**EXHIBIT 10.8**

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF1933, AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANOPINION OF COUNSEL REASONABLY SATISFACTORY TO STOCKERYALE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. 

 

Right to Purchase 18,621 Shares of 

Common Stock of StockerYale, Inc. (subject 

to adjustment as provided herein) 

 

**COMMON STOCK PURCHASE WARRANT**

 

 

STOCKERYALE, INC., acorporation organized under the laws of the State of Massachusetts (the “Company”), hereby certifies that, for value received, SMITHFIELD FIDUCIARY LLC, or assigns (the “Holder”), is entitled, subject to the termsset forth below, to purchase from the Company from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through July 13, 2012 (the “Expiration Date”), up to 18,621 fully paidand nonassessable shares of Common Stock (as hereinafter defined), $.001 par value, of the Company, at the Exercise Price (as defined below). The number and character of such shares of Common Stock and the Exercise Price are subject to adjustment asprovided herein. 

 

As used herein the following terms, unlessthe context otherwise requires, have the following respective meanings: 

 

(a) The term “Company” shall include StockerYale, Inc. and any corporation which shall succeed or assume the obligations of StockerYale, Inc. hereunder. 

 

(b) The term “Common Stock” includes (i) the Company’s CommonStock, par value $.001 per share, and (ii) any other securities into which or for which any of the securities described in (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

(c) The term “Other Securities” refers to any stock(other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu ofor in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. 

(d) The term “Exercise Price” shall mean $0.80 per share of Common Stock subject to thisWarrant. 

 

**1. Exercise of Warrant.**

 

1.1 Number of Shares Issuable upon Exercise. From and after the datehereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, by delivery of an original or fax copy of the exercise notice attached hereto as Exhibit A (the“Exercise Notice”), shares of Common Stock of the Company, subject to adjustment pursuant to Section 4. 

 

1.2 Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

 

(a) If the Company’s Common Stock is traded on anexchange or is quoted on the National or SmallCap Market of The Nasdaq Stock Market, Inc.(“Nasdaq”), then the closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date.

 

(b) If the Company’s Common Stock is not traded on anexchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board or BBX Exchange, then the mean of the average of the closing bid and asked prices reported for the last business day immediately preceding the Determination Date. 

 

(c) Except as provided in clause (d) below, if the Company’s CommonStock is not publicly traded, then as the Holder and the Company agree or in the absence of agreement by arbitration in accordance with the rules then in effect of the American Arbitration Association, before a single arbitrator to be chosen from apanel of persons qualified by education and training to pass on the matter to be decided. 

 

(d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then all amounts to bepayable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter,assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of the Warrant are outstanding at the Determination Date. 

 

**2. Procedure for Exercise.**

 

2.1 Delivery of Stock Certificates, etc., on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of thisWarrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as practicableafter the exercise of this Warrant in full or in 

 

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part, and in any event within 3 business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will causeto be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of dulyand validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equalto such fraction multiplied by the then Fair Market Value of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1or otherwise. 

 

2.2 Exercise. 

 

(a) Payment may be made either in (i) cash or by certified or official bankcheck payable to the order of the Company equal to the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, Common Stock and/or Common Stock receivable upon exercise of the Warrant in accordance with Section (b) below, or (iii) by acombination of any of the foregoing methods, for the number of Common Shares specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per theterms of this Warrant) and the Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. 

 

( b) Notwithstanding any provisions herein to the contrary, if the FairMarket Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determinedbelow) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Exercise Notice in which event the Company shall issue to the Holder a number ofshares of Common Stock computed using the following formula: 

 

X=Y (A-B)

            A 

 
Where  X=  the number of shares of Common Stock to be issued to the Holder   Y=  the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of suchcalculation)   A=  the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)   B=  Exercise Price (as adjusted to the date of such calculation)
 

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**3. Effect of Reorganization, etc.; Adjustment of Exercise Price.**

 

3.1 Reorganization, Consolidation, Merger, etc. In case at any timeor from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangementcontemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof asprovided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on suchexercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be,if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4. 

 

3.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, theCompany, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of the Warrant after the effective date of suchdissolution pursuant to Section 3.1 to a bank or trust company having its principal office in New York, NY, as trustee for the Holder of the Warrant. 

 

3.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to inthis Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of suchreorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer,the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in fullforce and effect after the consummation of the transactions described in this Section 3, then only in such event will the Company’s securities and property (including cash, where applicable) receivable by the holders of the Warrant be deliveredto the Trustee as contemplated by Section 3.2. 

 

**4.Extraordinary Events Regarding Common Stock.**In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of CommonStock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying

 

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the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event andthe denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall bereadjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the holder of this Warrant shall thereafter, on the exercise hereof as provided inSection 1, be entitled to receive shall be increased to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a)the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise. 

 

**5. Certificate as to Adjustments.**In each case of any adjustment orreadjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment orreadjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) theconsideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding ordeemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided inthis Warrant. The Company will forthwith mail a copy of each such certificate to the holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 11 hereof).****

 

**6. Reservation of Stock, etc., Issuable on Exercise of Warrant.**TheCompany will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. 

