Document:

Secured Convertible Promissory Note

 Exhibit 10.3 
 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. 
 FORM OF SECURED CONVERTIBLE PROMISSORY NOTE

  

			
	US$2,000,000	 	SEPTEMBER 21, 2009

 For value received DayStar Technologies, Inc., a Delaware corporation
(“Payor”), promises to pay to TD Waterhouse RRSP Account 240832S, in trust for Peter Alan Lacey as beneficiary (the “Lacey RRSP Account”), or its assigns, the principal sum of
US$2,000,000 on the terms set forth below. Interest on the outstanding principal amount shall accrue at the rate of 8% per annum. 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 September 18, 2009 between Payor and Holder. This Note shall be
secured by Payor’s pledge to Holder of Payor’s assets as set forth on Exhibit A to that certain Security Agreement by and between Payor and Holder dated on or about September 21, 2009 and incorporated herein by reference (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. 
 “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 or deferred compensation plan approved by the Board of Directors of the Company; (v) securities issued by the Company upon the conversion or exercise of options, warrants, or convertible securities previously issued by the Company; or
(iii) any securities issued to the Holder, EPOD Solar, Inc. (“EPOD”), any affiliate of the Holder or EPOD or any recipient of securities issued by the Company, as directed by the Holder or EPOD, as applicable, or any
affiliate of the Holder or EPOD, as applicable. 
 “Future Issuance” shall have the
meaning set forth in Section 2(a). 
 “Holder” means the Lacey RRSP Account, 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, 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) $0.60 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 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 3,333,333 shares of Common Stock (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)
pursuant to (i) above, or upon conversion of any securities that may be

  

 - 2 - 

 
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 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, 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 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 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. 
 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

  

 - 3 - 

 
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 the Company 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.

 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. 
 3. If, 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, Payor distributes to holders of such class or series of Capital Stock any assets (excluding ordinary cash
dividends) or debt securities or any rights or warrants to purchase debt securities, assets or other securities, the Conversion Price shall be adjusted in accordance with the formula: 
  

			
		  	 C x [(O x M) - F]
         O x M

	C1 =	  
		  

  

 - 4 - 

 where: 
 C1 = the adjusted Conversion Price. 
 C = the Conversion Price prior to adjustment
pursuant to this subsection. 
 M = the fair market value per share of such class or series of Capital Stock immediately before
the record date mentioned below, as reasonably determined by Payor’s Board of Directors with the advice of Payor’s investment banker. 
 O = the number of shares of such class or series of Capital Stock outstanding on the record date mentioned below. 
 F = the fair market value on the record date of the aggregate of all assets, securities, rights or warrants distributed, as reasonably determined by Payor’s Board of Directors with the advice of
Payor’s investment banker. 
 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 not less than fifteen (15) days prior to such event. 
 e. No Stockholder Approval. In no
event shall any conversion under this Note require the Payor to seek stockholder approval under applicable Nasdaq listing rules. 
 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 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. All
payments shall be applied first to accrued interest, and thereafter to principal. 
  

 - 5 - 

 b. 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 (which election and notice shall not be required in the case of an Event of Default under Section 4(c) or 4(d)) and Payor’s subsequent failure to
cure any such Event of Default under Section 4(d) within thirty (30) days following receipt of such written notice, 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. 
 c. Default Interest. In the event Payor fails to pay the entire unpaid principal balance 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 12% per annum or the highest rate permitted by law. 
 d. 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. 
 e. 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 10 days from written notice thereof with respect
to subsections (a) and (b) only, 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 or agreements set forth in the Agreement, the Security Agreement or this
Note; 
 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; or 
 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 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. 
  

 - 6 - 

 5. Transfer. 
 a. In order to transfer this Note, Holder, or its duly authorized representative, shall surrender this Note at the office of Payor pursuant to Section 10 hereof, accompanied by 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 thirty (30) days prior written notice of such proposed transfer. In the event that Holder seeks to make a transfer of this Note 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 the Company 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 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. 
  

 - 7 - 

 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: 
 TD Waterhouse RRSP Account 240832S 
 c/o Peter Alan Lacey 
 RR#2 Site 19 
 Box 6 Red Deer AB 
 T4N 5E2 
 if to Payor to: 
 DayStar Technologies, Inc. 

