Securities Purchase Agreement




Msftedit
5.41.15.1507;STOCK PURCHASE AGREEMENT 



        STOCK
PURCHASE AGREEMENT (this “Agreement”), dated as of December __, 2004, by
and between StockerYale, Inc., a Massachusetts corporation (the
“Company”), and the investor named on the signature page hereof (the
“Investor”). 




W I T N E S S E T H 



        WHEREAS,
the Company is offering for sale up to 2,500,000 shares (the “Shares”) of
its Common Stock (as defined below) at the price per share of Common Stock negotiated with
each purchaser, pursuant to a Confidential Offering Memorandum dated as of November 29,
2004 (the “Memorandum”), this transaction generally being herein referred
to as the “Private Placement”; and 



        WHEREAS,
the Investor desires to purchase from the Company shares of Common Stock on the terms and
conditions set forth herein. 



        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for good and valuable consideration the receipt of which is hereby acknowledged, the
parties agree as follows: 



         1.       
          Definitions. Unless specifically defined herein, capitalized terms used
          herein have the meaning ascribed to such terms in the Memorandum except that,
          unless the context requires otherwise, the following terms have the meanings
          indicated: 




        “Business
Day” shall mean any day except Saturday, Sunday and any day which shall be in
Boston, Massachusetts a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close. 



        “Common
Stock” shall mean the Common Stock, par value $0.001 per share, of the Company. 



        “Investors”
shall mean all of the purchasers of Shares sold in the Private Placement. 



        “Person”
shall mean any individual, partnership, joint venture, firm, corporation, association,
trust or other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof. 



        “Total
Purchase Price” shall mean the aggregate purchase price for all of the Shares
sold in the Private Placement. 



         2.       
          Purchase of Common Stock. Subject and pursuant to the terms and conditions
          set forth in this Agreement, the Company agrees that it will issue and sell to
          the Investor and the Investor agrees that it will purchase from the Company, at
          $____ per share of Common Stock (the “Per Share Purchase Price”),
          _________shares of Common Stock (the “Investor Shares”). The
          aggregate purchase price for the shares of Common Stock shall be $_________ (the
          “Aggregate Purchase Price”). The shares of Common Stock are
          being offered pursuant to the Memorandum. 





      3.
Deliveries at Closing. 



         (a)       
          Deliveries by the Investor. At the Closing of the transactions contemplated
          hereby, the Investor shall deliver to the Company the following: 




          		    (1)       
               the Aggregate Purchase Price by wire transfer of immediately available funds to
               an account  designated by the Company as set forth on Annex V
               hereto, which funds will be delivered to the Company in consideration of the
               Investor Shares issued at the closing of the transaction contemplated hereby; 



               



          		    (2)       
               an executed Investor Questionnaire in the form attached as Annex I; 



               



          		    (3)       
               an executed Managed Account Representation Letter in the form attached as
               Annex II, if the Investor is acting on behalf of a managed account
               in the purchase of the Investor Shares; and 



               



          		    (4)       
               a completed Registration Statement Questionnaire in the form attached as
               Annex III. 



               



         (b)       
          Deliveries by the Company. At the Closing of the transactions contemplated
          hereby, the Company shall deliver to the Investor one or more certificates
          representing the Investor Shares registered in the name of the Investor or its
          nominee(s), as the Investor has specified in writing to the Company. 





      4.
Representations, Warranties, Covenants and Agreements. 



         (a)       
          Investor Representations, Warranties and Covenants. The Investor represents,
          warrants and agrees as follows: 




          		    (1)       
               The Investor has received and reviewed a copy of the Memorandum, and all
               appendices and  supplements (if any) thereto, relating to the Shares and
               understands that no Person has been authorized to give any  information
               or to make any representations that were not contained in the Memorandum, and
               the Investor has not relied on any  such other information or
               representations in making a decision to purchase the Investor Shares. The
               Investor has had access  to such financial and other information and has
               had the opportunity to ask questions and receive answers as deemed necessary
                in respect of the decision to purchase the Investor Shares, and has
               consulted with its advisors concerning the proposed  investment in the
               Company. The Investor understands that an investment in the Company involves a
               high degree of risk for  the reasons, among others, set forth under the
               caption “Risk Factors” in the Memorandum. 



               



          		    (2)       
               The Investor has decided to invest in the Shares and, in making the decision to
               so invest, is not  in any way relying on the fact that any other Person
               has decided to invest in the Shares. 



               



          		    (3)       
               The Investor represents that the Investor (or, if applicable, each managed
               account on whose behalf  the Investor Shares are being purchased by such
               Investor) is an “accredited investor” as defined in Rule 501 under the
                Securities Act of 1933, as amended (the “Securities Act”),
               as certified by the Investor in the Investor Questionnaire attached hereto as
               Annex I. The Investor further represents that the Investor (or, if
               applicable, each managed account on whose behalf the Investor Shares are being
               purchased) has such knowledge and experience in financial and business matters
               as to be capable of evaluating the merits and risk of an investment in the
               Shares and can bear the economic risk of loss of the entire investment in the
               Shares being purchased. 



