8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 19, 2007

StockerYale, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	000-27372	04-2114473
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

32 Hampshire Road Salem, New Hampshire	03079
(Address of principal executive offices)	(Zip Code)

(603) 893-8778

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Amendment to Secured Term Note

On June 19, 2007, StockerYale, Inc. (the “Company”) and Laurus Master Fund, Ltd. (“Laurus”) entered into a Note Amendment Agreement (the “Amendment”) to the secured term note issued by the Company to Laurus on December 30, 2005 (the “December Note”). The Amendment extended the maturity date of the December Note from December 30, 2008 to June 30, 2010. The Amendment also reduced the monthly payments of principal and interest payable by the Company on the December Note from $121,212 to $60,000.

Securities Purchase Agreement

On June 19, 2007, in connection with the Amendment, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Laurus under which the Company borrowed $2,318,180 and issued a Secured Term Note (the “Note”) to Laurus. The Note is due on June 30, 2010. The Company agreed to make monthly payments of principal and interest on the Note beginning on July 1, 2007. The outstanding principal on the Note accrues interest at an annual rate of 2% above the prime rate, subject to a minimum annual interest rate of 8% (subject to certain adjustments). The Company may elect to prepay the Note provided that (i) if such prepayment occurs during the first year of the date of issuance, the Company shall pay a 15% prepayment penalty, (ii) if such prepayment occurs during the second year of the date of issuance, the Company shall pay a 10% prepayment penalty and (iii) if such prepayment occurs during the third year of the date of issuance, the Company shall pay a 5% prepayment penalty. Laurus holds a security interest in certain assets of the Company.

Under the Securities Purchase Agreement, the Company sold and issued to Laurus an aggregate of 300,000 shares of common stock of the Company at a per share purchase price of $.01, for an aggregate purchase price of $3,000. The Company will use the net proceeds from the Securities Purchase Agreement for general corporate purposes.

The Company and Laurus also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) on June 19, 2007, under which the Company agreed to register the shares of common stock for resale under the Securities Act of 1933, as amended.

The foregoing descriptions of the Amendment, the Securities Purchase Agreement, the Note, the Registration Rights Agreement and the transactions contemplated therein and thereby, do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements and instruments, which are filed as exhibits hereto and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

A description of the Note and the Securities Purchase Agreement and the indebtedness incurred thereunder is contained in, or incorporated by reference from, Item 1.01 above, which is incorporated herein by reference. The foregoing description is subject to, and qualified in its entirety by, the Securities Purchase Agreement and the Note filed or incorporated by reference as exhibits hereto and incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

Item 1.01 is hereby incorporated by reference into this item.

The shares of common stock issued and sold pursuant to the Securities Purchase Agreement were issued and sold in reliance on Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder, as a sale by the Company not involving a public offering. No underwriters were involved with the issuance and sale of such securities.

Item 9.01 Financial Statements and Exhibits.

(d) The exhibits listed in the Exhibit Index below are filed with this report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	StockerYale, Inc.
Date: June 22, 2007	By:	/s/ Marianne Molleur
		Marianne Molleur Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Securities Purchase Agreement, dated as of June 19, 2007, by and between StockerYale, Inc. and Laurus Master Fund, Ltd.
10.2	Registration Rights Agreement, dated as of June 19, 2007, by and between StockerYale, Inc. and Laurus Master Fund, Ltd.
10.3	Note Amendment Agreement, dated as of June 19, 2007, by and between StockerYale, Inc. and Laurus Master Fund, Ltd.
10.4	Secured Term Note, dated as of June 19, 2007, issued by StockerYale, Inc. to Laurus Master Fund, Ltd.

EX-10.1

Exhibit 10.1

STOCKERYALE, INC.