2972 Stender Way 
 Santa Clara, California 

	 	Attn:	Mr. Robert Aldrich 

	 	  	Interim Chief Executive Officer and Chairman 

 with a copy to: 
 Phillips Lytle LLP 
 30 South Pearl Street 
 Albany, New York 12207 
 Attn: Richard E. Honen, 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 construed under the laws of the State of California, as applied to agreements among California residents, made and to be performed entirely within the State of California, 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. 
  

 - 8 - 

			
	DayStar Technologies, Inc.
	a Delaware corporation
		
	By:	 	 /s/ William S. Steckel

	Name:	 	William S. Steckel
	Title:	 	Chief Financial Officer

 [SIGNATURE PAGE TO SECURED CONVERTIBLE PROMISSORY NOTE]Security Agreement

 Exhibit 10.4 
 SECURITY AGREEMENT 
 This Security Agreement
(this “Security Agreement”) is made effective as of September 21, 2009 (“Effective Date”), by and between DayStar Technologies, Inc., a Delaware corporation (“Debtor”), and
TD Waterhouse RRSP Account 240832S, in trust for Peter Alan Lacey as beneficiary (“Secured Party”), with reference to the essential facts stated in the Recitals below. 
 RECITALS 
 A. Pursuant to the terms of that
certain Purchase Agreement dated September 18, 2009 (the “Purchase Agreement”), the Secured Convertible Promissory Note of even date herewith (the “Note”), the warrant of even date herewith (the
“First Warrant”), the second warrant as described in the Purchase Agreement (the “Second Warrant”, and together with the First Warrant, the “Warrants”), and the Registration
Rights Agreement of even date herewith (the “Registration Rights Agreement”), all between Debtor and Secured Party, Secured Party is loaning to Debtor a total amount of $2,000,000 (the “Loan”). This
Security Agreement, the Purchase Agreement, the Note, the Warrants and the Registration Rights Agreement shall collectively be referred to as the “Loan Documents”. 
 B. As a condition to receiving the Loan, the terms of the Loan Documents require that Debtor enter into this Security Agreement. 

C. As security for the payment and performance of Debtor’s obligations to Secured Party under the Loan Documents, and as a condition
precedent to Secured Party’s obligation to make the Loan, it is the intent of Debtor to create and grant to Secured Party and a security interest in certain property as hereinafter provided. 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the Loan, the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Debtor hereby agrees as follows: 
 1. Grant of Security Interest. As security for the full and timely payment and performance of the obligations of Debtor to Secured
Party described in Section 2 below (such obligations, collectively and severally, the “Obligations”), Debtor hereby pledges and grants to Secured Party a security interest (“Security Interest”) in
and to (a) all of Debtor’s right, title and interest in and to contracts to which Debtor is a party, and all other contracts relating to Debtor’s assets, business and operations, (b) all of Debtor’s intellectual property and
rights therein and thereto, (c) all of Debtor’s other assets, and all assets used and useful in Debtor’s business and operations, and (d) all other items identified in Exhibit A hereto and incorporated herein by this
reference (collectively and severally, the “Collateral”). 
 2. Obligations. The Obligations
secured by this Security Agreement shall consist of (a) the Loan Documents (including, but not limited to, any liquidated damages that may be payable by the Company pursuant to Section 1.2(b) of the Registration Rights Agreement), (b)

 
any additional monies advanced to or borrowed by Debtor from Secured Party, (c) this Security Agreement, and (d) all amendments or extensions or renewals of such documents, whether now
existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later
increased, created or incurred. 
 3. Representations and Warranties. Debtor hereby represents and warrants that:

 (a) Debtor is the owner of the Collateral and no other person has any right, title, claim or interest (by way of security
interest or other lien or charge or otherwise) in, against or to the Collateral, except liens for taxes, assessments and other government charges not yet due and payable; except a security interest held by Banc of America Leasing & Capital,
LLC in certain of the Collateral as described in that certain UCC 1 financing statement filed on October 22, 2008 in the Office of the Secretary of State of the State of Delaware under filing number 83561188 (the “Prior
Lien”); 
 (b) Debtor will not sell or offer to sell or otherwise transfer the Collateral or any interest therein
without the prior written consent of Secured Party, except as may be permitted under the Prior Lien; 
 (c) Debtor will not
create or permit to exist any future lien on or security interest in the Collateral in favor of any third party with priority over Secured Party, without the prior written consent of Secured Party; except in connection with the Prior Lien;