               



          		    (4)       
               The Investor understands and expressly acknowledges and agrees that none of the
               Shares has been, or will be, registered or qualified under the Securities Act,
               or under any applicable securities laws of any State of the United States
               (“Applicable State Law”) and therefore may not be offered,
               sold, transferred, assigned, pledged, hypothecated or otherwise disposed of,
               directly or indirectly, unless subsequently registered or qualified under the
               Securities Act and under Applicable State Law or unless an exemption from the
               registration requirements of the Securities Act and Applicable State Law is
               available, in each case to the extent permitted by the terms of this Agreement. 



               



          		    (5)       
               The Investor understands and agrees that all certificates representing the
               Investor Shares shall bear a legend which will be substantially in the form of
               the following: 



               



	 	
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS (“APPLICABLE STATE
LAW”). THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
FROM REGISTRATION UNDER THE ACT OR APPLICABLE STATE LAW RELATING TO DISPOSITION OF
SECURITIES.” 






          		    (6)       
               The Investor (or, if applicable, each managed account on whose behalf the
               Investor Shares are being purchased by the Investor) will acquire the Investor
               Shares pursuant to this Agreement for its own account for investment and not
               with a view to, or in connection with, the resale or distribution thereof or in
               any arrangement or understanding with any other persons regarding the
               distribution of such Investor Shares. The Investor hereby covenants and agrees
               that, during the six month period following the Closing, the Investor shall
               execute a lockup agreement, containing a restriction on the sale of Investor
               Shares for a period terminating on the earlier of the ninetieth day following
               closing of a primary offering by the Company or the six month anniversary of the
               Closing, and other standard terms and conditions, with any requesting
               underwriter participating in a primary offering (as defined in
               Section 5(a)(1) below). 



               



          		    (7)       
               The Investor hereby covenants and agrees with the Company not to, directly or
               indirectly, sell, offer, contract or grant any option to sell (including without
               limitation any short sale), pledge, transfer, establish a “put equivalent
               position” as such term is defined by Rule 16a-1(h) under the Securities
               Exchange Act of 1934, as amended (the “Exchange Act”), or
               otherwise dispose of any Investor Shares, options or warrants to acquire
               Investor Shares, or securities exchangeable or exercisable for or convertible
               into Investor Shares owned either of record or beneficially (as defined in Rule
               13d-3 under the Exchange Act) by the Investor or publicly announce the
               Investor’s intention to do any of the foregoing or enter into any swap or
               other arrangement that transfers to another, in whole or in part, any of the
               economic benefits or risks of ownership of the Investor Shares, prior to the
               date on which the Registration Statement (as defined in Section 5(a)(2)) is
               declared effective (other than in connection with a sale pursuant to a
               registration statement effected under Section 5(a)(1) hereof). 



               



          		    (8)       
               The Investor hereby covenants and agrees with the Company not to make any sale
               of the Investor Shares without causing the prospectus delivery requirement under
               the Securities Act to be satisfied or otherwise complying with the Securities
               Act, and the Investor acknowledges and agrees that the Investor Shares are not
               transferable on the books of the Company unless the certificate submitted to the
               transfer agent evidencing the Investor Shares is accompanied by (a) a
               separate certificate (i) in the form of Annex V hereto,
               (ii) executed by an officer of, or other authorized person designated by,
               the Investor, and (iii) to the effect that (A) the Investor Shares have
               been sold in accordance with a registration statement pursuant to Section 5
               hereof and (B) the requirement of delivering a current prospectus has been
               satisfied; or (b) an opinion of counsel reasonably satisfactory to the
               Company stating that an exemption from registration is available under the
               Securities Act. The Investor acknowledges and agrees that, notwithstanding
               anything else in this Agreement to the contrary, there may be times when the
               Company may suspend the use of the prospectus forming a part of a registration
               statement (or otherwise render the registration statement unavailable) in the
               event that, and during such period as, pending negotiations relating to, or
               consummation of, a transaction, or the occurrence of any other event, would
               require additional disclosure of material information by the Company in the
               registration statement and the Company determines that disclosing such
               information would (x) adversely affect the Company, (y) make it
               impractical or inadvisable to cause the registration statement to be filed or to
               become effective or to amend or supplement the registration statement or
               (z) otherwise render the Company unable to comply with the requirements of
               the Securities and Exchange Commission (the “Commission”). In
               such event, subject to the last sentence of this Section 4(a)(8), the Company
               may suspend the use of such prospectus until such time as an amendment to such
               registration statement has been filed by the Company and declared effective by
               the Commission, or until such time as the Company has filed an appropriate
               report with the Commission pursuant to the Exchange Act. The Investor hereby
               covenants and agrees that it will not sell any Investor Shares pursuant to said
               prospectus during the period commencing at the time at which the Company gives
               the Investor written notice of the suspension of the use of said prospectus and
               ending the date on which the Company gives the Investor written notice that the
               Investor may thereafter effect sales pursuant to said prospectus. Anything
               herein to the contrary notwithstanding, the Company does not have the right to
               suspend the use of such prospectus for a period of more than sixty (60) business
               days per suspension and the Company may not exercise this right to suspend the
               use of such prospectus more than two times in any twelve month period. 



