Document:

Form Of Warrant Agent Agreement

 Exhibit 4.5 
  

FORM OF 
  
 WARRANT AGREEMENT 
  
 between 
  
 DayStar
Technologies, Inc. 
  
 and 
  
 U.S. Stock Transfer Corporation 
  
 Dated as of
                          , 2003 

 This Agreement, dated as of
                    , 2003, is between DayStar Technologies, Inc., a Delaware corporation (the “Company”) and U.S. Stock Transfer
Corporation, a                          corporation, (the “Warrant Agent”). 
  
 The Company, at or about the time that it is entering into this Agreement,
proposes to issue and sell to public investors up to 1,700,000 Units (together with the additional units issuable as provided herein, the “Units”). Each Unit consists of one share of Common Stock of the Company (“Common Stock”),
one Class A Warrant (collectively, the “Class A Warrants”) and one Class B Warrant (collectively, the “Class B Warrants”) . Each Class A Warrant and each Class B Warrant is exercisable to purchase one share of Common Stock upon
the terms and conditions and subject to adjustment in certain circumstances, all as set forth in this Agreement. The Class A Warrants and the Class B Warrants are hereinafter referred to, collectively, as the “Warrants.” The Company also
proposes to grant to the Representative of the Underwriters of the public offering an option to purchase 255,000 additional Units to cover over-allotments, if any. 
  
 The Company also proposes to issue to the Representative of the Underwriters warrants to purchase up to 170,000 additional
Units. In addition, the Company will issue approximately 211,111 units in connection with two bridge financing rounds completed before the public offering. 
  
 The Company wishes to retain the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the Warrants to be issued under this Agreement (the “Warrant Certificates”) and the exercise of the Warrants; 
  
 The Company and the Warrant Agent wish to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders thereof (“Warrantholders”) and to set forth the respective rights and obligations of the Company and the Warrant Agent. Each Warrantholder is an intended
beneficiary of this Agreement with respect to the rights of Warrantholders herein. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: 
  
 Section 1. Appointment of Warrant Agent 
  
 The Company appoints the Warrant Agent to act as agent for the Company in accordance with the instructions in this Agreement
and the Warrant Agent accepts such appointment. 
  
 Section 2. Date, Denomination and Execution of Warrant Certificates 
  
 The Warrant Certificates (and the Form of Election to Purchase and the Form of Assignment to be printed on the reverse thereof) shall be in registered form only and shall be substantially of the tenor and purport
recited in Exhibit A (with respect to Class A Warrants) and Exhibit B (with respect to Class B Warrants) hereto, and may have such letters, numbers or other 
  

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 marks of identification or designation and such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, or with any rule or regulation made pursuant thereto, or with any rule or regulation of any
stock exchange on which the Common Stock or the Warrants may be listed or any automated quotation system, or to conform to usage. Each Class A Warrant Certificate shall entitle the registered holder thereof, subject to the provisions of this
Agreement and of the Warrant Certificate, to purchase, on or after                 , 2003 and on or before the close of business on
                , 2008 (the “Expiration Date”), one fully paid and non-assessable share of Common Stock for each Warrant evidenced by such Warrant
Certificate for $            . The exercise price of the Class A Warrants (the “Class A Exercise Price”) is subject to adjustments as provided in Section 6 hereof. Each
Class B Warrant Certificate shall entitle the registered holder thereof, subject to the provisions of this Agreement and of the Warrant Certificate, to purchase, on or after
                    , 2003 and on or before the close of business on the Expiration Date, one fully paid and non-assessable share of Common
Stock for each Warrant evidenced by such Warrant Certificate for $            . The exercise price of the Class B Warrants (the “Class B Exercise Price”) is subject to
adjustments as provided in Section 6 hereof. Each Warrant Certificate issued as a part of a Unit offered to the public as described in the recitals, above, shall be dated
            , 2003; each other Warrant Certificate shall be dated the date on which the Warrant Agent receives valid issuance instructions from the Company or a transferring holder
of a Warrant Certificate or, if such instructions specify another date, such other date. 
  
 For purposes of this Agreement, the term “close of business” on any given date shall mean 5:00 p.m., Eastern time, on such date; provided, however, that if such date is not a business day, it shall mean 5:00
p.m., Eastern time, on the next succeeding business day. For purposes of this Agreement, the term “business day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in New York, New York (or in the
state in which the Warrant Agent maintains the principal office in which it conducts business related to the Warrants) are authorized or obligated by law to be closed. 
  
 Each Warrant Certificate shall be executed on behalf of the Company by the Chairman of the Board or its President or a Vice
President, either manually or by facsimile signature printed thereon, and have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Warrant Certificate shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any Warrant Certificate shall
cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof by the Company, such Warrant Certificate, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the same
force and effect as though the person who signed such Warrant Certificate had not ceased to be such officer of the Company. 
  
 Section 3. Subsequent Issue of Warrant Certificates 
  
 Subsequent to their original issuance, no Warrant Certificates shall be reissued except (i) Warrant Certificates issued upon
transfer thereof in accordance with Section 4 hereof, 
  

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 (ii) Warrant Certificates issued upon any combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof, (iii) Warrant Certificates issued in replacement of mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon the partial exercise of Warrant Certificates pursuant to
Section 7 hereof, and (v) Warrant Certificates issued to reflect any adjustment or change in the Exercise Price or the number or kind of shares purchasable thereunder pursuant to Section 22 hereof. The Warrant Agent is hereby irrevocably authorized
to countersign and deliver, in accordance with the provisions of said Sections 4, 5, 7 and 22, the new Warrant Certificates required for purposes thereof, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such purposes. 
  
 Section 4. Transfers and Exchanges of Warrant Certificates 
  
 The Warrant Agent will keep or cause to be kept books for registration of ownership and transfer of the Warrant Certificates
issued hereunder. Such registers shall show the names and addresses of the respective holders of the Warrant Certificates and the kind and number of Warrants evidenced by each such Warrant Certificate. 
  
 The Warrant Agent shall, from time to time, register the transfer of any
outstanding Warrants upon the books to be maintained by the Warrant Agent for that purpose, upon surrender of the Warrant Certificate evidencing such Warrants, with the Form of Assignment duly filled in and executed with such signature guaranteed by
a banking institution or NASD member and such supporting documentation as the Warrant Agent or the Company may reasonably require, to the Warrant Agent at its stock transfer office in Glendale, California at any time on or before the Expiration Date
of such Warrant, and upon payment to the Warrant Agent for the account of the Company of an amount equal to any applicable transfer tax. Payment of the amount of such tax may be made in cash, or by certified or official bank check, payable in lawful
money of the United States of America to the order of the Company. 
  
 Upon receipt of a Warrant Certificate, with the Form of Assignment duly filled in and executed, accompanied by payment of an amount equal to any applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered Warrant
Certificate and countersign and deliver to the transferee a new Warrant Certificate for the number of full Class A Warrants or Class B Warrants, as the case may be, transferred to such transferee; provided, however, that in case the registered
holder of any Warrant Certificate shall elect to transfer fewer than all of the Warrants evidenced by such Warrant Certificate, the Warrant Agent in addition shall promptly countersign and deliver to such registered holder a new Warrant Certificate
or Certificates for the number of full Class A Warrants or Class B Warrants, as the case may be, not so transferred. 
  
 Any Warrant Certificate or Certificates may be exchanged at the option of the holder thereof for another Warrant Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same kind and number of Warrants, upon surrender of such Warrant Certificate or Certificates, with the Form of Assignment duly filled in and executed, to the Warrant Agent, at any
time or from time to time after the close of business on the date hereof and prior to the close of business on the Expiration Date relating to such Warrant. The Warrant 
  

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 Agent shall promptly cancel the surrendered Warrant Certificate and deliver the new Warrant Certificate pursuant to the
provisions of this Section. 
  
 Section 5.
Mutilated, Destroyed, Lost or Stolen Warrant Certificates 
  
 Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of any Warrant Certificate, and in the case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to them of all reasonable expenses incidental thereto, and, in the case of mutilation, upon surrender and cancellation of the Warrant Certificate, the Warrant Agent shall countersign and deliver a
new Warrant Certificate of like tenor for the same kind and number of Warrants. 
  
 Section 6. Adjustments of Number and Kind of Shares Purchasable and Exercise Price 
  
 The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the occurrence, after the date hereof, of any of the following events: 
  
 A. In case the Company shall (1) pay a dividend in, or make a distribution of, shares of capital stock on its outstanding Common Stock,
(2) subdivide its outstanding shares of Common Stock into a greater number of such shares or (3) combine its outstanding shares of Common Stock into a smaller number of such shares, the total number of shares of Common Stock purchasable upon the
exercise of each Class A Warrant and Class B Warrant outstanding immediately prior thereto shall be adjusted so that the holder of any Warrant Certificate thereafter surrendered for exercise shall be entitled to receive at the same aggregate
Exercise Price the number of shares of capital stock (of one or more classes) which such holder would have owned or have been entitled to receive immediately following the happening of any of the events described above had such Warrant been
exercised in full immediately prior to the record date with respect to such event. Any adjustment made pursuant to this Subsection shall, in the case of a stock dividend or distribution, become effective as of the record date therefor and, in the
case of a subdivision or combination, be made as of the effective date thereof. If, as a result of an adjustment made pursuant to this Subsection, the holder of any Warrant Certificate thereafter surrendered for exercise shall become entitled to
receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive and shall be evidenced by a Board resolution filed with the Warrant Agent) shall determine the
allocation of the adjusted Exercise Price between or among shares of such classes of capital stock. 
  
 B. In the event of a capital reorganization or a reclassification of the Common Stock (except as provided in Subsection A. above or
Subsection E. below), any Warrantholder, upon exercise of Warrants, shall be entitled to receive, in substitution for the Common Stock to which he would have become entitled upon exercise immediately prior to such reorganization or reclassification,
the shares (of any class or classes) or other securities or property of the Company (or cash) that he would have been entitled to receive at the same aggregate Exercise Price upon such reorganization or reclassification if such Warrants had been
exercised 
  

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 immediately prior to the record date with respect to such event; and in any such case, appropriate
provision (as determined by the Board of Directors of the Company, whose determination shall be conclusive and shall be evidenced by a certified Board resolution filed with the Warrant Agent) shall be made for the application of this Section 6 with
respect to the rights and interests thereafter of the Warrantholders (including but not limited to the allocation of the Exercise Price between or among shares of classes of capital stock), to the end that this Section 6 (including the adjustments
of the number of shares of Common Stock or other securities purchasable and the Exercise Price thereof) shall thereafter be reflected, as nearly as reasonably practicable, in all subsequent exercises of the Warrants for any shares or securities or
other property (or cash) thereafter deliverable upon the exercise of the Warrants. 
  
