable or any accrued interest or other amounts due under this Note on the date the same becomes due and payable; 

b. Payor breaches any of its representations, warranties, covenants (including failure to issue shares upon conversion of the Note) or
agreements set forth in the Agreement, the Security Agreement, the Purchase Agreement, this Note or any other agreement between Payor and Holder; 
 c. Payor files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect,
or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing; 
 d.
An involuntary petition is filed against Payor under any bankruptcy statute now or hereafter in effect, unless such petition is dismissed or discharged within sixty (60) days 

  
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thereafter, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of Payor; or

 e. Payor defaults under any other loan document under a Bridge Financing as that term is defined in the Security Agreement.

 5. Transfer. 
 a. In order to transfer this Note, Holder, or its duly authorized representative, shall provide Payor a copy of an assignment duly executed by Holder hereof, but in no event shall this Note be transferred
to a third party unrelated to Holder, unless (i) an Event of Default under Section 4(a) of this Note has been declared by Holder and (ii) Payor shall have received prior written notice of such transfer. In the event that Holder seeks
to make a transfer of this Note to an unrelated party in the absence of registration under the 1933 Act and any applicable state securities laws, Holder shall furnish an opinion of counsel satisfactory in form and in substance to Payor that such
transfer is exempt from registration under the 1933 Act and any applicable state securities laws 
 b. This Note is, and each
certificate representing Conversion Shares shall be, stamped or otherwise imprinted with a legend substantially in the following form: 
 “The securities represented hereby have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws and may not be reoffered, sold, transferred, pledged, or
otherwise disposed of except pursuant to (1) registration under such act or laws or (2) an exemption from registration under such act or laws.” 
 6. Loss or Mutilation of Note. Upon receipt by Payor of evidence reasonably satisfactory to Payor of the loss, theft, destruction or mutilation of this Note, together with an indemnity
reasonably satisfactory to Payor, in the case of loss, theft, or destruction, or the surrender and cancellation of this Note, in the case of mutilation, Payor shall execute and deliver to Holder a new Note of like tenor and denomination as this
Note. 
 7. Waiver or Amendment. Any term of this Note may be amended or waived with the written consent of Payor and Holder. The
failure of Holder to enforce at any time any of the provisions of this Note shall not, absent an express written waiver signed by Holder specifying the provision being waived, be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Note or any part hereof or the right of Holder thereafter to enforce each and every such provision. No waiver of any breach of this Note shall be held to be a waiver of any other or subsequent breach. 

8. Taxes. Payor agrees that it will pay, when due and payable, any and all stamp, original issue or similar taxes which may be payable in
respect of the issue of this Note and/or any Conversion Shares or certificates therefor. Payor shall not, however, be required to pay any stamp, original issue or similar tax which may be payable in respect of any transfer involved in the transfer
and delivery of stock certificates to a person other than of Holder. 

  
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 9. Notices. All notices or other communications to a party required or permitted hereunder
shall be in writing and shall be delivered personally or by facsimile (receipt confirmed electronically) to such party (or, in the case of an entity, to an executive officer of such party) or shall be sent by a reputable express delivery service or
by certified mail, postage prepaid with return receipt requested, addressed as follows: 
 if to Holder
to: 
 Michael Moretti 
 14230 Hwy. 281 N. 
 San Antonio, Texas 78232 

if to Payor to: 
 DayStar Technologies, Inc. 
 1010 S. Milpitas Boulevard 

Milpitas, California 95035 
 Attn:  Mr. Magnus Ryde 

          Chief Executive Officer 

with a copy to: 
 Greenberg Traurig, LLP 
 One International Place 

Boston, Massachusetts 02110 
 Attn: Stephen T. Adams, Esq. 
 Any party may change the above specified recipient
and/or mailing address by notice to all other parties given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile, provided that any such
facsimile is received during regular business hours at the recipient’s location) or on the day shown on the return receipt (if delivered by mail or delivery service). 
 10. Headings. The titles and headings to the Sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Note. This Note shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Note to be drafted. 
 11. Governing Law; Waiver of Jury Trial. This Note shall be governed by and construed under the laws of the State of New York, without giving effect to conflicts of laws principles that
would require the application of the laws of any other jurisdiction. THE PARTIES EACH HEREBY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS. 