SECURITIES PURCHASE AGREEMENT

June 19, 2007

TABLE OF CONTENTS

			Page
1.	PURCHASE AND SALE OF NOTE AND CLOSING SHARES		1
	1.1	Purchase of Note and Closing Shares	1
	1.2	The Closing Date	2
	1.3	Form of Payment	2
2.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY		2
	2.1	Organization, Good Standing and Qualification	2
	2.2	Subsidiaries	2
	2.3	Capitalization; Voting Rights.	3
	2.4	Authorization; Binding Obligations	4
	2.5	Liabilities	4
	2.6	Agreements; Action	4
	2.7	Obligations to Related Parties	5
	2.8	Changes	5
	2.9	Title to Properties and Assets; Liens, Etc	6
	2.10	Intellectual Property.	7
	2.11	Compliance with Other Instruments	7
	2.12	Litigation	7
	2.13	Tax Returns and Payments	8
	2.14	Employees	8
	2.15	Registration Rights and Voting Rights	8
	2.16	Compliance with Laws; Permits	9
	2.17	Environmental and Safety Laws	9
	2.18	Valid Offering	9
	2.19	Full Disclosure	9
	2.20	Insurance	10
	2.21	SEC Reports	10
	2.22	No Market Manipulation	10
	2.23	Listing	10
	2.24	No Integrated Offering	11
	2.25	Stop Transfer	11
	2.26	Dilution	11
	2.27	Material Agreements	11
	2.28	ERISA	11
	2.29	Solvency	11
	2.30	Form S-3 Eligibility	12
	2.31	Patriot Act	12
3.	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		12
	3.1	Requisite Power and Authority	12
	3.2	Investment Representations	13
	3.3	Purchaser Bears Economic Risk	13
	3.4	Acquisition for Own Account	13
	3.5	Purchaser Can Protect Its Interest	13
	3.6	Accredited Investor	13

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TABLE OF CONTENTS

			Page
	3.7	Legends	13
	3.8	Market Manipulation	14
4.	COVENANTS OF THE COMPANY.		14
	4.1	Stop-Orders	14
	4.2	Listing	14
	4.3	Market Regulations	14
	4.4	Reporting Requirements	14
	4.5	Use of Funds	14
	4.6	Access to Facilities	15
	4.7	Intentionally Omitted.	15
	4.8	Insurance	15
	4.9	Intellectual Property; Corporate Existence	15
	4.10	Financial Information	15
	4.11	Intentionally Omitted.	15
	4.12	Confidentiality	15
	4.13	Corporate Existence	15
	4.14	Reissuance of Securities	16
	4.15	Priority of Notes	16
	4.16	Expenses and Other Payments	16
	4.17	Transfer and Depositary Agent Instructions	16
5.	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.		17
	5.1	Execution	17
	5.2	Payment	17
	5.3	Representations and Warranties	17
6.	CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE.		17
	6.1	Execution	17
	6.2	Exchange Listing	17
	6.3	Representations and Warranties	17
	6.4	Legal Opinion	18
	6.5	Delivery of Securities	18
	6.6	Board Resolutions	18
	6.7	Reservation of Shares	18
	6.8	Intentionally Omitted.	18
	6.9	Good Standing Certificates	18
	6.10	Secretary’s Certificate	18
	6.11	Filings	18
	6.12	Security Agreement	18
	6.13	Other Transaction Documents	18
7.	COVENANTS OF THE COMPANY AND THE PURCHASER REGARDING INDEMNIFICATION.		19
	7.1	Company Indemnification	19
	7.2	Purchaser's Indemnification	19

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TABLE OF CONTENTS

			Page
	7.3	Procedures	19
	7.4	Limitation on Acquisition of Common Stock of the Company	20
8.	MISCELLANEOUS.		20
	8.1	Governing Law	20
	8.2	Survival	20
	8.3	Successors and Assigns	20
	8.4	Entire Agreement; Survival	21
	8.5	Severability	21
	8.6	Amendment and Waiver.	21
	8.7	Delays or Omissions	21
	8.8	Notices	21
	8.9	Titles and Subtitles	22
	8.10	Facsimile Signatures; Counterparts	22
	8.11	Broker's Fees	22
	8.12	Construction	22

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STOCKERYALE, INC.

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of June 19, 2007 by and between StockerYale, Inc., a Massachusetts corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”).

RECITALS

Whereas, the Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

Whereas, the Company desires to sell and the Purchaser desires to purchase, upon the terms and conditions stated in this Agreement, (i) a secured term note of the Company substantially in the form attached as Exhibit A in the principal amount of $2,318,180 (together with any secured notes issued in exchange therefor or replacement thereof in accordance with the terms thereof, the “Note”) and (ii) 300,000 shares of the Company’s common stock (the “Closing Shares”) (the Note and the Closing Shares are referred to herein collectively as the “Securities”); and

Whereas, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached as Exhibit B (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. PURCHASE AND SALE OF NOTE AND CLOSING SHARES.

1.1 Purchase of Note and Closing Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall issue and sell to the Purchaser and the Purchaser agrees to purchase from the Company the Note and the Closing Shares. The purchase price (the “Purchase Price”) of (a) the Note at the closing (the “Closing”) shall be equal to $1.00 for each $1.00 of principal amount of the Note purchased (representing an aggregate Purchase Price of $2,318,180 with respect to the Note) and (b) the Closing Shares at the Closing shall be equal to the product of (i) the amount of Closing Shares issued to the Purchaser hereunder, multiplied by (ii) $.01 (representing an aggregate Purchase Price of $3,000 with respect to the Closing Shares).