 C. Whenever the number of shares of Common Stock or other securities purchasable upon exercise of a Warrant is adjusted as provided in
this Section 6, the Company will promptly file with the Warrant Agent a certificate signed by a Chairman or co-Chairman of the Board or the President or a Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Company setting forth the number and kind of securities or other property purchasable upon exercise of a Class A Warrant and a Class B Warrant, as so adjusted, stating that such adjustments in the number or kind of
shares or other securities or property conform to the requirements of this Section 6, and setting forth a brief statement of the facts accounting for such adjustments. Promptly after receipt of such certificate, the Company, or the Warrant Agent at
the Company’s request, will deliver, by first-class, postage prepaid mail, a brief summary thereof (to be supplied by the Company) to the registered holders of the outstanding Warrant Certificates; provided, however, that failure to file or to
give any notice required under this Subsection, or any defect therein, shall not affect the legality or validity of any such adjustments under this Section 6; and provided, further, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 12 hereof. 
  
 D. In case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or
merger which does not result in any reclassification or change of the outstanding Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which shall have acquired such assets, as the case may be, shall execute and deliver to the Warrant Agent a supplemental warrant agreement providing that the holder of each
Warrant then outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, solely the kind and amount of shares of stock and other securities and property (or cash) receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock of the Company for which such Warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section. The above provision of this Subsection shall similarly apply to successive consolidations, mergers, sales
or transfers. 
  
 The Warrant Agent shall not be under any
responsibility to determine the correctness of any provision contained in any such supplemental warrant agreement relating to either the kind 
  

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 or amount of shares of stock or securities or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or transfer or of any adjustment to be made with respect thereto, but subject to the provisions of Section 20 hereof, may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, a certificate of a firm of independent certified public accountants (who may be the accountants regularly employed by the Company) with respect thereto. 
  
 E. Irrespective of any adjustments in the number or kind of
shares issuable upon exercise of Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrant Certificates initially issuable pursuant to
this Warrant Agreement. 
  
 F. The Company may
retain a firm of independent public accountants of recognized standing, which may be the firm regularly retained by the Company, selected by the Board of Directors of the Company or the Executive Committee of said Board, and not disapproved by the
Warrant Agent, to make any computation required under this Section, and a certificate signed by such firm shall, in the absence of fraud or gross negligence, be conclusive evidence of the correctness of any computation made under this Section.

  
 G. For the purpose of this Section, the term
“Common Stock” shall mean (i) the Common Stock or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time as a result of an adjustment made pursuant to this Section, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock of
the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section, and all other provisions of this Agreement, with respect to the Common Stock, shall apply on like terms to any such other shares. 
  
 H. The Company may, from time to time and to the extent
permitted by law, reduce the Exercise Price of the Class A Warrants or Class B Warrants by any amount for a period of not less than 20 days. If the Company so reduces the Exercise Price of such Warrants, it will give not less than 15 days’
notice of such decrease, which notice may be in the form of a press release, and shall take such other steps as may be required under applicable law in connection with any offers or sales of securities at the reduced price. 
  
 Section 7. Exercise and Redemption of Warrants 

 
 Unless the Warrants have been redeemed as provided in this Section 7, the
registered holder of any Warrant Certificate may exercise the Warrants evidenced thereby, in whole at any time or in part from time to time at or prior to the close of business, on the Expiration Date relating to such Warrant, subject to the
provisions of Section 9, at which time the Warrant 
  

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 Certificates shall be and become wholly void and of no value. Warrants may be exercised by their holders or redeemed by
the Company as follows: 
  
 A. Exercise of
Warrants shall be accomplished upon surrender of the Warrant Certificate evidencing such Warrants, with the Form of Election to Purchase on the reverse side thereof duly filled in and executed, to the Warrant Agent at its stock transfer office in
Glendale, California, together with payment to the Company of the Exercise Price (as of the date of such surrender) of the Warrants then being exercised and an amount equal to any applicable transfer tax and, if requested by the Company, any other
taxes or governmental charges which the Company may be required by law to collect in respect of such exercise. Payment of the Exercise Price and other amounts may be made by wire transfer of good funds, or by certified or bank cashier’s check,
payable in lawful money of the United States of America to the order of the Company. No adjustment shall be made for any cash dividends, whether paid or declared, on any securities issuable upon exercise of a Warrant. 
  
 B. Upon receipt of a Warrant Certificate, with the Form of
Election to Purchase duly filled in and executed, accompanied by payment of the Exercise Price of the Warrants being exercised (and of an amount equal to any applicable taxes or government charges as aforesaid), the Warrant Agent shall promptly
request from the transfer agent with respect to the securities to be issued and deliver to or upon the order of the registered holder of such Warrant Certificate, in such name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of the securities to be purchased, together with cash made available by the Company pursuant to Section 8 hereof in respect of any fraction of a share of such securities otherwise issuable upon such
exercise. If the Warrant is then exercisable to purchase property other than securities, the Warrant Agent shall take appropriate steps to cause such property to be delivered to or upon the order of the registered holder of such Warrant Certificate.
In addition, if it is required by law and upon instruction by the Company, the Warrant Agent will deliver to each Warrantholder a prospectus which complies with the provisions of Section 9 of the Securities Act of 1933, as amended, and the Company
agrees to supply Warrant Agent with sufficient number of prospectuses to effectuate that purpose. 
  
 C. In case the registered holder of any Warrant Certificate shall exercise fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent shall promptly countersign and deliver to the registered holder of such Warrant Certificate, or to his duly authorized assigns, a new Warrant Certificate or Certificates evidencing the number of Warrants that were not
so exercised. 
  
 D. Each person in whose name
any certificate for securities is issued upon the exercise of Warrants shall for all purposes be deemed to have become the holder of record of the securities represented thereby as of, and such certificate shall be dated, the date upon which the
Warrant Certificate was duly surrendered in proper form and payment of the Exercise Price (and of any applicable taxes or other governmental charges) was made; provided, however, that if the date of such surrender and payment is a date on which the
stock transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares as of, and the certificate for such shares shall be dated, the next succeeding business day on which the stock transfer books
of the Company are open (whether before, on or after the Expiration Date 
  

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 relating to such Warrant) and the Warrant Agent shall be under no duty to deliver the certificate for
such shares until such date. The Company covenants and agrees that it shall not cause its stock transfer books to be closed for a period of more than 20 consecutive business days except upon consolidation, merger, sale of all or substantially all of
its assets, dissolution or liquidation or as otherwise provided by law. 
  
 E. The Class A Warrants outstanding may be redeemed at the option of the Company, in whole or in part on a pro-rata basis, by giving not less than 30 days prior notice as provided in Section 7(f) below, which notice
may not be give before, but may be given at any time after, the closing price of the Common Stock on the principal exchange on which it is then traded has equaled or exceeded
$             per share on each of five consecutive trading days that occur subsequent to the date of this Warrant Agreement. The price at which Class A Warrants may be redeemed (the
“Redemption Price”) is $0.25 per Class A Warrant. On and after the redemption date the holders of record of redeemed Class A Warrants shall be entitled to payment of the Redemption Price upon surrender of such redeemed Class A
Warrants to the Company at the office of the Warrant Agent designated for that purpose. Class B Warrants are non-redeemable. 
  
 F. Notice of redemption of Class A Warrants shall be given at least 30 days prior to the redemption date by mailing, by registered or
certified mail, return receipt requested, a copy of such notice to the Warrant Agent and to all of the holders of record of Class A Warrants at their respective addresses appearing on the books or transfer records of the Company or such other
address designated in writing by the holder of record to the Warrant Agent not less than 40 days prior to the redemption date. 
  
 G. From and after the redemption date, all rights of the Class A Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (a) no later than one day prior to the redemption date the Company shall have irrevocably deposited with the Warrant Agent as paying agent a sufficient amount to pay on the redemption date the Redemption Price for all Class A
Warrants called for redemption and (b) the notice of redemption shall have stated the name and address of the Warrant Agent and the intention of the Company to deposit such amount with the Warrant Agent no later than one day prior to the redemption
date. 
  
 H. On the redemption date, the Warrant
Agent shall pay to the holders of record of redeemed Class A Warrants all monies received by the Warrant Agent for the redemption of Class A Warrants to which the holders of record of such redeemed Class A Warrants who shall have surrendered their
Class A Warrants are entitled. The Warrant Agent shall have no obligation to pay for the redemption of the Class A Warrants except to the extent that funds for such payment have been provided to it by the Company. 
  
 I. Any amounts deposited with the Warrant Agent that are not
required for redemption of Class A Warrants may be withdrawn by the Company. Any amounts deposited with the Warrant Agent that shall be unclaimed after six months after the redemption date shall be redelivered back to the Company, and thereafter the
holders of the Class A Warrants called for redemption for which such funds were deposited shall look solely to the Company for 
  

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 payment. The Company shall be entitled to the interest, if any, on funds deposited with the Warrant Agent
and the holders of redeemed Class A Warrants shall have no right to any such interest. At the instruction of the Company, the Warrant Agent shall deposit or invest any and all funds deposited with it by the Company in connection with any redemption
in federally insured, interest bearing accounts with a financial institution or institutions designated by the Company but shall have no liability with respect to the performance of any such investments other than, in the case of funds deposited in
accounts maintained by the Warrant Agent, the liability of the Warrant Agent to its depositors in such accounts, generally. 
  
 J. If the Company fails to make a sufficient deposit with the Warrant Agent as provided above, the holder of any Class A Warrants called
for redemption may at the option of the holder (a) by notice to the Company declare the notice of redemption a nullity as to such holder, or (b) maintain an action against the Company for the Redemption Price. If the holder brings such an action,
the Company will pay reasonable attorneys’ fees of the holder. If the holder fails to bring an action against the Company for the Redemption Price within 60 days after the redemption date, the holder shall be deemed to have elected to declare
the notice of redemption to be a nullity as to such holder and such notice shall be without any force or effect as to such holder. Except as otherwise specifically provided in this Paragraph J, a notice of redemption, once mailed by the Company as
provided in Paragraph F shall be irrevocable. 
  
 Section 8. Fractional Interests 
  
 The Company shall
not be required to issue any Warrant Certificate evidencing a fraction of a Warrant or to issue fractions of shares of securities on the exercise of the Warrants. If any fraction (calculated to the nearest one-hundredth) of a Warrant or a share of
securities would, except for the provisions of this Section, be issuable on the exercise of any Warrant, the Company shall, at its option, either purchase such fraction for an amount in cash equal to the current value of such fraction computed on
the basis of the closing market price (as quoted on NASDAQ) on the trading day immediately preceding the day upon which such Warrant Certificate was surrendered for exercise in accordance with Section 7 hereof or issue the required fractional
Warrant or share. By accepting a Warrant Certificate, the holder thereof expressly waives any right to receive a Warrant Certificate evidencing any fraction of a Warrant or to receive any fractional share of securities upon exercise of a Warrant,
except as expressly provided in this Section 8. 
  
 Section 9. Reservation of Equity Securities 
  
 The
Company covenants that it will at all times reserve and keep available, free from any pre-emptive rights, out of its authorized and unissued equity securities, solely for the purpose of issue upon exercise of the Warrants, such number of shares of
equity securities of the Company as shall then be issuable upon the exercise of all outstanding Warrants (“Equity Securities”). The Company covenants that all Equity Securities which shall be so issuable shall, upon such issue, be duly
authorized, validly issued, fully paid and non-assessable. 
  