  
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 12. Usury. Notwithstanding anything to the contrary contained herein, no provisions of this
Note shall require the payment or permit the collection of interest in excess of the Maximum Lawful Rate. If any excess of interest in such respect is herein provided for, or shall be adjudicated to be so provided, in this Note or otherwise in
connection with this loan transaction, the provisions of this Section 12 shall govern and prevail, and neither Payor nor the sureties, guarantors, successors or assigns of Payor shall be obligated to pay the excess amount of such interest, or
any other excess sum paid for the use, forbearance or detention of sums loaned pursuant hereto. If for any reason interest in excess of the Maximum Lawful Rate shall be deemed charged, required or permitted by any court of competent jurisdiction,
any such excess shall be applied as a payment and reduction of the principal of indebtedness evidenced by this Note; and, if the principal amount hereof has been paid in full, any remaining excess shall forthwith be paid to Payor. In determining
whether or not the interest paid or payable exceeds the Maximum Lawful Rate, Payor and Holder shall, to the extent permitted by applicable law and subject to section 3(b) above, (i) characterize any non-principal payment as an expense, fee, or
premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term
of the indebtedness evidenced by this Note so that the interest for the entire term does not exceed the Maximum Lawful Rate. As used herein, the term “Maximum Lawful Rate” shall mean the maximum lawful rate of interest which may be
contracted for, charged, taken, received or reserved by Holder in accordance with the applicable laws of the State of New York. 

  
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	DayStar Technologies, Inc.
a Delaware corporation
		
	By:	 	/s/ Magnus Ryde
		 	Name: Magnus Ryde
		 	Title:   Chief Executive OfficerWarrant, dated as of January 24, 2011

 Exhibit 10.3 
 THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS OTHERWISE DESCRIBED BELOW. 
 THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF (I) SUCH REGISTRATION OR (II) AN EXEMPTION THEREFROM AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. 

Warrant No. CSW-100     
 DAYSTAR TECHNOLOGIES, INC. 
 VOID AFTER 5:00 P.M. PST ON January 23,
2016 
 Warrant to Purchase 193,550 Shares 
 of Common Stock Dated January 24, 2011 
 WARRANT FOR THE PURCHASE OF SHARES
OF COMMON STOCK 
 THIS CERTIFIES THAT, FOR VALUE RECEIVED, Michael Moretti, or his registered assign(s) (the
“Holder”), is entitled to purchase from Daystar Technologies, Inc., a Delaware corporation (the “Company”), subject to the terms and conditions set forth in this Warrant, up to 193,550 fully paid and nonassessable
shares of common stock (“Common Stock”), of the Company, at any time commencing on the date hereof (the “Commencement Date”) and expiring at 5:00 p.m. PST, on January 23, 2016 (the “Expiration
Date”). The price for each share of Common Stock purchased hereunder (as adjusted as set forth herein, collectively the “Warrant Shares”) is $1.55 per share until expiration of this Warrant (as adjusted as set forth herein,
the “Purchase Price”). 
 The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be
held, subject to all of the conditions, limitations and provisions set forth herein. 
 1. EXERCISE OF WARRANT. 

A. MANNER OF EXERCISE. Except as set forth in Section 1(D), this Warrant may be exercised in whole at any time, or in part
from time to time, during the period commencing on the sixth month anniversary of the Commencement Date and expiring on the Expiration Date or, if any such day is a day on which banking institutions in the City of San Francisco, California, are
authorized by law to close, then on the next succeeding day that shall not be such a day, by presentation and surrender of this Warrant to the Company at its principal 

 
office with the Purchase Form attached as Annex I (the “Purchase Form”) duly executed and accompanied by payment (either in cash or by certified or official bank check,
payable to the order of the Company) of the Purchase Price for the number of shares specified in the Purchase Form and instruments of transfer, if appropriate, duly executed by the Holder or its duly authorized attorney. 