               



          		    (9)       
               The execution and delivery of this Agreement by the Investor and the performance
               of this Agreement and the consummation by the Investor or the Investor’s
               advisory clients, as the case may be, of the transactions contemplated hereby
               have been duly authorized by all necessary (corporate, in the case of a
               corporation) action of the Investor and, if applicable, the Investor’s
               advisory clients; and this Agreement, when duly executed and delivered by the
               Investor, will constitute a valid and legally binding instrument, enforceable in
               accordance with its terms against the Investor or any of the Investor’s
               advisory clients, as the case may be. 



               



          		    (10)       
               The Investor represents that: 



               



          		    (A)       
               If the Investor is a corporation, it is a corporation duly incorporated, validly
               existing and in good standing under the laws of the jurisdiction of its
               incorporation, with full power and authority (corporate and other) to perform
               its obligations under this Agreement. If the Investor is a limited liability
               company, it is a limited liability company duly organized, validly existing and
               in good standing under the laws of the jurisdiction of its incorporation, with
               full power and authority (limited liability company and other) to perform its
               obligations under this Agreement. If the Investor is any other form of business
               entity, it is duly organized or formed, validly existing and in good standing
               under the laws of its jurisdiction of organization, with full power and
               authority to perform its obligations under this Agreement. 



               



          		    (B)       
               If the Investor is a corporation acting in an advisory capacity, it is a
               corporation duly organized, validly existing and in good standing under the laws
               of the jurisdiction of its incorporation, with full power and authority
               (corporate and other) to act on behalf of its advisory clients under this
               Agreement. If the Investor is a limited liability company acting in an advisory
               capacity, it is a limited liability company duly organized, validly existing and
               in good standing under the laws of the jurisdiction of its incorporation, with
               full power and authority (corporate and other) to act on behalf of its advisory
               clients under this Agreement. 



               



          		    (C)       
               If the Investor is a trust, the trustee thereunder has been duly appointed as
               trustee of such Investor with full power and authority to act on behalf of such
               Investor and to perform the obligations of such Investor under this Agreement.
               Furthermore, the trustee under such trust has independently determined that the
               purchase of the Investor Shares is a suitable investment for such trust as
               authorized by the terms thereof and applicable laws and regulations. 



               



          		    (D)       
               If the Investor is a limited partnership, it is a limited partnership duly
               organized, validly existing and in good standing under the laws of the
               jurisdiction of its organization, with full power and authority to perform its
               obligations under this Agreement. 



               



          		    (E)       
               If the Investor is a limited partnership acting in an advisory capacity, it is a
               limited partnership duly organized, validly existing and in good standing under
               the laws of the jurisdiction of its organization, with full power and authority
               to act on behalf of its advisory clients under this Agreement. 



               



          		    (F)       
               The execution and delivery of this Agreement and the performance by the Investor
               of the transactions contemplated hereby have been duly authorized by all
               necessary corporate or other action of the Investor. 



               



          		    (G)       
               If the Investor is a corporation, limited liability company, partnership, trust
               or other form of business entity, the execution and delivery of this Agreement
               will not contravene or result in a default under any provision of existing law
               or regulations to which the Investor is subject, the provisions of its trust
               instrument, charter, by-laws or other governing documents or any indenture,
               mortgage or other agreement or instrument to which it is a party or by which it
               is bound and does not require on its part any approval, authorization, license
               or filing from or with any foreign, federal, state or municipal board or agency
               which has not been obtained or duly made. 



               



          		    (H)       
               If the Investor is an individual, the Investor has full power and authority to
               perform its obligations under this Agreement. 



               



          		    (11)       
               The Investor agrees to complete and execute and return to the Company
               (a) the Investor Questionnaire attached as Annex I to this Agreement
               representing that the Investor is investing in Shares as an “accredited
               investor;” (b) if the Investor is acting on behalf of a managed
               account in the purchase of any Investor Shares, the Managed Accounts
               Representation Letter attached as Annex II to this Agreement; and (c) the
               Registration Statement Questionnaire attached as Annex III, in each case
               together with an executed signature page to this Agreement. The Investor
               represents and warrants that the answers thereto are true and correct as of the
               date hereof and will be true and correct as of the effective date of the
               Registration Statement (as defined in Section 5). If any of the answers provided
               by the Investor in the questionnaires change prior to the effective date of the
               Registration Statement, the Investor will provide the Company with prompt
               written notice of such changes. The Investor further represents and warrants
               that it is not purchasing the Investor Shares on behalf of any managed account
               other than as listed in the Managed Account Representation Letter. 



               



          		    (12)       
               The Investor has not entered into any contracts, arrangements, understandings or
               relationships (written or otherwise) with any other Person or Persons (other
               than the Company or a limited partner/member or affiliate of Investor, which in
               any case shall not violate any securities laws) with respect to any securities
               of the Company (including but not limited to transfer or voting of any of the
               securities, finder’s fees, joint ventures, loan or option arrangements,
               puts or calls, guarantees of profits, division of profits or loss, or the giving
               or withholding of proxies) or the operations, management or control of the
               Company; the Investor is not bound together, under common control with, in a
               common enterprise with, or otherwise acting in concert with, any other Person or
               Persons (other than a limited partner/member or affiliate of Investor, which in
               any case shall not violate any securities laws) in connection with the
               transactions contemplated by this Agreement; and the Investor does not own any
               securities of the Company which are pledged or otherwise subject to a
               contingency the occurrence of which would give another Person voting power or
               investment power over such securities. 