 The
Company covenants that if any equity securities, required to be reserved for the purpose of issue upon exercise of the Warrants hereunder, require registration with or approval 
  

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 of any governmental authority under any federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such securities to be duly registered, or approved, as the case may be, and, to the extent practicable, take all such action in anticipation of and prior to the exercise of the
Warrants, including, without limitation, filing any and all post-effective amendments to the Company’s Registration Statement on Form SB-2 (Registration No. 333-110337) necessary to permit a public offering of the securities underlying the
Warrants at any and all times during the term of this Agreement, provided, however, that in no event shall such securities be issued, and the Company is authorized to refuse to honor the exercise of any Warrant, if such exercise would result in the
opinion of the Company’s Board of Directors, upon advice of counsel, in the violation of any law; and provided further that, in the case of a Warrant exercisable solely for securities listed on a securities exchange or for which there are at
least three independent market makers, in lieu of obtaining such registration or approval, the Company may elect to redeem Warrants submitted to the Warrant Agent for exercise for a price equal to the difference between the aggregate low asked
price, or closing price, as the case may be, of the securities for which such Warrant is exercisable on the date of such submission and the Exercise Price of such Warrants; in the event of such redemption, the Company will pay to the holder of such
Warrants the above-described redemption price in cash within 10 business days after receipt of notice from the Warrant Agent that such Warrants have been submitted for exercise. 
  
 Section 10. Reduction of Conversion Price Below Par Value 
  
 Before taking any action that would cause an adjustment pursuant to Section
6 hereof reducing the portion of the Class A Exercise Price or Class B Exercise Price required to purchase one share of capital stock below the then par value (if any) of a share of such capital stock, the Company will use its best efforts to take
any corporate action which, in the opinion of its counsel, may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such capital stock. 
  
 Section 11. Payment of Taxes 
  
 The Company covenants and agrees that it will pay when due and payable any
and all federal and state documentary stamp and other original issue taxes which may be payable in respect of the original issuance of the Warrant Certificates, or any shares of Common Stock or other securities upon the exercise of Warrants. The
Company shall not, however, be required (i) to pay any tax which may be payable in respect of any transfer involved in the transfer and delivery of Warrant Certificates or the issuance or delivery of certificates for Common Stock or other securities
in a name other than that of the registered holder of the Warrant Certificate surrendered for purchase or (ii) to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of any Warrant Certificate until any
such tax shall have been paid, all such tax being payable by the holder of such Warrant Certificate at the time of surrender. 
  

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 Section 12. Notice of Certain Corporate Action 
  
 In case the Company after the date hereof shall propose (i) to offer to the
holders of Common Stock, generally, rights to subscribe to or purchase any additional shares of any class of its capital stock, any evidences of its indebtedness or assets, or any other rights or options or (ii) to effect any reclassification of
Common Stock (other than a reclassification involving merely the subdivision or combination of outstanding shares of Common Stock) or any capital reorganization, or any consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or any sale, transfer or other disposition of its property and assets substantially as an entirety, or the liquidation, voluntary or involuntary dissolution or winding-up of the Company, then, in each
such case, the Company shall file with the Warrant Agent and the Company, or the Warrant Agent on its behalf, shall mail (by first-class, postage prepaid mail) to all registered holders of the Warrant Certificates notice of such proposed action,
which notice shall specify the date on which the books of the Company shall close or a record be taken for such offer of rights or options, or the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, voluntary or involuntary dissolution or winding-up shall take place or commence, as the case may be, and which shall also specify any record date for determination of holders of Common Stock entitled to vote thereon or
participate therein and shall set forth such facts with respect thereto as shall be reasonably necessary to indicate any adjustments in the Class A Exercise Price and the Class B Exercise Price and the number or kind of shares or other securities
purchasable upon exercise of Warrants which will be required as a result of such action. Such notice shall be filed and mailed in the case of any action covered by clause (i) above, at least ten days prior to the record date for determining holders
of the Common Stock for purposes of such action or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record are to be entitled to such offering; and, in the case of any action covered by clause (ii)
above, at least 20 days prior to the earlier of the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or winding-up is expected to become
effective and the date on which it is expected that holders of shares of Common Stock of record on such date shall be entitled to exchange their shares for securities or other property deliverable upon such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or winding-up. 
  
 Failure to give any such notice or any defect therein shall not affect the legality or validity of any transaction listed in this Section 12. 

 
 Section 13. Disposition of Proceeds on Exercise of
Warrant Certificates, etc. 
  
 The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent for the purchase of securities or other property through the exercise of such Warrants. 
  
 The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer office. Copies of this 
  

 11 

 Agreement may be obtained upon written request addressed to the Warrant Agent at its stock transfer office in
Glendale, California. 
  
 Section 14.
Warrantholder Not Deemed a Stockholder 
  
 No Warrantholder, as
such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise of the Warrants represented thereby for any purpose whatever, nor
shall anything contained herein or in any Warrant Certificate be construed to confer upon any Warrantholder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance or otherwise), or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 12 hereof), or to receive dividend or subscription rights, or otherwise, until such Warrant Certificate shall
have been exercised in accordance with the provisions hereof and the receipt of the Exercise Price and any other amounts payable upon such exercise by the Warrant Agent. 
  
 Section 15. Right of Action 
  
 All rights of action in respect to this Agreement are vested in the respective registered holders of the Warrant
Certificates; and any registered holder of any Warrant Certificate, without the consent of the Warrant Agent or of any other holder of a Warrant Certificate, may, in his own behalf for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, his right to exercise the Warrants evidenced by such Warrant Certificate, for the purchase of shares of the Common Stock in the manner provided in the
Warrant Certificate and in this Agreement. 
  
 Section 16. Agreement of Holders of Warrant Certificates 
  
 Every holder of a Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent and with every other holder of a Warrant Certificate that: 
  
 A. the Warrant Certificates are transferable on the registry books of the Warrant Agent only upon the terms
and conditions set forth in this Agreement; and 
  
 B. the Company and the Warrant Agent may deem and treat the person in whose name the Warrant Certificate is registered as the absolute owner of the Warrant (notwithstanding any notation of ownership or other writing thereon made by anyone
other than the Company or the Warrant Agent) for all purposes whatever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. 
  

 12 

 Section 17. Cancellation of Warrant Certificates 
  
 In the event that the Company shall purchase or otherwise acquire any
Warrant Certificate or Certificates after the issuance thereof, such Warrant Certificate or Certificates shall thereupon be delivered to the Warrant Agent and be canceled by it and retired. The Warrant Agent shall also cancel any Warrant Certificate
delivered to it for exercise, in whole or in part, or delivered to it for transfer, split-up, combination or exchange. Warrant Certificates so canceled shall be delivered by the Warrant Agent to the Company from time to time, or disposed of in
accordance with the instructions of the Company. 
  
 Section 18. Concerning the Warrant Agent 
  
 The Company
agrees to pay to the Warrant Agent from time to time, on demand of the Warrant Agent, reasonable compensation for all services rendered by it hereunder and also its reasonable expenses, including counsel fees, and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Warrant Agent, arising out of or in connection with the acceptance and administration of this Agreement. 
  
 Section 19. Merger or Consolidation or Change of Name of Warrant Agent 
  
 Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent, shall be the successor to the Warrant
Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor warrant agent under the provisions of Section
21 hereof. In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any of the Warrant Certificates shall have been countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates
and in this Agreement. 
  
 In case at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned;
and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this Agreement. 
  

 13 

 Section 20. Duties of Warrant Agent 
  
 The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company and the holders of Warrant Certificates, by their acceptance thereof, shall be bound: 
  
 A. The Warrant Agent may consult with counsel satisfactory to it (who may be counsel for the Company), and
the opinion of such counsel shall be full and complete authorization and protection to the Warrant Agent as to any action taken, suffered or omitted by it in good faith and in accordance with such opinion; provided, however, that the Warrant Agent
shall have exercised reasonable care in the selection of such counsel. Fees and expenses of such counsel, to the extent reasonable, shall be paid by the Company. 
  
 B. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a Chairman or co-Chairman of the Board or the President or a Vice President or the Secretary of the Company and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. 
  
 C. The Warrant Agent shall be liable hereunder only for its own gross negligence, bad faith or willful
misconduct. 
  
 D. The Warrant Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature on the Warrant Certificates and such statements or recitals as describe the Warrant Agent or
action taken or to be taken by it) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. 
  
 E. The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for the making of any change in the number of shares of Common Stock for which a Warrant is exercisable required under the
provisions of Section 6 or responsible for the manner, method or amount of any such change or the ascertaining of the existence of facts that would require any such adjustment or change (except with respect to the exercise of Warrant Certificates
after actual notice of any adjustment of the Exercise Price); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Warrant Certificate or as to whether any shares of Common Stock will, when issued, be validly issued, fully paid and non-assessable. 
  

 14 

 F. The Warrant Agent shall be under no obligation to institute any action, suit or legal
proceeding or take any other action likely to involve expense unless the Company or one or more registered holders of Warrant Certificates shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses which may be
incurred. All rights of action under this Agreement or under any of the Warrants may be enforced by the Warrant Agent without the possession of any of the Warrants or the production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the registered holders of the Warrant Certificates, as their respective
rights or interests may appear. 
  
 G. The
Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity. 
  
 H. The Warrant Agent is
hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from a Chairman or co-Chairman of the Board or President or a Vice President or the Secretary or the Controller of the Company, and to
apply to such officers for advice or instructions in connection with the Warrant Agent’s duties, and it shall not be liable for any action taken or suffered or omitted by it in good faith in accordance with instructions of any such officer.

  
 I. The Warrant Agent will not be responsible
for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrant Certificates to be complied with by the Company. 
  
 J. The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys, agents or employees and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees or for any loss to
the Company resulting from such neglect or misconduct; provided, however, that reasonable care shall have been exercised in the selection and continued employment of such attorneys, agents and employees. 
  
 K. The Warrant Agent will not incur any liability or
responsibility to the Company or to any holder of any Warrant Certificate for any action taken, or any failure to take action, in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument
reasonably believed by the Warrant Agent to be genuine and to have been signed, sent or presented by the proper party or parties. 
  
 L. The Warrant Agent will act hereunder solely as agent of the Company in a ministerial capacity, and its duties will be determined solely
by the provisions hereof. The 
  

 15 

 Warrant Agent will not be liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own gross negligence, bad faith or willful conduct. 
  
 Section 21. Change of Warrant Agent 
  
 The Warrant Agent may resign and be discharged from its duties under this Agreement upon 30 days’ prior notice in writing mailed, by registered or
certified mail, to the Company. The Company may remove the Warrant Agent or any successor warrant agent upon 30 days’ prior notice in writing, mailed to the Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent and shall, within 15 days following such appointment, give notice thereof in
writing to each registered holder of the Warrant Certificates. If the Company shall fail to make such appointment within a period of 15 days after giving notice of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent, then the Company agrees to perform the duties of the Warrant Agent hereunder until a successor Warrant Agent is appointed. After appointment and execution of a copy of this Agreement in
effect at that time, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the former Warrant Agent shall deliver
and transfer to the successor Warrant Agent, within a reasonable time, any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section, however, or any defect therein shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor warrant agent, as the case may be. 
  