 (d) Debtor will, upon Secured Party’s request, remove any unauthorized lien or security interest on the Collateral, and
defend any claim affecting the Collateral; 
 (e) Debtor will pay all charges against the Collateral, including, but not limited
to, taxes, assessments, encumbrances, and insurance, and upon Debtor’s failure to do so, Secured Party may pay any such charge as it deems necessary and add the amount paid to the indebtedness of Debtor secured hereunder; 
 (f) Debtor will not use or permit any Collateral to be used unlawfully or in violation of any provision of the Loan Documents, this Security
Agreement, or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; and 
 (g) all
information heretofore, herein or hereafter supplied to Secured Party by or on behalf of Debtor or Debtor with respect to the Collateral is true and correct in all material respects. 
 4. Covenants of Debtor and Debtor. Debtor hereby agrees: 
 (a) to do all acts that may be necessary to maintain, preserve and protect the Collateral; 
 (b) to notify Secured Party promptly of any change in Debtor’s name or place of business, or, if Debtor has more than one place of
business, its head office, or office in which Debtor’s records relating to the Collateral are kept; 
  

 - 2 - 

 (c) to procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings deemed necessary or appropriate by Secured Party to perfect, maintain and protect its security interest hereunder and the priority thereof and to deliver promptly to Secured Party all originals of Collateral
or proceeds consisting of chattel paper or instruments including but not limited to one or more UCC-1 financing statements, leasehold deeds of trust and patent and trademark collateral filings, all in a form reasonably requested by Secured Party;

 (d) to appear in and defend any action or proceeding which may affect its title to or Secured Party’s interest in the
Collateral; 
 (e) to keep separate, accurate and complete records of the Collateral and to provide Secured Party with such
records and such other reports and information relating to the Collateral as Secured Party may reasonably request from time to time; 
 (f) not to cause or permit any waste or unusual or unreasonable depreciation of the Collateral; and 
 (g) at any
reasonable time, upon reasonable request by Secured Party, to exhibit to and allow inspection by Secured Party (or persons designated by Secured Party) of the Collateral. 
 5. Events of Default. The occurrence of the following event (“Event of Default”) shall constitute an Event of Default under this Agreement: 
 (a) Debtor shall default in its performance of any covenant under this Security Agreement; 
 (b) Debtor fails to pay when due any sum payable under the terms of the Loan Documents or this Security Agreement and Debtor has failed to
cure such nonpayment within ninety (90) days after such sum has become due and payable; 
 (c) Debtor 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; or 
 (d) An involuntary petition is filed against Debtor under any bankruptcy
statute now or hereafter in effect, unless such petition is dismissed or discharged within sixty (60) days 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 Debtor. 
 6. Remedies. Upon the occurrence of any Event of Default,
Secured Party may, at its option, and without further notice to or demand on Debtor and in addition to all rights and remedies available to Secured Party under the Loan Documents or under law, do any one or more of the following, subject, however,
to the rights of the secured party under the Prior Lien: 
 (a) foreclose or otherwise enforce Secured Party’s security
interest in the Collateral in any manner permitted by law, or provided for in this Security Agreement; and 
  

 - 3 - 

 (b) recover from Debtor or Debtor all costs and expenses, including, without limitation,
reasonable attorney’s fees, incurred or paid by Secured Party in exercising any right, power or remedy provided by this Security Agreement or by law; 
 7. Entire Agreement, Severability. This Security Agreement and the Loan Documents contain the entire agreement between Secured Party and Debtor with respect to the Collateral which is the subject
of this Security Agreement. If any of the provisions of this Security Agreement shall be held invalid or unenforceable, this Security Agreement shall be construed as if not containing those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly. 
 8. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the laws of California as applied to agreements among California residents, made and to be performed entirely within the State of California. 
 9. Notice. Any written notice, consent or other communication provided for in this Security Agreement shall be delivered to the
addresses and sent in the manner as set forth in the Loan Documents. Such addresses may be changed by written notice given as provided in the Loan Documents. 
 10. Interpretation. All terms with their initial letters capitalized and not otherwise defined herein shall have the meaning as set forth in the Loan Documents. 
 [SIGNATURE PAGE FOLLOWS] 
  

 - 4 - 

 IN WITNESS WHEREOF, Debtor and Secured Party have executed this Security Agreement effective
as of the date first above written. 
  