               



          		    (13)       
               Except as otherwise set forth in Annex III, as of the date hereof, the
               Investor does not beneficially own any shares of Common Stock. 



               



          		    (14)       
               No state, federal or foreign regulatory approvals, permits, licenses or consents
               or other contractual or legal obligations are required for the Investor to enter
               into this Agreement or otherwise purchase the Investor Shares. 



               



          		    (15)       
               The Investor hereby covenants and agrees not to disclose any confidential
               information provided to the Investor by the Company in the Memorandum or
               otherwise in connection with the Private Placement with respect to the Company,
               except as otherwise required by law. 



               



         (b)       
          Company Representations, Warranties and Covenants. The Company hereby
          represents, warrants and agrees as follows: 




          		    (1)       
               The Company has been duly incorporated and is validly existing in good standing
               under the laws of  the jurisdiction of its incorporation, with full power
               and authority (corporate and other) to perform its obligations under 
               this Agreement and to consummate the transactions contemplated hereby. 



               



          		    (2)       
               The execution, delivery and performance of this Agreement by the Company and the
               consummation by  the Company of the transactions contemplated hereby have
               been duly authorized by all necessary action of the Company and the 
               Agreement has been duly executed and delivered by the Company; and this
               Agreement, when duly executed and delivered by the  Investor, will
               constitute a valid and legally binding instrument of the Company enforceable in
               accordance with its terms. 



               



          		    (3)       
               The Investor Shares have been duly authorized by the Company, and when issued
               and delivered by the  Company against payment therefor as contemplated
               hereby and in accordance with the terms of the Memorandum, the Investor 
               Shares will be validly issued, fully paid and nonassessable, free of
               preemptive rights and free from all taxes, liens,  charges and security
               interests in respect of the issuance thereof. 



               



          		    (4)       
               The execution and delivery of this Agreement, the consummation by the Company of
               the transactions  herein contemplated and the compliance by the Company
               with the terms hereof do not and will not (i) violate the Articles of 
               Organization (as amended to date) of the Company, or the By-Laws (as amended
               to date) of the Company, or (ii) result in a  breach or violation of any
               of the terms or provisions of, or constitute a default under, any indenture,
               mortgage, deed of  trust, loan agreement or other agreement or instrument
               to which the Company or any of its subsidiaries is a party or by  which
               the Company or any of its subsidiaries is bound or to which any of their
               properties or assets are subject, or any  applicable statute or any
               order, judgment, decree, rule or regulation of any court or governmental agency
               or body having  jurisdiction over the Company or any of its subsidiaries
               or any of their properties or assets other than a breach or  violation
               that would reasonably be expected to have a material adverse effect on the
               condition (financial or otherwise),  business, assets or results of
               operations of the Company (a “Material Adverse Effect”); and no
               consent, approval, authorization, order, registration or qualification of or
               with any such court or governmental agency or body is required for the valid
               authorization, execution, delivery and performance by the Company of this
               Agreement, the issue of the Investor Shares or the consummation by the Company
               of the other transactions contemplated by this Agreement, except for such
               consents, approvals, authorizations, registrations or qualifications as may be
               required under Federal or state securities or “blue sky” laws or, with
               respect to requirements applicable to the Investor and except where the failure
               to obtain such consents, approvals, authorizations, registrations or
               qualifications would not reasonably be expected to have a Material Adverse
               Effect. 



               



          		    (5)       
               The information contained in the following documents, which the Company has
               furnished to the Investor does not contain any untrue statement of material fact
               or omit to state any material fact necessary in order to make the statements
               therein in light of the circumstances in which they were made not misleading as
               of the respective final dates of the documents. Each of the documents listed in
               (A), (B) and (C) below complied as to form in all material respects with the
               applicable requirements of the Securities Act or Exchange Act as of the date
               filed with the Commission. 



               



          		    (A)       
               the Company’s Annual Report to Stockholders on Form 10-K for the fiscal
               year ended December 31, 2003, as amended (without exhibits); 



               



         (B)       
          the Company’s Quarterly Report on Form 10-Q for the quarter ended
          September 30, 2004; and 




         (C)       
          the Memorandum. 




          		    (6)       
               The balance sheets of the Company for the twelve months ended December 31, 2003
               have been prepared in conformity with generally accepted accounting principles
               applied on a consistent basis, are consistent in all material respects with the
               books and records of the Company and accurately present in all material respects
               the financial position of the Company and its subsidiaries as of December 31,
               2003. There has been no material adverse change in the financial condition or
               business or results of operations of the Company or its subsidiaries since
               December 31, 2003, except as disclosed in the Company’s Quarterly Report on
               Form 10-Q for the quarter ended September 30, 2004 and the Memorandum. 



               



         (c)       
          Survival of Representations, Warranties and Agreements. Notwithstanding
          any investigation made by any party to this Agreement, all covenants,
          agreements, representations and warranties made by the Company and the Investor
          herein and in the certificates for the Investor Shares delivered pursuant hereto
          shall survive the execution of this Agreement, the delivery to the Investor of
          the Investor Shares and the payment therefor. 