 Section 22. Issuance of New Warrant Certificates 

 
 Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new Warrant Certificates in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Class A Exercise Price or the Class B Exercise
Price or the number or kind of shares purchasable under the several Warrant Certificates made in accordance with the provisions of this Agreement. 
  
 Section 23. Notices 
  
 Notice or demand pursuant to this Agreement to be given or made on the Company by the Warrant Agent or by the registered holder of any Warrant Certificate
shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows: 
  
 DayStar Technologies, Inc. 
 900 Golden Gate Terrace, Suite A 
 Grass Valley, California 95945 
 Attention: President 
  

 16 

 Subject to the provisions of Section 21, any notice pursuant to this Agreement to be given or made by the
Company or by the holder of any Warrant Certificate to or on the Warrant Agent shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent
with the Company) as follows: 
  

	
	 	 	 	 
	
	 	 	 	 
	
	 	 	 	 
	
	 	 	 	 

  
 Any notice or demand
authorized to be given or made to the registered holder of any Warrant Certificate under this Agreement shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, to the last address of such holder as it shall
appear on the registers maintained by the Warrant Agent. 
  
 Section 24. Modification of Agreement 
  
 The Warrant Agent may, without the consent or concurrence of the Warrantholders, by supplemental agreement or otherwise, concur with the Company in making any changes or corrections in this Agreement that the Warrant Agent shall have been
advised by counsel (who may be counsel for the Company) are necessary or desirable to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained, or to make any other
provisions in regard to matters or questions arising hereunder and which shall not be inconsistent with the provisions of the Warrant Certificates and which shall not adversely affect the interests of the Warrantholders. As of the date hereof, this
Agreement contains the entire and only agreement, understanding, representation, condition, warranty or covenant between the parties hereto with respect to the matters herein, supersedes any and all other agreements between the parties hereto
relating to such matters, and may be modified or amended only by a written agreement signed by both parties hereto pursuant to the authority granted by the first sentence of this Section. 
  
 Section 25. Successors 
  
 All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder. 
  
 Section 26. California Contract 
  
 This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of California and for all purposes shall be construed in accordance with the laws of said State. 
  

 17 

 Section 27. Termination 
  
 This Agreement shall terminate as of the close of business on the Expiration Date, or such earlier date upon which all
Warrants shall have been exercised or redeemed, except that the Warrant Agent shall account to the Company as to all Warrants outstanding and all cash held by it as of the close of business on the Expiration Date. 
  
 Section 28. Benefits of this Agreement 
  
 Nothing in this Agreement or in the Warrant Certificates shall be construed
to give to any person or corporation other than the Company, the Warrant Agent, and their respective successors and assigns hereunder and the registered holders of the Warrant Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent, their respective successors and assigns hereunder and the registered holders of the Warrant Certificates. 
  
 Section 29. Descriptive Headings 
  
 The descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 
  
 Section 30. Counterparts 
  
 This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and
the same instrument. 
  
 (Remainder of page intentionally left
blank; signature page follows) 
  

 18 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the day
and year first above written. 
  

	DAYSTAR TECHNOLOGIES, INC.
		
	By:	 	 
	 	

	 	 	Name:
	 	 	Title:

  

	U.S. STOCK TRANSFER CORPORATION
		
	By:	 	 
	 	

	 	 	Name:
	 	 	Title:

  

 19 

 Exhibit A 
  

VOID AFTER 5 P.M. PACIFIC TIME ON
                        , 2008 
  

WARRANTS TO PURCHASE COMMON STOCK 
  

	 W            
	  	                     Class A Warrants

  
 DayStar Technologies,
Inc. 
  
 CUSIP
                     
  
 THIS CERTIFIES THAT 
  
 or registered assigns, is the registered holder of the number of Class A Warrants (“Class A Warrants”) set forth above. Each Class A Warrant, unless and
until redeemed by the Company as provided in the Warrant Agreement, hereinafter more fully described (the “Warrant Agreement”) entitles the holder thereof to purchase from DayStar Technologies, Inc., a corporation incorporated under
the laws of the State of Delaware (the “Company”), subject to the terms and conditions set forth hereinafter and in the Warrant Agreement, at any time on or after
            , 2003 and before the close of business on             , 2008 (“Expiration Date”), one
fully paid and non-assessable share of Common Stock of the Company (“Common Stock”) upon presentation and surrender of this Warrant Certificate, with the instructions for the registration and delivery of Common Stock filled in, at
the stock transfer office in Glendale, California, of U.S. Stock Transfer Corporation, Warrant Agent of the Company (“Warrant Agent”) or of its successor warrant agent or, if there be no successor warrant agent, at the corporate
offices of the Company, and upon payment of the Exercise Price (as defined in the Warrant Agreement) and any applicable taxes paid either in cash, or by certified or official bank check, payable in lawful money of the United States of America to the
order of the Company. Each Class A Warrant initially entitles the holder to purchase one share of Common Stock for $            . The number and kind of securities or other property
for which the Class A Warrants are exercisable are subject to adjustment in certain events, such as mergers, splits, stock dividends, reverse splits and the like, to prevent dilution. The Company may redeem any or all outstanding and unexercised
warrants by giving not less than 30 days prior notice at any time after the closing price of the Common Stock on the principal exchange on which it is traded has equaled or exceeded
$             per share on each of five consecutive trading days subsequent to             , 2003. The Redemption
Price is $0.25 per Class A Warrant. All Class A Warrants not theretofore exercised will expire on the Expiration Date. 
  

 Exhibit A 

 This Warrant Certificate is subject to all of the terms, provisions and conditions of the Warrant
Agreement, dated as of                             , 2003, between the Company and the Warrant Agent,
to all of which terms, provisions and conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is incorporated herein by reference and made a part hereof and reference is made to the Warrant
Agreement for a full description of the rights, limitations of rights, obligations, duties and immunities of the Warrant Agent, the Company and the holders of the Warrant Certificates. Copies of the Warrant Agreement are available for inspection at
the stock transfer office of the Warrant Agent or may be obtained upon written request addressed to the Company at DayStar Technologies, Inc., 900 Golden Gate Terrace, Suite A, Grass Valley, California 95945, Attention: President. 
  
 The Company shall not be required upon the exercise of the Class A Warrants
evidenced by this Warrant Certificate to issue fractions of Class A Warrants, Common Stock or other securities, but shall make adjustment therefor in cash on the basis of the current market value of any fractional interest as provided in the Warrant
Agreement. 
  
 In certain cases, the sale of securities by the
Company upon exercise of Class A Warrants would violate the securities laws of the United States, certain states thereof or other jurisdictions. The Company has agreed to use all commercially reasonable efforts to cause a registration statement to
continue to be effective during the term of the Class A Warrants with respect to such sales under the Securities Act of 1933, and to take such action under the laws of various states as may be required to cause the sale of securities upon exercise
to be lawful. However, the Company will not be required to honor the exercise of Class A Warrants if, in the opinion of the Board of Directors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In certain cases,
the Company may, but is not required to, purchase Class A Warrants submitted for exercise for a cash price equal to the difference between the market price of the securities obtainable upon such exercise and the exercise price of such Class A
Warrants. 
  
 This Warrant Certificate, with or without other
Certificates, upon surrender to the Warrant Agent, any successor warrant agent or, in the absence of any successor warrant agent, at the corporate offices of the Company, may be exchanged for another Warrant Certificate or Certificates evidencing in
the aggregate the same number of Class A Warrants as the Warrant Certificate or Certificates so surrendered. If the Class A Warrants evidenced by this Warrant Certificate shall be exercised in part, the holder hereof shall be entitled to receive
upon surrender hereof another Warrant Certificate or Certificates evidencing the number of Class A Warrants not so exercised. 
  
 No holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise hereof for any purpose whatever, nor shall anything contained in the Warrant Agreement or herein be construed to confer upon the holder of this Warrant Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof or give or withhold consent to any corporate action (whether upon any matter
submitted to stockholders at any meeting thereof, or give or withhold consent to any merger, recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, conveyance or
otherwise) or to receive notice of meetings or 
  

 Exhibit A 

 other actions affecting stockholders (except as provided in the Warrant Agreement) or to receive dividends or
subscription rights or otherwise until the Class A Warrants evidenced by this Warrant Certificate shall have been exercised and the Common Stock purchasable upon the exercise thereof shall have become deliverable as provided in the Warrant
Agreement. 
  
 If this Warrant Certificate shall be surrendered
for exercise within any period during which the transfer books for the Company’s Common Stock or other class of stock purchasable upon the exercise of the Class A Warrants evidenced by this Warrant Certificate are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares purchasable upon such transfer until the date of the reopening of said transfer books. 
  

Every holder of this Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent, and with every other holder of
a Warrant Certificate that: 
  
 (a) this Warrant Certificate is
transferable on the registry books of the Warrant Agent only upon the terms and conditions set forth in the Warrant Agreement, and 
  
 (b) the Company and the Warrant Agent may deem and treat the person in whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
The Company shall not be required to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of Class A Warrants evidenced by this Warrant Certificate until any tax which may be payable in respect thereof by
the holder of this Warrant Certificate pursuant to the Warrant Agreement shall have been paid, such tax being payable by the holder of this Warrant Certificate at the time of surrender. 
  
 This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the
Warrant Agent. 
  
 (Remainder of page intentionally left blank;
signature page follows) 
  

 Exhibit A 

 WITNESS the facsimile signatures of the proper officers of the Company and its corporate seal.

  
 Dated:
                             
  

	DAYSTAR TECHNOLOGIES, INC. 
		
	By:	 	 
	 	

	 	 	Name:
	 	 	Title:

  

		
	Attest:	 	 
	 	

	 	 	Secretary

  
 Countersigned: 
  

		
	By:	 	 
	 	

	 	 	Authorized Officer

  

 Exhibit A 

 Exhibit B 
  

VOID AFTER 5 P.M. PACIFIC TIME ON
                            , 2008 
  
 WARRANTS TO PURCHASE COMMON STOCK 
  

	 Z            
	  	                         Class B
Warrants

  
 DayStar Technologies,
Inc. 
  
 CUSIP
                     
  
 THIS CERTIFIES THAT 
  
 or registered assigns, is the registered holder of the number of Class B Warrants (“Class B Warrants”) set forth above. As provided in the Warrant
Agreement (the “Warrant Agreement”), and as more fully described herein, each Class B Warrant entitles the holder thereof to purchase from DayStar Technologies, Inc., a corporation incorporated under the laws of the State of Delaware (the
“Company”), subject to the terms and conditions set forth hereinafter and in the Warrant Agreement, at any time on or after
                    , 2003 and before the close of business on
                , 2008 (“Expiration Date”), one fully paid and non-assessable share of Common Stock of the Company (“Common
Stock”) upon presentation and surrender of this Warrant Certificate, with the instructions for the registration and delivery of Common Stock filled in, at the stock transfer office in Glendale, California, of U.S. Stock Transfer
Corporation, Warrant Agent of the Company (“Warrant Agent”) or of its successor warrant agent or, if there be no successor warrant agent, at the corporate offices of the Company, and upon payment of the Exercise Price (as defined in
the Warrant Agreement) and any applicable taxes paid either in cash, or by certified or official bank check, payable in lawful money of the United States of America to the order of the Company. Each Class B Warrant initially entitles the holder to
purchase one share of Common Stock for $            . The number and kind of securities or other property for which the Class B Warrants are exercisable are subject to adjustment in
certain events, such as mergers, splits, stock dividends, reverse splits and the like, to prevent dilution. All Class B Warrants not theretofore exercised will expire on the Expiration Date. 
  