			
	DEBTOR:
	
	 DayStar Technologies, Inc.,
 a Delaware corporation

		
	By:	 	 /s/ William S. Steckel

	Name:	 	William S. Steckel
	Title:	 	Chief Financial Officer
	
	SECURED PARTY:
	
	 TD Waterhouse RRSP Account 240832S
 in trust for Peter Alan Lacey

		
	By:	 	 /s/ Peter Alan Lacey

	Name:	 	Peter Alan Lacey
	Title:	 	Authorized Signatory

 [SIGNATURE PAGE TO SECURITY AGREEMENT] 

 EXHIBIT A 
 COLLTERAL LIST 
 All of Debtor’s right, title and interest,
whether now owned or existing or hereafter acquired or arising, and wherever located in the following described property: 
 x    Equipment. All Equipment, as that term is defined in the Uniform Commercial Code as in effect in California (the “UCC”). 
 x    Investment Property. All Investment Property, as that term is
defined in the UCC. 
 x    Deposit Accounts. All
Deposit Accounts, as that term is defined in the UCC. 
 x    Documents and Instruments. All Documents and Instruments, as those terms are defined in the UCC. 
 x    Letter-of-Credit Rights. All Letter-of-Credit Rights, as that term is defined in the UCC. 
 x    Inventory Etc. All Inventory, as that term is defined in the
UCC. 
 x    Accounts. All Accounts, as that term is
defined in the UCC. 
 x    General Intangibles. All
General Intangibles, as that term is defined in the UCC, including but not limited to all federal, state, local and foreign, registered or unregistered rights in: 
 (i) all copyrights, rights and interests in copyrights, works protectable by copyrights, copyright registrations and
copyright applications, and all renewals of any of the foregoing, all income, royalties, damages and payments now and hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, all damages and payments
for past, present and future infringement of any of the foregoing and the right to sue for past, present and future infringement of any of the foregoing; 
 (ii) all patents, processes, patent rights and patent applications, including, without limitation, the inventions and improvements described and claimed therein, all patentable inventions and the
reissues, divisions, continuations, renewals, extensions and continuations-in-part of any of the foregoing and all income, royalties, damages, and payments now or hereafter due and/or payable under or with respect to any of the foregoing, including,
without limitation, damages and payments for past, present and future infringement of any of the foregoing and the right to sue for past, present and future infringement of any of the foregoing; 
 [EXHIBIT A TO SECURITY AGREEMENT] 