B. STATUS AS HOLDER OF WARRANT SHARES; TAXES; EXPIRATION. Upon receipt by the Company of this Warrant, the duly executed Purchase
Form and any other appropriate instruments of transfer, together with the Purchase Price, at its office, the Holder shall be deemed to be the holder of record of the Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. The Company shall pay any and all documentary stamp or similar issue taxes payable in respect of the
issue or delivery of Warrant Shares. This Warrant shall become void, and all rights hereunder shall cease, at the close of business on the Expiration Date. The Company in its sole discretion may extend the duration of this Warrant by delaying the
Expiration Date. 
 C. ISSUANCE OF CERTIFICATES. As soon as practicable after the exercise of all or any portion of this
Warrant, the Company shall, within three (3) Trading Days (defined below), (i) issue to the Holder a certificate or certificates for the number of full Warrant Shares to which the Holder is entitled, or, at the Holder’s request,
deliver such Warrant Shares electronically if such means is otherwise presently available to and utilized by the Company, registered in such name or names as may be directed by the Holder, and (ii) if this Warrant has not been exercised in
full, issue to the Holder a new countersigned warrant in substantially the same form for the Warrant Shares as to which this Warrant shall not have been exercised. This Warrant may not be exercised by, or securities issued to, any Holder in any
state in which such exercise would be unlawful. 
 D. SHAREHOLDER APPROVAL. The Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant if the issuance of such shares of Common Stock under this Warrant would cause the Company to issue shares in excess of 19.99% of the Company’s then outstanding shares (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 Nasdaq Capital Market for issuances of shares 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. Unless and until such approval or written opinion is obtained, the Holder shall not be issued shares of Common Stock
in an amount greater than the Exchange Cap. 
 2. RESERVATION OF SHARES. The Company will at all times reserve for issuance and delivery
upon exercise of this Warrant all Warrant Shares or other shares of capital stock of the Company (and other securities and property) from time to time receivable upon exercise of this Warrant. All such shares (and other securities and property)
shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and nonassessable and free of all preemptive rights. 

  
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 3. NO FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. If the holder of this Warrant would be entitled, upon the exercise of this Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, purchase such fractional interest, determined
as follows: 
  

	 	(a)	If the Common Stock is listed on a national securities exchange (which includes the Nasdaq Capital Market) or admitted to unlisted trading privileges on such exchange
or listed for trading on the OTC Bulletin Board, the current value shall be the last reported sale price of the Common Stock on such exchange on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such
day, the average of the closing bid and asked prices for such day on such exchange; or 

  

	 	(b)	If the Common Stock is not listed or admitted to unlisted trading privileges, the current value shall be the mean of the last reported bid and asked prices reported by
the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or 

  

	 	(c)	If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current value shall be an amount
determined (i) in good faith by the Board of Directors of the Company and certified in a Board resolution, based on the most recently completed arm’s-length transaction between the issuer of such security and a Person other than an
affiliate of such person, the closing of which occurred on such date or within the six- month period preceding such date, or (ii) if no such transaction has occurred on such date or within such six-month period, the value of the security as
determined by an independent financial expert. 

 4. STOCK DIVIDENDS; SPLIT-UPS. If after the issuance of this Warrant, and
subject to the provisions herein the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock or by a split-up of shares of Common Stock or other similar event, then, on the effective day
thereof, the number of Warrant Shares shall be increased in proportion to such increase in outstanding shares and the then applicable Purchase Price shall be correspondingly decreased. 
 5. AGGREGATION OF SHARES. If after the date hereof, and subject to the provisions herein, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse
stock split, or reclassification of shares of Common Stock or other similar event, then, after the effective date of such consolidation, combination or reclassification, the number of Warrant Shares shall be decreased in proportion to such decrease
in outstanding shares and the then applicable Purchase Price shall be correspondingly increased. 
 6. REORGANIZATION, ETC. If after the
date hereof any capital reorganization or reclassification of the Common Stock, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation or other similar event
shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and fair provision shall be made whereby the registered 