 

**7. Assignment; Exchange of Warrant.**Subject to compliance withapplicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”) with respect to any or all of the Shares. On the surrender for exchange of this Warrant,with the Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with evidence reasonably satisfactory to the Company demonstrating compliance with applicablesecurities laws, which shall include, without limitation, a legal opinion from the Transferor’s counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense but with paymentby the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the 

 

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transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof forthe number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. 

 

**8. Replacement of Warrant.**On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of thisWarrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender andcancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.****

 

**9. Registration Rights.**The Holder of this Warrant has been granted certain registration rights by the Company. These registration rights are setforth in a Registration Rights Agreement entered into by the Company and the Holder at or prior to the issue date of this Warrant. 

 

**10.****Maximum Exercise.**The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number ofshares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exerciseof this Warrant with respect to which the determination of this proviso is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock ofthe Company on such date. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder.Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction described in this paragraph may be revoked upon 75 days prior notice from the Holder to theCompany and is automatically null and void upon an event of default under any of the Secured Convertible Notes previously issued by the Company to the Holder. Notwithstanding the foregoing, to the extent required by the Nasdaq Marketplace Rules, atno time may the Holder exercise all or part of this Warrant to acquire a number of shares of Common Stock that, together with any shares of Common Stock acquired upon conversion of all or any part of any Secured Convertible Notes issued by theCompany to the Holder prior to the date hereof or the interest payable thereon, would in the aggregate exceed 19.99% of the outstanding shares of the Company’s Common Stock, determined as of the date hereof, without first obtaining stockholderapproval of such issuance of Common Stock (the “Conversion Limitations”). In obtaining stockholder approval, stockholders shall not be entitled to vote shares of Common Stock acquired upon exercise of this Warrant and/or conversionof any Secured Convertible Notes on such matter. In the event such approval is so required, then the Company shall (i) within fifteen (15) days following notice by the Holder to convert an amount in excess of the Conversion Limitations file proxymaterials relating to such stockholder approval with the Securities and Exchange Commission and (ii) use its best efforts to obtain as promptly as possible such stockholder approval. 

 

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**11. Warrant Agent.**The Company may, by written notice to the Holder of this Warrant, appoint anagent for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, andthereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.****

 

**12. Transfer on the Company’s Books.**Until this Warrant is transferred on the books of the Company, the Company may treat the registeredHolder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.****

 

**13. Notices, etc.**All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first class registered orcertified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such Holder furnishes to the Company an address, then to, and at the address of, the last Holder of this Warrant whohas so furnished an address to the Company. 

 

**14**.**Voluntary Adjustment by the Company.**The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

**15.****Miscellaneous.**This Warrant and any termhereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed inaccordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought concerning the transactions contemplated by this Warrant shall be brought only in the state courts of New York or in the federalcourts located in the state of New York; provided, however, that the Holder may choose to waive this provision and bring an action outside the state of New York. The individuals executing this Warrant on behalf of the Company agree to submit to thejurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Warrant is invalid or unenforceableunder any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may proveinvalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the termshereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. The Company acknowledges that legal counsel participated in the preparation of this Warrant and,therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any party against the other party. 

 

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IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of the date first written above.

 

STOCKERYALE, INC
By: 
/s/ Mark W. Blodgett
  Mark W. Blodgett  President and CEO
 
Witness:
 

 

 

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**Exhibit A**

 

FORM OF SUBSCRIPTION 

 

(To be signed only on exercise of Warrant) 

 

TO: StockerYale, Inc. 

 

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.             ), hereby irrevocably elects to purchase (checkapplicable box): 

 

 ̈                shares of the Common Stock covered by such Warrant; or 

 

 ̈  the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. 

 

The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, whichis $            . Such payment takes the form of (check applicable box or boxes): 

 

 ̈  $             in lawful money of the United States; and/or             the cancellation ofsuch portion of the attached Warrant as is exercisable for a total of             shares of Common Stock (using a Fair Market Value of$             per share for purposes of this calculation); and/or 

 

 ̈  the cancellation of such number of shares of CommonStock as is necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchaseable pursuant to the cashless exercise procedure set forth in Section 2.

 

The undersigned requests that the certificates for such shares be issued inthe name of, and delivered to             whose address is                                                                                                                                                                                                                . 

 

The undersignedrepresents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the“Securities Act”) or pursuant to an exemption from registration under the Securities Act. 

 
Dated:                      Signature:                                                              
(Signature must conform to name of holder

asspecified on the face of the warrant)

 

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**Exhibit B**

 

FORM OF TRANSFEROR ENDORSEMENT 

 

(To be signed only on transfer of Warrant) 

 

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” theright represented by the within Warrant to purchase the percentage and number of shares of Common Stock of StockerYale, Inc. to which the within Warrant relates specified under the headings “Percentage Transferred” and “NumberTransferred,” respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of StockerYale, Inc. with full power of substitution in the premises. 

 
Transferees Percentage Transferred Number Transferred
 
Dated:                                _________________________________________________________________(Signature must conform to name of holder as specified on the face of the Warrant)Signed in the presenceof:                                                                                (Name)                                                                                                            (Address)                                                                                                        (City, State, Zip)                                                                                            ACCEPTED AND AGREED:[TRANSFEREE]                                                                                                (Name)                                                                                                                ( Address)                                                                                                            (City, State, Zip)                                                                                                
 

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