         5.       
          Registration of the Shares; Compliance with the Securities Act. 





      (a)
Registration Rights; Registration Procedures and Expenses. 



          		    (1)       
               If at any time or times after the date hereof, the Company shall determine or be
               required to  register any shares of its Common Stock or other equity
               securities for sale under the Securities Act in exchange for cash 
               (whether in connection with a public offering of securities by the Company (a
               “primary offering”), a public offering of securities by
               stockholders of the Company (a “secondary offering”) or both),
               but not in connection with a registration effected solely to implement an
               employee benefit plan or a transaction to which Rule 145 or any other
               similar rule of the Commission under the Securities Act is applicable, the
               Company shall: 



               



          		    (A)       
               Promptly give written notice thereof to each of the Investors. 



               



          		    (B)       
               Use commercially reasonable efforts to effect the registration under the
               Securities Act of all Investor Shares (but not any other shares) which such
               Investors request to be registered in a writing delivered to the Company within
               10 days after such Investors’ receipt of the notice referred to above,
               subject to subparagraph (iii) below. 



               



          		    (C)       
               In the case of the registration of shares of Common Stock by the Company in
               connection with an underwritten public offering, (a) the Company shall not
               be required to include any Investor Shares in such underwriting unless the
               Investors thereof accept the terms of the underwriting as agreed upon between
               the Company and the underwriter or underwriters selected by it, and (b) if
               the underwriter(s) determines that marketing factors require a limitation on the
               number of Investor Shares to be offered, the Company shall not be required to
               register Investor Shares of the Investors in excess of the amount, if any, of
               shares of the capital stock which the principal underwriter of such underwritten
               offering shall reasonably and in good faith agree to include in such offering in
               excess of any amount to be registered for the Company, and in the event of any
               such limitation, the number of Investor Shares of any Investor requesting
               inclusion in such registration shall be based upon the relative holdings of
               Common Stock of all Investors requesting such registration (and if any Investor
               would thus be entitled to include more Investor Shares than such Investor
               requested to be registered, the excess shall be allocated among other requesting
               Investors pro rata based upon their relative holdings of Common
               Stock). All expenses relating to the registration and offering of Investor
               Shares pursuant to this Section 5(a)(1) and pursuant to Section 5(a)(2) below
               shall be borne by the Company, except that the Investors shall bear underwriting
               and selling commissions attributable to their Investor Shares being registered,
               any transfer taxes on shares being sold by such Investors and the costs of any
               counsel or other professional advisors engaged by the Investors. 



               



Notwithstanding the foregoing, the
Company’s obligations pursuant to this Section 5(a)(1) shall be suspended for so
long as the Registration Statement filed pursuant to Section 5(a)(2) is effective. 



         (2)       
          The Company shall: 




          		    (A)       
               Subject to the provisions of subparagraph (B) of this Section 5(a)(2) and
               Sections 5(c) and 5(d) below, use commercially reasonable efforts to prepare and
               file with the Commission within 60 days of the Closing a registration statement
               on Form S-3 under Rule 415 under the Securities Act (the
               “Registration Statement”) to enable the public offering and
               sale of the Investor Shares by the Investor from time to time through the NASDAQ
               National Market, the over-the-counter market or in privately-negotiated
               transactions or otherwise. 



               



          		    (B)       
               The Company shall use commercially reasonable efforts, subject to receipt of
               necessary information from the Investor, to cause the Registration Statement to
               become effective within 120 days after the Closing. 



               



          		    (C)       
               Promptly prepare and file with the Commission such amendments and supplements to
               the Registration Statement and the prospectus used in connection therewith as
               may be necessary to keep the Registration Statement effective for a period not
               exceeding the second anniversary of the Closing, or such shorter period which
               will terminate on the earlier of the date when (i) the Shares held by the
               Investor may be sold without registration under the Securities Act or (ii) all
               of the Shares covered by such Registration Statement have been sold pursuant to
               such Registration Statement or otherwise. 



               



          		    (D)       
               Promptly furnish to the Investor with respect to the Investor Shares registered
               under the Registration Statement (and to each underwriter, if any, of such
               Investor Shares) such number of copies of the Registration Statement and any
               amendment or supplement thereto and of prospectuses and preliminary prospectuses
               in conformity with the requirements of the Securities Act as the Investor shall
               reasonably request. 



               



          		    (E)       
               Promptly file documents required of the Company for customary “blue
               sky” clearance in states specified in writing by the Investor and
               reasonably required by the Investor in order to resell its Investor Shares;
               provided, however, that the Company shall not be required to
               qualify to do business or consent to service of process in any jurisdiction in
               which it is not now so qualified or has not so consented. 



               



          		    (F)       
               Promptly inform the Investor when any stop order by the Commission has been
               issued with respect to the Investor Shares and use commercially reasonable
               efforts to promptly cause such stop order to be withdrawn. 



               



          		    (G)       
               Take such other actions as may reasonably be necessary to effect the
               registration of the resale of the Investor Shares on a registration statement on
               Form S-3 in accordance with the terms of this Agreement and to allow such
               Investor Shares to trade in the same market system or exchange where the
               Company’s Common Stock then trades. 