  
 - 3 -

 holders shall thereafter have the right to purchase and receive, upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the securities of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented by this
Warrant, had such reorganization, reclassification, consolidation, merger, or sale not taken place and in such event appropriate provision shall be made with respect to the rights and interests of the registered holders to the end that the
provisions hereof (including, without limitation, provisions for adjustments of the Purchase Price and the Warrant Shares) shall thereafter be applicable, as nearly as may be in relation to any share of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger or sale unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or
the corporation purchasing such assets, shall assume by written instrument executed and delivered to the Company the obligation to deliver to the registered holders such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holders may be entitled to purchase. 
 7. FORM OF WARRANT. This Warrant need not be changed because of any adjustment
pursuant to the terms herein, and any form of warrant issued after such adjustment may state the same Purchase Price and the same number of shares as is stated in this Warrant. However, the Company may at any time in its sole discretion make any
change in the form of this Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any warrant thereafter issued, whether in exchange or substitution for this Warrant or otherwise, may be in the form as so
changed. The Company agrees to notify the Holder of any adjustment to the number of shares or Purchase Price of the Warrant, any changes to the form of this Warrant or any other change pursuant to the terms herein. 

8. TRANSFER OF WARRANTS. This Warrant and the Warrant Shares have not been registered under the 1933 Act or similar state laws. This Warrant and
Warrant Shares cannot be sold or transferred by an investor unless (i) they are so registered or (ii) an exemption from registration is available at the time of transfer and, if requested by the Company, an opinion of counsel satisfactory
to the Company to the effect that such registration is not required is delivered to the Company. Subject to the foregoing limitations, the Company shall register the transfer, from time to time, of this Warrant upon the Company’s warrant
register, upon surrender of this Warrant for transfer, accompanied by a duly executed Assignment Form in the form attached as Annex II, with signatures properly guaranteed as indicated. Upon any such transfer, a new warrant or warrants
representing the aggregate number of this Warrant shall be issued and this Warrant shall be cancelled by the Company. 
 A restrictive legend
shall be placed upon each share certificate acquired upon exercise of this Warrant in substantially the following form: 
 THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AMENDED, OR ANY STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED,

  
 - 4 -

 
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF (I) SUCH REGISTRATION OR (II) AN EXEMPTION THEREFROM AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. 
 The foregoing legend will be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become the subject of an effective resale
registration statement or they become eligible for resale pursuant to Rule 144 under the 1933 Act. 
 9. NO RIGHTS AS STOCKHOLDERS. Prior
to the exercise of this Warrant in accordance with the terms hereof and payment of the full exercise price therefor, the Holder will not be entitled to any rights by virtue hereof as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends or other distributions, to exercise any preemptive rights, to consent or to receive notice as stockholders of the Company in respect to the meetings of stockholders or the election of directors of the Company or
any other matter. 
 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS. If this Warrant is lost, stolen, mutilated, or destroyed, the
Company may on such terms as to indemnity or otherwise as it may in its discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new warrant of like denomination, tenor, and date. Any such new
warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone. 

11. GOVERNING LAW. This Warrant shall be governed by and construed in accordance with the laws of New York State without giving effect to
conflicts of laws principles that would require the application of the law of another jurisdiction. 

  
 - 5 -

 12. NOTICES OF CERTAIN ACTIONS. In the event: 

 

	 	(a)	the Company sets a record date with respect to the holders of Common Stock for the purpose of entitling or enabling them to receive any dividend or other distribution,
or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; 

  

	 	(b)	the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock or by a split-up of shares of Common Stock or other
similar event; 

  

	 	(c)	the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split, or reclassification of shares of Common Stock or
other similar event; 

  

	 	(d)	of any capital reorganization or reclassification of the Common Stock, or consolidation or merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation or other similar event; 

  

	 	(e)	of the voluntary or involuntary dissolution, liquidation or winding-up of the Company; 

 