 (iii) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, mask works, logos and other business identifiers, prints and labels on which any of the foregoing have appeared or appear; all registrations and recordings thereof, and all applications
in connection therewith, and all renewals thereof, and all income, royalties, damages and payments now or hereafter due and/or payable under or with respect to any of the foregoing, including, without limitation, damages and payments for past,
present and future infringement of any of the foregoing and the right to sue for past, present and future infringement of any of the foregoing; 
 (iv) all moral or similar rights; compilations; sui generis rights; rights under treaties, conventions, directives and the like (including but not limited to rights under the Berne Convention for
the Protection Of Literary and Artistic Works, GATT, and all European Union directives, including but not limited to directives regarding the legal protection of databases); trade secrets; derivative works; tangible or intangible intellectual
property being or to be developed; schematics; know-how; technology; rights in computer software programs or applications (in both source and object code form and in escrow or otherwise); software and firmware listings; fully commented and updated
software source code, and complete system build software and instructions related to all software described herein; designs; sounds; lyrics; soundtracks; music and musical compositions; motion picture synchronization rights; scripts; continuities;
testing procedures and results; fabrication and manufacturing methods; supplier lists; registrations and applications relating to any of the foregoing; employee and independent contractor lists; customer lists; sales prospects; sales, advertising,
marketing and promotional information, materials, brochures, presentations, white papers, case studies, seminar materials, workbooks, brochures, training manuals and materials; website content; documents, records and files relating to design, end
user documentation; manufacturing, quality control, sales, marketing and customer support for all Intellectual Property described herein; business and financial information and strategies; proprietary and other information in or with respect to
which Debtor has any interest or rights of any nature; and data and databases; all exclusive and nonexclusive licenses for any of the foregoing intellectual property as described in this Annex A including any subsection hereof, to the extent such
licenses may be assigned as security without the consent of the licensor (under their terms or, notwithstanding their terms, under existing or future Laws), or to the extent the consent of the licensor is now or hereafter obtained by Secured Party
or Debtor; and all other tangible or intangible information and intellectual property, media (whether now or hereafter existing or invented), copies and languages (including foreign and computer languages) in which any of the foregoing is now or
hereafter recorded, copied, translated, encoded or otherwise stored or utilized in any manner (all of the property described in subsections (i), (ii), (iii) and (iv) is hereafter referred to collectively as “Intellectual
Property”); 
  

 - 7 - 

 (v) all (a) contracts and rights therein, including without limitation
rights under software, information and other development contracts; (b) royalties; (c) documents, documents of title, drafts, checks, acceptances, bonds, letters of credit, notes and other negotiable and non-negotiable instruments, bills
of exchange, security deposits, certificates of deposit, insurance policies and any other writings evidencing a monetary obligation or security interest in or lease of personal property; (d) licenses, leases, rents, contracts or agreements,
government entitlements and subsidies and tax refunds; (e) investment property, including, but not limited to, all certificated or uncertificated securities, security entitlements, securities accounts, commodity contracts and commodity
accounts; (f) deposit accounts; (g) guarantees, bonds and other personal property securing the payment or performance of any of the foregoing; (h) chattel paper; (i) general intangibles as such term is defined in the Uniform
Commercial Code, which shall, in any event, include, without limitation, all right, title and interest in or under any contracts, models, drawings, materials and records, claims, literary rights, goodwill, rights of performance, warranties, rights
under insurance policies and rights of indemnification; and (j) Internet domain names and other identifiers of Debtor and all rights connected therewith; 
 (vi) all advertising and promotional materials, training manuals, workbooks, case studies and other materials prepared in
connection with and/or relating to Debtor’s consulting business, including, but not limited to design, development, implementation and sale of software, applications, enhancements, frameworks, methodologies, training, marketing, sales and other
services that incorporate or utilize any element of the Intellectual Property pursuant to any existing or future license or other agreement in which Debtor now or hereafter has any interest or right of any nature whatsoever (including, without
limitation, rights which do not amount to a property right), whether or not used or to be used by Debtor (including without limitation any interest of Debtor as seller or buyer, manufacturer, developer, licensee or licensor, or lessee or lessor);
and all whether registered, filed or recorded or not; all whether any or all of the foregoing is eligible for intellectual property protection (including but not limited to whether any of the foregoing is copyrighted or copyrightable). 

x    Books and Records. All books, correspondence, credit
files, records, invoices, and other documents, including without limitation all tapes, cards, computer runs and other papers or documents in the possession or control of Debtor; and all balances, credits, deposits, accounts or monies of or in the
name of Debtor in the possession or control of, or in transit to the Secured Party, and all records and data relating to anything described in this Exhibit A, whether in the form of a writing, photograph, microfilm, microfiche, or electronic or
other media, together with all of Debtor’s assignable right, title, and interest in and to all computer software and hardware required to utilize, create, maintain, and process any such records or data on electronic media. 
 x    Fixtures. All Fixtures, as that term is defined in the UCC.

  

 - 8 - 

 x    Insurance.
All policies of insurance covering or relating in any manner to any of the property described in this Exhibit A, all of which policies are hereby assigned to Secured Party as security for the payment and performance of the Obligations. 

x    Products. All products and produce of any of the above.

  

 - 9 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]