               



          		    (H)       
               File the reports required to be filed by it under the Securities Act and the
               Exchange Act (or, if the Company is not required to file such reports, it will,
               upon the request of any holder of Investor Shares, make publicly available other
               information so long as necessary to permit sales under Rule 144 under the
               Securities Act), all to the extent required from time to time to enable the
               Investor to sell Investor Shares without registration under the Securities Act
               within the limitations provided by (i) Rule 144 under the Securities Act, as
               such Rule may be amended from time to time, or (ii) any similar rule or
               regulation hereafter adopted by the Commission; provided, however,
               that, except as otherwise expressly provided in this Section 5(a)(2)(H),
               nothing in this Agreement shall require the Company to file reports under the
               Securities Act or the Exchange Act, to register any of its securities under the
               Exchange Act, or to make publicly available any information concerning the
               Company at any time when it is not required by law or by any agreement by which
               it is bound to do any of the foregoing. 



               



A questionnaire related to the
Registration Statement to be completed by the Investor is attached hereto as
Annex IV. 



         (b)       
          Transfer of Shares. The Investor agrees not to effect any disposition of the
          Investor Shares or the right to purchase the Investor Shares that would
          constitute a sale within the meaning of the Securities Act except as
          contemplated in Sections 5(a)(1) and (2) or pursuant to an exemption from
          registration under the Securities Act. The Investor agrees to promptly notify
          the Company of any changes in the information set forth in any registration
          statement regarding the Investor Shares or the Investor. 




         (c)       
          The Investor hereby acknowledges and agrees that in the event that the Company
          makes any filing with the SEC in connection with a primary underwritten offering
          within 30 days following the Closing Date, the time period for preparing and
          filing a Registration Statement as contemplated by Section 5(a)(2) above shall
          be extended until September 23, 2003 and the Company shall use commercially
          reasonable efforts, subject to the receipt of necessary information from the
          Investor, to cause the Registration Statement to become effective as promptly
          thereafter as practicable. 




         (d)       
          Postponement. The Company may postpone the filing or effectiveness of any
          registration statement to be filed pursuant to this Section 5 for a
          reasonable period of time if (i) the Company is engaged in confidential
          negotiations or other confidential business activities, disclosure of which
          would be required in such registration statement and (ii) the Board of
          Directors of the Company determines in good faith that such disclosure would
          have a material adverse effect on any such confidential negotiations or other
          confidential business activities or would be materially detrimental to the
          Company. 




         (e)       
          Indemnification and Contribution. 





         (1)
For the purpose of this Section 5(e): 



          		    (A)       
               The term “Selling Shareholder” shall include the Investor,
               officers, directors, trustees, or any affiliate of such Investor and each
               person, if any, who controls the Selling Shareholder within the meaning of the
               Securities Act and 



               



          		    (B)       
               The term “Registration Statement” shall include (i) the
               Registration Statement and any final prospectus, exhibit, supplement or
               amendment included in or relating to the Registration Statement and
               (ii) any registration statement filed in connection with Section 5(a)(1)
               and any final prospectus, exhibit, supplement or amendment included in or
               relating to such registration statement; and 



               



          		    (2)       
               The Company agrees to indemnify and hold harmless each Selling Shareholder from
               and against any losses, claims, damages or liabilities to which such Selling
               Shareholder may become subject (under the Securities Act or otherwise) insofar
               as such losses, claims, damages or liabilities (or actions or proceedings in
               respect thereof) arise out of, or are based upon any untrue statement or alleged
               untrue statement of a material fact contained in the Registration Statement or
               the omission or alleged omission to state therein a material fact required to be
               stated therein or necessary to make the statements therein not misleading or
               arise out of any failure by the Company to fulfill any undertaking included in
               the Registration Statement and the Company will reimburse such Selling
               Shareholder for any reasonable legal or other expenses reasonably incurred in
               investigating, defending or preparing to defend any such action, proceeding or
               claim, provided, however, that the Company shall not be liable in
               any such case to the extent that such loss, claim, damage or liability arises
               out of, or is based upon, any such untrue statement or omission made in such
               Registration Statement in reliance upon written information furnished to the
               Company by or on behalf of such Selling Shareholder for use in preparation of
               the Registration Statement, or the failure of such Selling Shareholder to comply
               with the covenants and agreements contained in Sections 4(a)(7) and 5(b) hereof
               respecting sale of the Shares or any statement or omission in any prospectus
               that is corrected or made not misleading in any subsequent prospectus that was
               delivered to the Investor prior to the pertinent sale or sales by the Investor.
               The Company will reimburse such Selling Shareholder, as the case may be, for any
               legal or other expenses reasonably incurred in investigating, defending or
               preparing to defend any such action, proceeding or claim. 