 This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of                     , 2003, between the Company and the Warrant Agent, to all of which terms,
provisions and conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is incorporated herein by reference and made a part hereof and reference is made to the Warrant Agreement for a

  

 Exhibit B 

 full description of the rights, limitations of rights, obligations, duties and immunities of the Warrant Agent, the
Company and the holders of the Warrant Certificates. Copies of the Warrant Agreement are available for inspection at the stock transfer office of the Warrant Agent or may be obtained upon written request addressed to the Company at DayStar
Technologies, Inc., 900 Golden Gate Terrace, Suite A, Grass Valley, California 95945, Attention: President. 
  
 The Company shall not be required upon the exercise of the Class B Warrants evidenced by this Warrant Certificate to issue fractions of Class B Warrants,
Common Stock or other securities, but shall make adjustment therefor in cash on the basis of the current market value of any fractional interest as provided in the Warrant Agreement. 
  
 In certain cases, the sale of securities by the Company upon exercise of Class B Warrants would violate the securities laws
of the United States, certain states thereof or other jurisdictions. The Company has agreed to use all commercially reasonable efforts to cause a registration statement to continue to be effective during the term of the Class B Warrants with respect
to such sales under the Securities Act of 1933, and to take such action under the laws of various states as may be required to cause the sale of securities upon exercise to be lawful. However, the Company will not be required to honor the exercise
of Class B Warrants if, in the opinion of the Board of Directors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In certain cases, the Company may, but is not required to, purchase Class B Warrants submitted for
exercise for a cash price equal to the difference between the market price of the securities obtainable upon such exercise and the exercise price of such Class B Warrants. 
  
 This Warrant Certificate, with or without other Certificates, upon surrender to the Warrant Agent, any successor warrant
agent or, in the absence of any successor warrant agent, at the corporate offices of the Company, may be exchanged for another Warrant Certificate or Certificates evidencing in the aggregate the same number of Class B Warrants as the Warrant
Certificate or Certificates so surrendered. If the Class B Warrants evidenced by this Warrant Certificate shall be exercised in part, the holder hereof shall be entitled to receive upon surrender hereof another Warrant Certificate or Certificates
evidencing the number of Class B Warrants not so exercised. 
  
 No
holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose
whatever, nor shall anything contained in the Warrant Agreement or herein be construed to confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof or give or withhold consent to any corporate action (whether upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any merger,
recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, conveyance or otherwise) or to receive notice of meetings or other actions affecting stockholders (except as
provided in the Warrant Agreement) or to receive dividends or subscription rights or otherwise until the Class B Warrants evidenced by this Warrant Certificate shall have been exercised and the Common Stock purchasable upon the exercise thereof
shall have become deliverable as provided in the Warrant Agreement. 
  

 Exhibit B 

 If this Warrant Certificate shall be surrendered for exercise within any period during which the transfer
books for the Company’s Common Stock or other class of stock purchasable upon the exercise of the Class B Warrants evidenced by this Warrant Certificate are closed for any purpose, the Company shall not be required to make delivery of
certificates for shares purchasable upon such transfer until the date of the reopening of said transfer books. 
  
 Every holder of this Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that: 
  
 (a) this Warrant Certificate is
transferable on the registry books of the Warrant Agent only upon the terms and conditions set forth in the Warrant Agreement, and 
  
 (b) the Company and the Warrant Agent may deem and treat the person in whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
The Company shall not be required to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of Class B Warrants evidenced by this Warrant Certificate until any tax which may be payable in respect thereof by
the holder of this Warrant Certificate pursuant to the Warrant Agreement shall have been paid, such tax being payable by the holder of this Warrant Certificate at the time of surrender. 
  
 This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the
Warrant Agent. 
  
 (Remainder of page intentionally left blank;
signature page follows) 
  

 Exhibit B 

 WITNESS the facsimile signatures of the proper officers of the Company and its corporate seal.

  
 Dated:
                     
  

	DAYSTAR TECHNOLOGIES, INC. 
		
	By:	 	 
	 	

	 	 	Name:
	 	 	Title:

  

		
	Attest:	 	 
	 	

	 	 	Secretary

  
 Countersigned: 
  

		
	By:	 	 
	 	

	 	 	Authorized Officer

  

 Exhibit BIntellectual Property Assignment Agreement

 Exhibit 10.10 
  
 Execution Copy 
  
 INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT 
  
 This Intellectual Property Assignment Agreement (this “Agreement”) is made and entered into this 8th day of December, 1998 (the “Effective
Date”) by and between Dr. Eric D. Cole, an individual whose address is 14076 Winding Ridge Lane, Centerville, VA 20121 (“Cole”), and DayStar Technologies, Inc., a Delaware corporation whose address is 303 South Broadway, Denver,
Colorado 80209 (the “Company”). Cole and DayStar are hereinafter sometimes referred to individually as a “Party” and collectively as the “Parties.” 
  
 RECITALS: 
  
 A. Cole and the Company have previously entered into that certain Patent License Agreement (the “License Agreement”) dated effective as of June
15, 1996, pursuant to which Cole licensed to the Company certain rights relating to Patent No. 5,437,736 (the “Patent”). 
  
 B. Cole and the Company have previously entered into that certain Intellectual Property Assignment Agreement, dated as of April 30, 1998 (the
“Assignment Agreement”), whereby Cole assigned to the Company all of his right, title and interest in and to the concentrator technology (the “Technology”) embodied in the patent application filed by Cole with the United States
Patent and Trademark Office (“USPTO”), USPTO Reference No. 08/914,323 (the “Patent Application”). 
  
 C. Cole and the Company have previously entered into that certain Employee Invention Disclosure and Confidentiality Agreement dated as of May 4, 1998 (the
“Inventions Agreement”) pursuant to which Cole agreed that inventions (as defined therein) were the sole and exclusive property of the Company. Cole terminated employment with the Company on June 9, 1998. 
  
 D. Cole and the Company desire to enter into this Agreement in order to amend
certain provisions of the Assignment Agreement and to assign all of Cole’s right, title and interest in and to the Patent and Improvements, consistent with the requirements of the Inventions Agreement. “Improvements” shall mean any
modification, variation or revision to or any new and useful process, apparatus, composition of matter, or article of manufacture derived from the Patent, the Patent Application or the Technology which was conceived by Cole prior to the execution of
this Agreement and consistent with the Inventions Agreement. 
  
 E. It is the intention of the Parties that this Agreement shall supersede in its entirety the License Agreement and the Assignment Agreement, but that the Inventions Agreement shall remain in full force and effect. 
  
 NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 
  

 1 

 1. Assignment. Cole hereby sells, conveys, assigns and transfers to the Company Cole’s entire
right, title and interest in and to the Technology, the Patent, the Patent Application, and all continuation, divisional, continuation-in-part and reissue applications, the Improvements and the technology, know-how and inventions embodied therein,
all foreign and United States copyright, trade secret, trademark, service mark and other ownership rights related to the Technology, the Patent and the Patent Application, including, without limitation, all documentation, software, work product,
research, memoranda, market studies, trademark searches and related opinions, patent, trademark or copyright applications or registrations, whether foreign or domestic, feasibility studies, discoveries, inventions (whether conceived or reduced to
practice), know-how and good will, and all agreements and contracts in connection with the use, development, maintenance, advertisement or marketing of the Patent and the Patent Application and the right to sue for past infringement of the Patent
and the Technology (collectively referred to hereafter as the “Intellectual Property”). Cole has simultaneously herewith executed an assignment of the Patents and Patent Application substantially in the form of Exhibit A attached
hereto for recording with the USPTO. 
  
 2. Payments to
Cole. In consideration of the assignment contained herein, the Company agreed to pay Cole the following: 
  
 (a) Assignment Fee. $30,000 within 24 months after the date of this Agreement. 
  
 (b) Royalty. On the fifteenth day following the end of
each calendar quarter during the term of this Agreement, commencing with the first calendar quarter ending after the date of this Agreement, the Company shall pay Cole a royalty (the “Royalty”) equal to the sum of: 
  
 (i) Twenty percent (20%) of the first $1,000,000 of: (A)
gross royalties collected by the Company after the Effective Date for licenses granted by the Company to the Intellectual Property or (B) from the gross proceeds received from the Sale of the Intellectual Property (as hereinafter defined) after the
Effective Date (the gross royalties and gross proceeds hereafter referred to as the “Fees”); fifteen percent (15%) of the second $1,000,000 of such Fees collected after the Effective Date; and ten percent (10%) of all remaining Fees
collected after the Effective Date; provided, however, that Cole shall not be entitled to a Royalty with respect to any Sale of the Intellectual Property (AA) as to which he has exercised his right of first refusal as set forth in Section 6, or (BB)
in connection with which the Company is dissolved and its assets liquidated; and 
  
 (ii) Two percent (2%) of the gross revenues collected from any and all products produced and sold by the Company covered by the claims of
either or both the Patent or the Patent Application. 
  
 (c) The term “Sale of the Intellectual Property” shall mean a transfer of all of the Company’s right, title and interest in and to all or any part of the Intellectual Property in consideration of the receipt by the Company or
its shareholders solely of cash or promissory notes, whether by a sale of the asset or by merger or consolidation. If the 

  

 2 

 
Intellectual Property is sold in connection with the sale of other assets of the Company, the amount of consideration allocable to the Sale of the
Intellectual Property shall equal the amount allocated to the Intellectual Property by the parties to such sale. Such allocation shall be binding on the Parties for purposes of determining any Royalty payable under Section 2(b)(i)(B) or the purchase
price for purposes of Section 6 of this Agreement. 
  
 (d) In the event any product produced by the Company contains intellectual property in addition to the Intellectual Property, whether licensed by the Company from a third party or developed by the Company, the Royalty specified in the
foregoing subsection (ii) payable to Cole shall be reduced to reflect the relative contribution of the Intellectual Property to the product. By way of example, if it is determined that the Intellectual Property’s relative contribution to the
product is 50%, then Cole shall be entitled to a Royalty of 1%. The determination of the relative contribution of the Intellectual Property to the product shall be made in good faith by the Company, and the Company shall give written notice to Cole
of such determination, which notice shall contain a detailed explanation of the basis for such determination. If Cole disagrees with such determination, he shall furnish written notice of his objections to the Company within 30 days after his
receipt of the Company’s written notice. Thereafter, the Company and Cole shall use their reasonable efforts to resolve any differences for a period of 60 days after the Company’s receipt of the Cole notice. If the Parties are unable to
agree within such 60-day period, thereafter the Parties shall submit the determination of the relative contribution of the Intellectual Property to the product to binding arbitration in Denver, Colorado. The Company shall reimburse Cole for
transportation, meals and lodging expenses incurred by during the hearing phase of any such arbitration. 
  