	 	(f)	the bankruptcy whether voluntary or involuntary of the Company; 

 then, and in each such case, the Company will provide written notice (an “Event Notice”) to the Holder at least ten days prior to (i) the record date in the case of (a) above,
specifying the record date and the amount and character of such dividend, distribution or right, and (ii) the effective date of any event specified in clause (b), (c), (d), (e), of (f) above, specifying the effective date on which such
event is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock will be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such event, if applicable. Any
failure to mail an Event Notice required by this Section 12 or any defect therein or in the mailing thereof will not affect the validity of the corporate action required to be specified in such Event Notice. Nothing herein shall prohibit the
Holder from exercising this Warrant during the ten day period commencing on the date of an Event Notice, provided that such exercise occurs prior to the Expiration Date and the Holder otherwise complies with the terms hereof. 

  
 - 6 -

 13. DELIVERY OF NOTICE. Notices and other communications to be given to the Holder of this Warrant
evidenced by this certificate shall be deemed to have been sufficiently given, if delivered or mailed, addressed in the name and at the address of such owner appearing on the records of the Company, and if mailed, sent registered or certified mail,
postage prepaid. Notices or other communications to the Company shall be deemed to have been sufficiently given if delivered by hand or mailed, by registered or certified mail, postage prepaid, to the Company at 1010 South Milpitas Boulevard,
Milpitas, California 95035, Attn: Mr. Magnus Ryde, Chief Executive Officer, or at such other address as the Company shall have designated by written notice to the registered owner as herein provided. Notice by mail shall be deemed given when
deposited in the United States mail as herein provided. 
 [Remainder of page intentionally left blank] 

  
 - 7 -

 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, manually or in
facsimile, by the undersigned thereunto duly authorized, as of the date first written above. 
  

					
	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	/s/ Magnus Ryde
		 	Name:	 	Magnus Ryde
		 	Title:	 	Chief Executive Officer

 [SIGNATURE
PAGE TO WARRANT] 

 ANNEX I 
 TO COMMON STOCK PURCHASE WARRANT 
 PURCHASE FORM 

 

			
	To:                    	  	Dated:                    

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.
            ) (the “Warrant”), hereby irrevocably elects to purchase
                    shares of the Common Stock covered by such Warrant. 
 The undersigned herewith makes payment of the full exercise price for such shares at the price per share provided for in such Warrant, which is
$            in lawful money of the United States. 
 IF PAYMENT FOR
ANY OF THE SHARES TO BE ISSUED HEREUNDER IS PURSUANT TO THE CASHLESS EXERCISE PROVISION IN SECTION 1(B) OF THE WARRANT, PLEASE PROVIDE THE FOLLOWING INFORMATION: 
 Number of Warrant Shares to be purchased under this Warrant:              

Closing Price per share of Common Stock on the Trading Day before this Purchase Form and the Warrant are surrendered:
$            as of             , 20        * 

Number of shares of Common Stock to be issued to the undersigned pursuant to the purchase described herein based upon the calculation in
Section 1(B) of the Warrant:            * 
 * Note: The
undersigned understands that this information is provided by the undersigned solely for informational purposes, and that it is not binding on the Company for any purpose. The terms of the Warrant, and not this Purchase Form, will govern the
calculation of these items and the actual number of shares of Common Stock to be received by the undersigned pursuant to the purchase of shares of Common Stock hereunder. 
 Capitalized terms used but not defined herein have the meaning assigned to such terms in the Warrant. 
  

			
	[Name]
		
		 	 
	Name:	 	 
	Title:	 	 
	Address:	 	 

 [ANNEX I TO WARRANT]

 ANNEX II 
 TO COMMON STOCK PURCHASE WARRANT 
 ASSIGNMENT FORM 

FOR VALUE RECEIVED,
                                         
       hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No.             ) with respect to the number of
shares of Common Stock covered thereby set forth below, unto: 
  

									
	 Name of Assignee
	  	Address	 	  	No. of Shares	 
		  				  			
		  				  			
		  				  			
		  				  			
		  				  			

Dated:                     

 

	
	[Name]
	
	  
	Name:
	Title:

 Signature Guaranteed: 

 

			
		
	By:	 	 

 The signature should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. 

[ANNEX II TO WARRANT]

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