               



          		    (3)       
               The Investor agrees to indemnify and hold harmless the Company (and each person,
               if any, who controls the Company within the meaning of Section 15 of the
               Securities Act, each officer of the Company who signs the Registration Statement
               and each director of the Company) from and against any losses, claims, damages
               or liabilities to which the Company (or any such officer, director or
               controlling person) may become subject (under the Securities Act or otherwise),
               insofar as such losses, claims, damages or liabilities (or actions or
               proceedings in respect thereof) arise out of, or are based upon, any failure to
               comply with the covenants and agreements contained in Sections 4(a)(7) and 5(b)
               hereof respecting sale of the Shares, or any untrue statement of a material fact
               contained in the Registration Statement on the effective date thereof if such
               untrue statement was made in reliance upon written information furnished by or
               on behalf of the Investor for use in preparation of the Registration Statement,
               provided, however, that such Investor shall not be liable in any
               such case to the extent that the Investor has furnished in writing to the
               Company information expressly for use in such Registration Statement or any
               amendment thereof or supplement thereto which corrected or made not misleading
               information previously furnished to the Company prior to the filing of the
               Registration Statement, and if furnished to the Company after the filing of the
               Registration Statement, has notified the Company of such information immediately
               upon its occurrence or the Investor’s knowledge of its occurrence. The
               Investor will reimburse the Company (or such officer, director or controlling
               person), as the case may be, for any legal or other expenses reasonably incurred
               in investigating, defending or preparing to defend any such action, proceeding
               or claim. In no event shall the liability of the Investor hereunder be greater
               in amount than the dollar amount of the proceeds received by such Investor (net
               of any underwriting discount) upon the sale of the Shares giving rise to such
               indemnification obligation. 



               



          		    (4)       
               Promptly after receipt by any indemnified person of a notice of a claim or the
               beginning of any action in respect of which indemnity is to be sought against an
               indemnifying person pursuant to this Section 5(e), such indemnified person shall
               notify the indemnifying person in writing of such claim or of the commencement
               of such action, and, subject to the provisions hereinafter stated, in case any
               such action shall be brought against an indemnified person and such indemnifying
               person shall be entitled to participate therein, and, to the extent it shall
               wish, to assume the defense thereof, with counsel reasonably satisfactory to
               such indemnified person. After notice from the indemnifying person to such
               indemnified person of its election to assume the defense thereof, such
               indemnifying person shall not be liable to such indemnified person for any legal
               expenses subsequently incurred by such indemnified person in connection with the
               defense thereof, provided, however, that if there exists or shall
               exist a conflict of interest that would make it inappropriate, in the opinion of
               counsel to the indemnified person, for the same counsel to represent both the
               indemnified person and such indemnifying person or any affiliate or associate
               thereof, the indemnified person shall be entitled to retain its own counsel at
               the expense of such indemnifying person; provided, however, that
               no indemnifying person shall be responsible for the fees and expenses of more
               than one separate counsel for all indemnified parties. The indemnifying party
               shall not be liable for any settlement of any proceeding effected without its
               written consent, but, if settled with such consent or if there be a final
               judgment for the plaintiff, the indemnifying party agrees to indemnify the
               indemnified party or parties in accordance with the provisions of this Section
               5(e). 



               



          		    (5)       
               If the indemnification provided for in this Section 5(e) from the indemnifying
               person is determined by a court of competent jurisdiction to be unavailable to
               an indemnified person hereunder in respect of any losses, claims, damages,
               liabilities or expenses referred to herein, then the indemnifying person, in
               lieu of indemnifying such indemnified person, shall contribute to the amount
               paid or payable by such indemnified person as a result of such losses, claims,
               damages, liabilities or expenses in such proportion as is appropriate to reflect
               the relative fault of the indemnifying person and indemnified persons in
               connection with the actions which resulted in such losses, claims, damages,
               liabilities or expenses, as well as any other relevant equitable considerations.
               The relative fault of such indemnifying person and indemnified persons shall be
               determined by reference to, among other things, whether any action in question,
               including any untrue or alleged untrue statement of a material fact, has been
               made by, or relates to information supplied by, such indemnifying person or
               indemnified persons, and the parties’ relative intent, knowledge, access to
               information and opportunity to correct or prevent such action. The amount paid
               or payable by a party as a result of the losses, claims, damages, liabilities
               and expenses referred to above shall be deemed to include, subject to the
               limitations set forth in this Section 5(e), any reasonable legal or other fees
               or expenses reasonably incurred by such party in connection with any
               investigation or proceeding. 



               



        The
parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(e), no
Investor shall be required to contribute any amount in excess of the dollar amount of the
proceeds received by such Investor (net of any underwriting discount) upon the sale of the
Shares giving rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. 



         (f)       
          Termination of Conditions and Obligations. The conditions precedent imposed
          by Section 4(a)(8) or this Section 5 upon the transferability of the Investor
          Shares shall cease and terminate as to any particular number of the Investor
          Shares when such Investor Shares shall have been effectively registered under
          the Securities Act and sold or otherwise disposed of in accordance with the
          intended method of disposition set forth in the registration statement covering
          such Investor Shares or when such Investor Shares shall have been sold or
          otherwise disposed following receipt by the Company of an opinion of counsel
          satisfactory to the Company stating that an exemption from registration is
          available under the Securities Act to sell or otherwise dispose of such Investor
          Shares. 