 (e) The Company and Cole shall use their good faith efforts to agree upon a single arbitrator selected by the mutual agreement of the
Parties from the panel of arbitrators of the American Arbitration Association of Denver, Colorado, or its successor. If the parties are unable to agree on a single arbitrator, the number and identity of the arbitrators shall be determined in
accordance with the rules and practices of the American Arbitration Association from time to time in force. The arbitration shall be conducted in accordance with the rules and practices of the American Arbitration Association, except that if such
rules and practices differ from the Colorado state rules of civil procedure or any other provisions of such state’s laws then in effect, such state rules and law shall govern. This submission and agreement to arbitrate shall be specifically
enforceable. Arbitration may proceed in the absence of one party if notice of the proceeding has been given to such party. The Parties agree to abide by all awards rendered in such proceedings. Such awards shall be final and binding on all Parties
to the extent and in the manner provided by the Colorado state rules of civil procedure. All awards may be filed with the clerk of one or more courts, state or federal, having jurisdiction over the party against whom such award is rendered or such
party’s property, as a basis of judgment. No party shall be considered in default hereunder during the pendency of arbitration proceedings relating to such matter. 
  

 3 

 (f) In no event shall the Royalty payable to Cole pursuant to Section 2(b)(ii) be reduced
to less than 0.5%. 
  
 (g) Except as set forth in
Section 2(h) below, the Royalty set forth in this Section 2(b) shall be payable to Cole until the expiration of the Patent or any patent issued pursuant to the Patent Application or any continuation, continuation in part, divisional, or foreign
application claiming the priority of the Patent, Patent Application or any continuation, continuation in part or divisional thereof so long as there is a U.S. counterpart with an unexpired term remaining. 
  
 (h) Termination of Royalty and Obligations under Sections
6, 7 and 8. The Company’s obligations to pay the Royalty to Cole shall terminate upon the occurrence of any of the following events: 
  
 (i) the sale to any single purchaser or related group of purchasers, in one transaction or a series of related transactions, of all of the
outstanding Class A Common Stock of the Company (or all of the Common Stock of the Company issued upon conversion of the same), 
  
 (ii) the Sale of the Intellectual Property, whether alone or in conjunction with the sale of all or substantially all of the assets of the
Company; provided that if the Sale of the Intellectual Property consists of the sale of the Company’s entire right, title and interest in and to only a part of the Intellectual Property, the obligation to pay the Royalty shall terminate as to
the Intellectual Property that is sold but shall continue as to the Intellectual Property that is not sold; or 
  
 (iii) the grant to Cole of a license pursuant to Section 7 hereof, 
  
 (i) The Company’s obligation to pay the Royalty shall terminate with respect to the events specified in
the foregoing subsections (h)(i) and (h)(ii) as of the closing date of such sale (or, in the case of a series of transactions, the closing of the final sale) and, with respect to the event specified in subsection (h)(iii) above, upon Cole’s
receipt of such license. 
  
 (j) Upon the closing
of the first to occur of any event described in subsection (h), including the first event in a series of related transactions, the Company’s obligations under Sections 6, 7 and 8 below shall terminate and be of no further force or effect;
provided that if the Sale of the Intellectual Property consists of the sale of the Company’s entire right, title and interest in and to only a part of the Intellectual Property, Cole’s rights under Section 6 shall continue as to the
Intellectual Property that is not sold. 
  
 (k)
Upon the Cole Entity’s receipt of the license referred to in subsection (h)(iii), the Company’s obligations under Sections 6 and 8 below shall continue. 
  
 3. Documents and Materials. Upon execution hereof, Cole shall deliver to the Company all tangible documents and
materials in connection with the Intellectual Property, including, without limitation, existing documentation, specifications and performance 
  

 4 

 
characteristics and design information related to the Intellectual Property. At the request of the Company, Cole agrees to provide the Company with
reasonable documentation of all items of Intellectual Property and inventions (as defined in the Inventions Agreement) assigned by him to the Company pursuant to this Agreement or that is owned by the Company pursuant to the Inventions Agreement and
that has not been previously documented. 
  
 4. Representations
and Warranties of Cole. Cole represents and warrants to the Company that: (a) Cole owns all right, title and interest in and to the Intellectual Property; (b) Cole has full power and authority to enter into this Agreement; (c) this Agreement is
enforceable against Cole in accordance with its terms; (d) this Agreement does not violate any agreement or contract to which Cole is a party or by which the Intellectual Property is bound; (e) the Intellectual Property is not subject to any liens
or encumbrances; (f) this Agreement provides for the assignment of all rights and property to the Company to enable the Company to own, operate, enhance or modify the Intellectual Property; and (g) there are no claims pending or threatened against
Cole or any other person relating to the Intellectual Property. 
  
 5. Indemnification and Set-Off 
  
 (a) Indemnification. Cole agrees to indemnify and hold the Company, and its directors, officers, shareholders, employees and agents harmless against and in respect of (a) any and all damages resulting from any misrepresentation,
breach of representation, or warranty or nonfulfillment of any agreement on the part of Cole under this Agreement; and (b) any and all actions, suits, proceedings, demands, assessments, judgments, costs and other expenses (including reasonable legal
fees) incident to any of the foregoing. 
  
 (b)
Notice of Claims for Indemnification. Notice of any claims desired to be asserted by the Company against Cole with respect to any matter for which the Company claims indemnification pursuant to this Section shall be served by the Company upon
Cole promptly. Any such notice shall set forth in reasonable detail the basis for the claim asserted. Within 20 days following its receipt of such notice, Cole shall send written notice to the Company stating: 
  
 (i) Whether in his view the claim is one for which the
Company is entitled to indemnification (a “Covered Claim”), and 
  
 (ii) If he acknowledges that the claim is a Covered Claim whether he chooses to dispute its validity by participating in any defense of any action brought by a third party with respect to such claim. 
  
 If Cole fails to furnish such notice with such 20-day period, such failure shall constitute
his agreement that the claim is a “Covered Claim” and his election not to participate in the defense of any action on the Claim. 
  
 If Cole fails to furnish such notice or states in such notification that the claim is not a Covered Claim or that he declines to dispute the validity of said Claim, the
Company may defend or settle the claim without the participation of Cole, reserving any rights it might have with respect to indemnification. If Cole acknowledges that the claim is a Covered Claim, then Cole may participate, at his own cost and
expense, in any discussions and proceedings relating thereto, provided that he has so notified the Company of his intention to do so in such notice. 
  

 5 

 Any settlement or compromise made by the Company in accordance with this Section 5 without the participation of Cole or
any final judgment or decree entered in any claim, suit or action defended only by the Company alone shall be deemed to have been consented to by, and shall be obligatory and binding upon, Cole as fully as if Cole alone had assumed the defense
thereof and a final judgment or decree had been entered in such suit or action, or with regard to such claim by a court of competent jurisdiction for the amount of such settlement or compromise, satisfaction, judgment or decree, subject only to the
right of Cole to dispute that any such claim is a Covered Claim if, but only if, Cole has served the proper notice within the proper time asserting that the claim is not a Covered Claim. 
  
 6. Right of First Refusal. 
  

(a) In the event of a proposed Sale of the Intellectual Property (as defined in Section 2(c)), Cole shall have the right of first
refusal to purchase the Intellectual Property on the same terms as offered to an unrelated, unaffiliated third party for the Intellectual Property. 
  
 (b) The Company shall deliver notice (the “Transfer Notice”) to Cole of such pending sale, together with all of the terms of
such sale, and Cole shall thereafter have 10 days in which to deliver written notice to the Company of his intention to exercise the right of first refusal. The closing of any purchase by Cole of the Intellectual Property pursuant to this Section 6
shall occur no later than 30 days following receipt by the Company of Cole’s written election to purchase. 
  
 (c) In the event Cole determines not to exercise the right of first refusal contained in this Section 6, the Company shall have 90 days to
transfer the Intellectual Property to the unrelated, unaffiliated third party specified in the Transfer Notice, provided that the terms of such transfer are no more favorable to the third party than those offered to Cole in the Transfer Notice.

  
 (d) If the Company fails to transfer the
Intellectual Property to such third party within 90 days, prior to any attempted subsequent transfer of the Intellectual Property, it shall comply with the terms of this Section 6. 
  

 6 

 7. Non-exclusive License. In the event the Company fails (a) to make any payment due and owing to
Cole within 15 days after notice by Cole to the Company that the Company is in default of any payment obligations hereunder, or (b) fails to earn at least $50,000 in gross revenues subject to royalties as stated in Section 2(b) within 48 months of
the Effective Date and at least $50,000 in gross revenues subject to royalties as stated in Section 2(b) for each of the two twelve month periods thereafter, then an entity designated by Cole in which Cole owns not less than 51% of the voting equity
interests (the “Cole Entity”) shall have the right to request from the Company, and the Company shall grant to the Cole Entity. a non-exclusive, non-transferable license to practice the Patent and any patent issued pursuant to the Patent
Application in the form as is attached hereto as Exhibit B upon Cole’s satisfaction of the following conditions precedent: 
  
 (i) The Cole Entity shall pay to the Company a license fee of $20,000, provided that the Company is not in default of its royalty
obligations under Section 2(b); if the Company is in default of such obligation, then the Cole Entity shall be entitled to offset any of the Company’s defaulted payment obligations against the $20,000 license fee and any balance shall remain
due and payable by the Company. 
  
 (ii) Cole
shall furnish to the Company a balance sheet of the Cole Entity, as of a date within 10 days of the request to grant the license, audited by independent public accountants, showing a tangible net worth of not less than $200,000; 
  
 (iii) Cole shall have converted all shares of Class A Common
Stock of the Company owned by him into shares of Common Stock; 
  
 (iv) Cole shall have requested such license within 60 days after his receipt of notice pursuant to subsection (v) below of the occurrence of the event triggering his right to receive such license. If Cole shall fail
to make such request within 60 days after such notice, his rights as to that triggering event under this subsection shall terminate and be null, void and of no further force or effect. The occurrence of another triggering event thereafter shall
entitle Cole to request or receive such a license as to that event; and 
  
 (v) The Company shall inform Cole of the occurrence of a triggering event within 30 days after its occurrence and shall inform Cole of his rights under this Section 7 as to such event; 
  
 PROVIDED, HOWEVER, THAT if the triggering event is the failure to meet either the $50,000
gross revenue threshold for the 48 months following the date hereof or the $50,000 gross revenue threshold for each of the two twelve-month periods thereafter, the Company shall have the right to pay to Cole in cash $30,000 in lieu of the
satisfaction of those requirements. Upon such payment, Cole shall not have the right to receive the foregoing license, and the triggering events specified in Section 7(b) above shall no longer be of any force or effect. 
  