         (g)       
          Information Available. So long as a registration statement is effective covering
          the resale of the Investor Shares, the Company will furnish to the Investor: 




          		    (1)       
               As soon as practicable after available (but in the case of the Company’s
               Annual Report to  Shareholders, within one hundred twenty (120) days
               after the end of each fiscal year of the Company), one copy of (i) its 
               Annual Report to Shareholders (which Annual Report shall contain financial
               statements audited in accordance with generally  accepted accounting
               principles by a national firm of certified public accountants), (ii) if not
               included in substance in the  Annual Report to Shareholders, its Annual
               Report on Form 10-K or equivalent form, (iii) its Quarterly Reports to 
               Shareholders, (iv) if not included in substance in its Quarterly Reports to
               Shareholders, its quarterly reports on Form 10-Q  or equivalent form, and
               (v) a full copy of the particular registration statement covering the Shares
               (the foregoing, in each  case, excluding exhibits); and 



               



          		    (2)       
               Upon the reasonable request of the Investor, all exhibits to the reports and
               registration  statement provided to the Investor pursuant to subparagraph
               (1) of this Section 5(g) and all other information that is made 
               available to shareholders; 



               



          		    (3)       
               Upon the reasonable request of the Investor, an adequate number of copies of the
               prospectuses to  supply to any other party requiring such prospectuses; 



               



and the Company, upon the
reasonable request of the Investor, will meet with the Investor or a representative
thereof at the Company’s headquarters to discuss all information relevant for
disclosure in the registration statement covering the Investor Shares and will otherwise
reasonably cooperate with any Investor conducting an investigation for the purpose of
reducing or eliminating such Investor’s exposure to liability under the Securities
Act, including the reasonable production of information at the Company’s
headquarters. 




      6.
Miscellaneous. 



         (a)       
          Remedies. It is understood and agreed that any
          breach of the provisions of this Agreement by either party hereto will result in
          irreparable injury to the other party hereto, that the remedy at law alone will
          be an inadequate remedy for such breach, and that, in addition to any other
          legal or equitable remedies which such party may have, such party may enforce
          its rights by actions for specific performance (to the extent permitted by law). 




         (b)       
          Fees and Expenses. Each of the parties hereto shall be responsible for their own
          expenses incurred in connection with the transactions contemplated hereby. The
          Company shall reimburse the Investor for its reasonable out-of-pocket expenses,
          if any, incurred in connection with the procedures in Section 5(a)(2)(A) through
          (H) hereof, other than fees and expenses, if any, of one counsel or other
          advisors to all of the Investors upon delivery to the Company of reasonable
          documentation setting forth such out-of-pocket expenses. 




         (c)       
          Binding Agreement; Assignment. This Agreement shall be binding upon, and shall
          inure solely to the benefit of, each of the parties hereto, and each of their
          respective heirs, executors, administrators, successors and permitted assigns,
          and no other person shall acquire or have any right under or by virtue of this
          Agreement. The Investor may not assign any of its rights or obligations
          hereunder to any other person or entity without the prior written consent of the
          Company. 




         (d)       
          Entire Agreement. This Agreement constitutes the entire agreement among the
          parties hereto with respect to the subject matter hereof and may be amended only
          by written execution by both parties. By executing this Agreement below, the
          Investor agrees to be bound by all of the terms, provisions, warranties,
          covenants and conditions contained herein. Upon acceptance by the Company, this
          Agreement shall be binding on both parties hereto. 




         (e)       
          Consent To Jurisdiction. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED AND
          CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
          MASSACHUSETTS, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PRINCIPLES.
          FURTHERMORE, EACH INVESTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
          COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES OF AMERICA FOR
          THE DISTRICT OF MASSACHUSETTS IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
          TO THIS AGREEMENT. 




         (f)       
          Notices. All notices, requests, consents and other communication hereunder shall
          be in writing, shall be mailed by first class registered or certified mail, or
          nationally recognized overnight express courier postage prepaid, and shall be
          deemed given when so mailed and shall be delivered as addressed as follows: 





      if
to the Company, to: 




         StockerYale,
Inc.32 
Hampshire RoadSalem, 
New Hampshire 03079Attn: 
Mark W. Blodgett,  




Chief Executive
Officer 




      with
a copy mailed to: 




         Goodwin
Procter LLPExchange 
PlaceBoston, 
Massachusetts 02109Attn: 
Stuart M. Cable,
P.C. 



or to such other person at such
other place as the Company shall designate to the Investor in writing; and 



if to the Investor, at its address
as set forth at the end of this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing. 



         (g)       
          Counterparts. This Agreement may be executed in any number of counterparts and
          by the parties hereto in separate counterparts, each of which when so executed
          shall be deemed to be an original and all of which taken together shall
          constitute one in the same agreement. 





[Remainder of Page
Intentionally Left Blank] 



        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written. 




STOCKERYALE, INC. 




By:  


                                                                     Name:
                                                                     Title:


Accepted and Agreed as of the date
first above written: 








Name of Investor (Print) 


By:
      Name:
      Title

Address:








Telephone:
Facsimile:



Nominee (name in which Investor Shares
are to be registered, if different than name of Investor)  




Address of Nominee: 














Taxpayer I.D. Number:
(if acquired in the name of a nominee, the taxpayer I.D. number of such
nominee)