 8. Prosecution of Patent Applications; Maintenance Fees. The Company
shall have the right, to be exercised at its discretion, to file, prosecute and maintain all patent applications that are the property of the Company and shall have the right, to be exercised at its discretion, to determine whether and where to file
a patent application, or to abandon the prosecution or maintenance of any patent or patent application for inventions or property of the Company. If the Company decides not to file, prosecute, or maintain any patent or patent application for which
Cole is an inventor or joint inventor, the Company shall notify Cole of its decision 30 days in advance of the relevant patent office deadline and Cole shall have the right to file, prosecute or maintain the patent or patent application. Upon
receiving timely notice from the Company of the Company’s decision not to file, prosecute or maintain the patent or patent application, Cole shall be responsible for any extension of time fees associated with filing, prosecuting or maintaining
the patent or patent application. Cole agrees to cooperate with and to assist the Company in the preparation and filing of all such patent application, including, without limitation, releasing 
  

 7 

 information and documents and executing necessary documents related thereto. Cole shall further cooperate with and assist
the Company in the protection and enforcement of the Intellectual Property as reasonably requested by the Company. The Company will compensate Cole at $100 per hour plus expenses for his time spent in rendering such cooperation and assistance if
requested by the Company, except for Cole’s execution of necessary documents or review of patent applications, as to which Cole shall not be entitled to receive any compensation. 
  
 9. Miscellaneous. 
  
 (a) No Partnership. It is not the intent of the Parties to create a partnership or joint venture or to assume partnership
responsibility or liability. 
  
 (b) Further
Assurances. Cole agrees to cooperate with the Company in providing further information and executing any further documents necessary or desirable to effect the terms of this Agreement. The Company will compensate Cole at $100 per hour plus
expenses for his time spent in rendering such cooperation and assistance if requested by the Company and if unrelated to prosecuting the Patent Application, except for Cole’s execution of necessary documents or review of patent applications, as
to which Cole shall not be entitled to receive any compensation. 
  
 (c) Governing Law and Construction. This Agreement will be governed by and construed in accordance with the laws of the State of Colorado without reference to its conflict-of-laws principles. This
Agreement’s final form resulted from review and negotiations among the Parties and their attorneys, and no part of this Agreement should be construed against any Party because of authorship. 
  
 (d) Recording. Exhibit A to this Agreement shall be
recorded with the USPTO promptly following execution hereof. 
  
 (e) Forum for Dispute Resolution. If any dispute arises among the Parties concerning the interpretation or performance of any portion of this Agreement which the Parties are unable to resolve themselves, and
any Party brings an action against any other Party seeking a declaratory order, specific performance, damages or any other legal or equitable relief based on this Agreement, the Parties agree that the forum for any such action shall be an
appropriate federal or state court in Colorado having jurisdiction, and further agree that the prevailing Party in any such action, as determined by the court, shall be awarded its reasonable attorneys’ fees and costs in addition to any relief
or judgment the court awards. 
  
 (f) Entire
Agreement; Amendment. This Agreement, together with exhibits, constitutes the entire agreement between the Parties with respect to the subject matter contained herein and supersedes any previous oral or written communications, representations,
understandings or agreements with respect thereto, except that certain provisions of the Inventions Agreement shall remain in full force and effect as set forth in Section 8 of the Inventions Agreement. To the extent that any of the provisions of
the Inventions Agreement that survived the termination of Cole’s employment on June 9, 1998 by virtue of said Section 8 are inconsistent with any of the provisions of this 
  

 8 

 
Agreement, the terms and provisions of this Agreement shall be deemed to have superseded any such conflicting provisions of the Inventions Agreement.
Provisions in this Agreement shall be considered in conflict with any surviving provisions of the Inventions Agreement only if the two provisions require inconsistent results. The terms of this Agreement may be modified only in writing, signed by
authorized representatives of both Parties. 
  
 (g) Successors and Assigns; Assignability. This Agreement will be binding upon the Parties’ respective successors and permitted assigns. The Company may assign this Agreement to any person without the prior written consent of
Cole. This Agreement may not be assigned by Cole without the prior written consent of the Company. 
  
 (h) Notice. Any notice, request, consent, demand or other communication required to be given under this Agreement will be in
writing and will be given by mailing the same, first-class, postage prepaid to the appropriate set forth on the first page of this Agreement or to such other person or at such other address as may hereafter be designated by like notice. Notices by
mail will be considered delivered and become effective three (3) days after the mailing thereof. 
  
 (i) Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be
an original, but all of which together shall constitute one and the same instrument. 
  
 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the date first above written. 
  

	 /s/    ERIC D. COLE

	DR. ERIC D. COLE
	
	 DAYSTAR TECHNOLOGIES, INC.,
 a Delaware corporation

		
	 By
	 	 /s/    JOHN R. TUTTLE

	 Name: 
	 	 John R. Tuttle

	 Title: 
	 	 President

  

 9 

 ASSIGNMENT 
  
 WHEREAS, Dr. Eric D. Cole, an individual whose address is 14076 Winding Ridge Lane, Centreville, VA 20121, is the owner of all right title and interest in
and to U.S. Patent No. 5,437,736 and U.S. Patent Application, USPTO Reference No. 08/914,323 ; 
  
 WHEREAS, DayStar Technologies, Inc., a Delaware corporation whose address is 303 South Broadway, Denver, Colorado 80209, is desirous of acquiring said interest of Dr. Eric D. Cole. 
  
 NOW THEREFORE, be it known that for certain good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, Dr. Eric D. Cole does irrevocably sell, assign and transfer to DayStar Technologies, Inc., its successors, legal representatives and assigns, the aforesaid patent and application for the
territory of the United States of America and all continuation, divisional, continuation-in-part and reissue applications, all patent applications in foreign countries, all applications pursuant to the Patent Cooperation Treaty and all applications
for extension filed or to be filed for the invention, and all Letters Patent, Invention Registrations, Utility Models, Extensions or Reissues and other patent rights, obtained for the invention in the United States or any other country; Dr. Eric D.
Cole also assigns any right, title or interest in and to the said invention which has not already been transferred to DayStar Technologies, Inc. and the right to sue for any past infringements of the patent and patent application; Dr. Eric D. Cole
warrants that no assignment has been made of the invention, application or patent therefor to a party other than DayStar Technologies, Inc. and is under no obligation to make any assignment of the invention, application, or patent therefor to any
other party; and Dr. Eric D. Cole further agrees to cooperate with DayStar Technologies, Inc. hereunder in the obtaining and sustaining of any and all such Letters Patent and in confirming DayStar Technologies, Inc.’s exclusive ownership of the
invention, but at the expense of DayStar Technologies, Inc. 
  
 The Commission of Patents is hereby authorized and requested to transfer ownership of the patent and to issue the Letters Patent solely in accordance with the terms of this Assignment, to DayStar Technologies, Inc., its successors, legal
representatives and assigns, as the assignee of the entire right, title and interest therein. 
  
 To the extent that that the patent application has been previously assigned, this assignment shall constitute confirmation of such assignment. 
  
 Dr. Eric D. Cole possesses under certain circumstances the right to receive a non-exclusive license to practice the patent
and patent application upon the terms and conditions set forth in an agreement entitled Intellectual Property Assignment Agreement dated December 8, 1998. 
  
 IN WITNESS WHEREOF, Dr. Eric D. Cole has executed this Assignment as of the day indicated hereunder. 
  

 A-1 

	
	/s/    ERIC D. COLE        
	

	 Dr. Eric D. Cole
 Date: December 29,
1998

  

 A-2 

	 State of Virginia
  
 County of Fairfax
	 	 )
 ) ss.
 )

  
 Before me, a Notary
Public in and for said County and State, personally appeared Dr. Eric D. Cole, who acknowledged himself to be Dr. Eric D. Cole and that executed the foregoing instrument for the purposes and considerations therein expressed, by signing his name.

  
 Given under my hand and seal of office this 29th day of December, 1998. 
  

	
	/s/    TERRY L. PURDY        
	

	Notary Public

  
 My Commission
Expires: Aug. 31, 1999 
  

 A-3 

 EXHIBIT B 
 NONEXCLUSIVE LICENSE AGREEMENT 
  
 This
non-exclusive License Agreement (the “Agreement”), executed to be effective as of                 ,
        , is by and between
                                , a
                                 corporation the “Cole Entity”) not less
than 51% of whose voting interests are owned by Dr. Eric D. Cole, an individual (“Cole”), Cole and DayStar Technologies, Inc., a Delaware corporation (“the Company”). Cole, Cole Entity and the Company are hereinafter sometimes
referred to individually as a “Party” and collectively as the “Parties.” 
  
 RECITALS 
  
 A. Cole and
the Company have previously entered into that certain Intellectual Property Assignment Agreement, dated December 8, 1998 (the “Assignment”), pursuant to which Cole assigned to the Company all of his right, title and interest in and to
certain Intellectual Property (as defined in the Assignment). 
  
 B. Pursuant to the Assignment, upon the occurrence of certain events, the Company agreed to grant the Cole Entity a non-exclusive, non-transferable license to use the Licensed Patents (as defined herein). 
  
 C. Such events have occurred, and the Company desires to grant Cole Entity a
non-exclusive, non-transferable license to use the Licensed Patents. 
  
 NOW,
THEREFORE, in consideration of the mutual covenants and conditions contained herein, the sufficiency of which is hereby acknowledged, the Parties as follows: 
  
 1. DEFINITIONS 
  
 (a) “Pending Patent Application” shall mean U.S. Patent Application Serial No. 08/914,323. 
  
 (b) “Licensed Patents” shall mean (i) any unexpired patent issuing
from the Pending Patent Application or any divisional, continuation, continuation-in-part, reissue, or reexamination United States or foreign patent application claiming priority from the Pending Patent Application and (ii) U.S. Patent No.
5,437,736. 
  
 (c) “Technology” shall mean all ideas,
concepts, information, techniques and inventions relating to the subject matter of the Pending Patent Application and Licensed Patents, whether or not patentable. 
  
 (d) “Improvements” shall mean any modification, variation or revision to or any new and useful process, apparatus,
composition of matter, or article of manufacture derived from the Technology, which is conceived by Cole, the Cole Entity or DayStar subsequent to the execution of this Agreement. 
  

 B-1 

 2. GRANT; ROYALTY 
  
 (a) Grant of License; Disclaimer. The Company hereby grants to Cole Entity a non-exclusive, worldwide, non-transferable right and license to
practice any method embodying any portion of the claims of the Licensed Patents. Nothing contained herein is intended nor shall it be construed to grant to Cole Entity any right to manufacture any products developed by the Company utilizing the
Technology. 
  
 (b) No Sublicense or Transfer of Licensed
Patents. Cole Entity may not sublicense or transfer the Licensed Patents to any other person or entity. 
  
 (c) Royalty. On the fifteenth day following the end of each calendar quarter during the term of this Agreement, commencing with the first calendar
quarter ending after the date of this Agreement, Cole Entity shall pay the Company a royalty (the “Royalty”) equal to two percent (2%) of the gross revenues collected from any and all products produced and sold by Cole Entity covered by
the claims of either or both the Patent or the Patent Application. 
  
 (d) In the event any product produced by Cole Entity contains intellectual property in addition to the intellectual property embodied in the Licensed Patents, whether licensed by the Cole Entity from a third party or developed by the Cole
Entity, the Royalty payable to the Company shall be reduced to reflect the relative contribution of the Licensed Patents to the product. By way of example, if it is determined that Licensed Patents’ relative contribution to the product is 50%,
then the Company shall be entitled to a Royalty of 1%. The determination of the relative contribution of the Licensed Patents to the product shall be made in good faith by the Cole Entity, and the Cole Entity shall give written notice to the Company
of such determination, which notice shall contain a detailed explanation of the basis for such determination. If the Company disagrees with such determination, it shall furnish written notice of its objections to the Cole Entity within 30 days after
its receipt of the Cole Entity’s written notice. Thereafter, the Cole Entity and the Company shall use their reasonable efforts to resolve any differences for a period of 60 days after the Cole Entity’s receipt of the Company’s
notice. If the Parties are unable to agree within such 60-day period, thereafter the Parties shall submit the determination of the relative contribution of the Licensed Patents to the product to binding arbitration in Denver, Colorado. The Company
shall reimburse Cole for transportation, meals and lodging expense incurred by during the hearing phase of any such arbitration. 
  
 (e) The Cole Entity and the Company shall use their good faith efforts to agree upon a single arbitrator selected by the mutual agreement of the Parties
from the panel of arbitrators of the American Arbitration Association of Denver, Colorado, or its successor. If the Parties are unable to agree on a single arbitrator, the number and identity of arbitrators shall be determined in accordance with the
rules and practices of the American Arbitration Association from time to time in force. The arbitration shall be conducted in accordance with the rules and practices of the American Arbitration Association, except that if such rules and practices
differ from the Colorado state rules of civil procedure or any other provision of such state’s laws then in effect, such state rules and law shall govern. This submission and agreement to arbitrate shall be specifically enforceable. Arbitration
may proceed in the absence of one Party if notice of the proceeding has been given to such Party. The Parties agree to abide by all awards rendered in such proceedings. Such awards shall be final and binding on all Parties to the extent and in the

  

 B-2 

 
manner provided by the Colorado state rules of civil procedure. All awards may be filed with the clerk of one or more courts, state or federal, having
jurisdiction over the Party against whom such award is rendered or such Party’s property, as a basis of judgment. No Party shall be considered in default hereunder during the pendency of arbitration proceedings relating to such matter.

  
 (f) In no event shall the Royalty payable to the Company
pursuant to Section 2(c) be reduced to less than 0.5%. 
  
 (g) The
Royalty shall be payable to the Company until the expiration of the Patent or any patent issued pursuant to the Patent Application or any continuation, continuation in part, divisional, or foreign application claiming the priority of the Patent,
Patent Application or any continuation, continuation in part or divisional thereof so long as there is a U.S. counterpart with an unexpired term remaining. 
  
 3. OWNERSHIP AND DISCLOSURE OF LICENSED PATENTS AND THE TECHNOLOGY 
  
 (a) Ownership of Licensed Patents. The Company shall exclusively own all rights in and to the Licensed Patents and the Technology, including patent
rights, trade secrets, copyrights and other intellectual property rights. 
  
 (b) Ownership of Improvements. All Improvements created or otherwise developed subsequent to the execution of this Agreement, including but not limited to copyrights, trade secrets, maskworks, trademarks, and
know-how, shall be the sole property of the Party creating or otherwise developing that Improvement and, if developed jointly by the Parties, shall be the joint property of the Parties. 
  
 4. NO REPRESENTATIONS OR WARRANTIES OR INDEMNIFICATION. 
  
 (a) No Representations or Warranties. The Company makes no representations and disclaims all warranties relating to,
and assumes no responsibility for: 
  
 (i) The
validity of the Licensed Patents; 
  
 (ii) The
freedom of Cole Entity to use the License granted hereunder without interfering with or infringing the rights of any third party; and 
  
 (iii) The safety or suitability for any purpose of the license granted hereunder. 
  
 THE COMPANY HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
AS TO THE USEFULNESS OR PERFORMANCE OF THE LICENSED PATENTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 
  

 B-3 

 (b) Release/Indemnification. Each of Cole and Cole Entity hereby releases the Company, its
directors, officers, shareholders, agents and employees from and against any responsibility for, and agrees to defend, indemnify and otherwise hold harmless the Company, its directors, officers, shareholders, agents and employees from and against
any claim, demand, loss, liability and expense (including, without limitations, attorneys’ fees and disbursements), arising in any way from or relating in any way to usage by Cole Entity of the Licensed Patents or of other activities of Cole or
Cole Entity relating to this Agreement. 
  
 (c) No
Consequential Damages. IN NO EVENT SHALL THE COMPANY BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY TYPE TO COLE OR COLE ENTITY OR ANY CUSTOMER OF COLE ENTITY. 
  
 (d) Maintenance. The Company shall have the right, to be exercised at its discretion, to maintain or abandon
maintenance of the issued patent, foreign or domestic, that is the property of the Company. If the Company decides not to maintain any patent for which Cole is an inventor or joint inventor, the Company shall notify Cole Entity of its decision 30
days in advance of the relevant patent office deadline and Cole Entity shall have the right to maintain the patent. Upon receiving timely notice from the Company of the Company’s decision not to maintain the patent, Cole Entity shall be
responsible for any extension of time fees associated with maintaining the patent. 
  
 5. CONFIDENTIALITY 
  
 (a) Confidentiality
Obligations. Each Party agrees to maintain as confidential all information relating to the Pending Patent Application and each Party specifically shall: 
  
 (i) limit access to information relating to the Pending Patent Application to only those employees of the Party having a need to know of
it for the purpose of this Agreement; 
  
 (ii) not
disclose information relating to the Pending Patent Application to any third party without the prior written consent of the Company (which consent shall not be withheld unreasonably); provided, however, that any such disclosure to a third party
shall be made only in confidence to the third party with an expressed understanding of the third party that the third party is not to disclose the information to others. 
  
 (b) Exceptions to Obligations. Nothing contained in Paragraph 5(a) shall in any way restrict or impair a Party’s
right to use, disclose or otherwise deal with any information which: 
  
 (i) is or becomes publicly known through no fault or wrongful act of the Company, Cole or Cole Entity, including through publication of a patent or patent application; or 
  
 (ii) is received from a third party, but only to the extent
rightfully permitted by the third party. 
  

 B-4 

 No portion of any information relating to the Licensed Patents shall be deemed to be within any of the exceptions of
Paragraph 5(b) solely on the basis that more general information of a corresponding nature is within any of such exceptions, or on the basis that elements of that portion of any information relating to the Pending Patent Application are
independently within any of the exceptions or on the basis that elements of that portion of any information relating to the Pending Patent Application are within any of the exceptions in a combination not substantially similar to that portion of the
Pending Patent Application. 
  
 6. ENFORCEMENT 
  
 If any of the Parties becomes informed that a third party is infringing any
of the Licensed Patents, such Party shall notify promptly the other Parties. The Company shall have the right, at its own expense, to enforce such patent, and if it bears all expenses associated therewith, to control the course of any such
proceedings and to retain any resulting recovery. 
  
 7. TERM/TERMINATION.

  
 (a) Term. Subject to the early termination provisions
of Section 7(b) below, the terms of this Agreement shall be for the life of the Patent or any patent issued pursuant to the Patent Application. 
  
 (b) Early Termination. This Agreement shall terminate automatically prior to the term set forth in Section 7(a) above in the event of any of the
following: 
  
 (i) A material breach by Cole or
Cole Entity of this Agreement that is not cured within thirty (30) days after receipt of written notice from the Company which sets forth the basis of the material breach and the Company’s intent to terminate this Agreement due to the material
breach; 
  
 (ii) To the extent permitted by law,
initiation of any bankruptcy or insolvency proceeding by Cole Entity. 
  
 (iii) Purported assignment or transfer of this Agreement by Cole Entity, or any part thereof, in contravention to this Agreement. 
  
 (c) Effect of Termination. In the event of an early termination pursuant to Section 7(b) above, Cole Entity shall
have no right or license to use the Licensed Patents. The provisions under Articles 1, 3, 4, 5, 6 and 8 survive termination of this Agreement. 
  
 8. MISCELLANEOUS 
  
 (a) Assignment. This Agreement is and shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted
assigns. The Company may assign this Agreement to any third party without the prior written consent of Cole or Cole Entity. This Agreement may not be assigned by Cole Entity except to an entity not less than 51% of whose voting equity interests are
owned by Cole and which agrees to be bound by the terms of this Agreement. Without the prior written consent of the Company, any reduction in ownership by Cole of his voting interests in Cole Entity below 51% shall constitute a prohibited assignment
hereunder. 
  

 B-5 

 (b) Amendments. No variation, amendment modification or waiver of any of the terms or conditions
hereof shall be deemed valid unless made in writing and signed by the Parties hereto. 
  
 (c) No Partnership. It is not the intent of the Parties to create a partnership or joint venture or to assume partnership responsibility or liability. 
  
 (d) Further Assurances. The Company agrees to cooperate with Cole and
Cole Entity in providing further information and executing any further documents necessary or desirable to effect the terms of this Agreement. Cole and Cole Entity will compensate the Company at $100 per hour plus expenses for time spent in
rendering such cooperation and assistance if requested by Cole or Cole Entity, except for the Company’s execution of necessary documents or review of patent applications, as to which the Company shall not be entitled to receive any
compensation. 
  
 (e) Governing Law and Choice of Forum.
This Agreement shall be construed and interpreted in accordance with the laws of the State of Colorado. If any dispute arises among the Parties concerning the interpretation or performance of any portion of this Agreement which the Parties are
unable to resolve themselves, and any Party brings an action against any other Party seeking a declaratory order, specific performance, damages or any other legal or equitable relief based on this Agreement, the Parties agree that the forum for any
such action shall be an appropriate federal or state court in Colorado having jurisdiction, and further agree that the prevailing Party in any such action, as determined by the court, shall be awarded its reasonable attorneys’ fees and costs in
addition to any relief or judgment the court awards. 
  
 (f)
Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. 
  
 (g) Waiver. Each Party agrees that any delay or omission on the part
of the other Party to enforce any right under this Agreement will not automatically operate as a waiver of such right or any other right, and a waiver of any right by a Party hereunder on one occasion will not be construed as a bar to or a waiver of
any right on any other occasion. 
  
 (h) Severability. Each
Party agrees that, should any provision of this Agreement be determined by a court of competent jurisdiction to violate or contravene any applicable aw or policy, such provision will be severed and modified by the court to the extent necessary to
comply with the applicable law or policy and such modified provision and the remainder of the provisions hereof will continue in full force and effect. 
  
 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the date first above written. 
  

 B-6 

	  

	DR. ERIC D. COLE
	
	 DAYSTAR TECHNOLOGIES, INC.,
 a Delaware corporation

		
	 By
	 	  

	 	 	 John R. Tuttle, President

	  

	 (Cole Entity)

		
	 By
	 	  

  

 B-7

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