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1.2 The Closing Date. The date and time of the Closing (the “Closing Date”) shall be at such time and place as is mutually agreed to by the Company and the Purchaser, subject to the satisfaction (or waiver) of all of the conditions to the Closing set forth in Sections 5 and 6.

1.3 Form of Payment. Pursuant to a Funds Escrow Agreement (the “Funds Escrow Agreement”), on the Closing Date, (i) the Purchaser shall pay the Purchase Price to the Company for the Note and the Closing Shares by wire transfer of immediately available funds in accordance with the Company’s written wire instructions, less any amount withheld for expenses and other payments pursuant to Section 4.16, (ii) the Company shall deliver to the Purchaser, the Note representing the principal amount of the Note that the Purchaser is then purchasing hereunder, duly executed on behalf of the Company and registered in the name of the Purchaser or its designee and (iii) the Company shall deliver to the Purchaser the stock certificates evidencing the Closing Shares registered in the Purchaser’s name.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company hereby represents and warrants to the Purchaser as of the date of this Agreement as set forth below except as disclosed in the Company’s filings under the Securities Exchange Act of 1934 (collectively, the “Exchange Act Filings”), or the Schedules hereto.

2.1 Organization, Good Standing and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is qualified to do business and in good standing in each other jurisdiction in which the ownership or leasing of its properties or the nature of its business requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations or financial condition of the Company, or on the transactions contemplated hereby, or by the other Offering Documents or the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Offering Documents.

2.2 Subsidiaries. Schedule 2.2 hereto sets forth each subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of each person’s ownership of the outstanding stock or other interests of such subsidiary. For the purposes of this Agreement, “subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other subsidiaries. All of the outstanding shares of capital stock of each subsidiary (that is a corporation) have been duly authorized and validly issued, and are fully paid and nonassessable. There are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any subsidiary for the purchase or acquisition of any shares of capital stock of any subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock. Neither the Company nor any subsidiary is subject to any obligation (contingent or otherwise) to

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repurchase or otherwise acquire or retire any shares of the capital stock of any subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence. Neither the Company nor any subsidiary is party to, nor has any knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of any subsidiary.

2.3 Capitalization; Voting Rights.

(a) The authorized capital stock of the Company on the Closing Date, consists of (i) no shares of preferred stock, and (ii) 100,000,000 shares of common stock, par value $.001 per share (the “Common Stock”), 35,273,571 shares of which are issued and outstanding.

(b) Except as disclosed on Schedule 2.3, other than (i) the shares reserved for issuance under the Company’s stock option plans; and (ii) shares which may be granted pursuant to this Agreement and the Transaction Documents, there are no outstanding options, warrants, rights (including preemptive rights and rights of first refusal) to subscribe to, call or commitment of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company (such Schedule 2.3 shall provide the exercise or conversion term, exercise or conversion price, vesting period, holders of such options, warrants or convertible securities and the amount granted or issued to each holder). There exists no proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Neither the offer, issuance or sale of any of the Note or the Closing Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities.

(c) All issued and outstanding shares of the Company’s Common Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable and (ii) together with the offer and sale of all convertible securities, rights, warrants, or options of the Company were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and no stockholder has a right of rescission or damages against the Company with respect thereto.

(d) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Articles of Organization, as amended to date (the “Charter”). The Closing Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed, except to the extent that such restrictions shall be eliminated by virtue of the Registration Rights Agreement.

(e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities of the Company or rights to purchase equity securities of the Company provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

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2.4 Authorization; Binding Obligations. All corporate action on the part of the Company necessary for the authorization of this Agreement, the Note, the Registration Rights Agreement, the Funds Escrow Agreement and the Reaffirmation and Ratification Agreement dated as of the date hereof by and among the Company, StockerYale Canada, Inc. and Lasiris Holdings, Inc. (the “Reaffirmation and Ratification Agreement”) (collectively, the “Transaction Documents”), the performance of all obligations of the Company hereunder at the applicable Closing and, the authorization, sale, issuance and delivery of the Note and the Closing Shares has been taken or will be taken prior to the Closing and no further consent or authorization of the Company, its board of directors or stockholders is required. This Agreement and the other Transaction Documents, when executed and delivered and to the extent that the Company is a party thereto, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (b) general principles of equity that restrict the availability of equitable or legal remedies. The sale of the Note and the issuance of the Closing Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. The Note, when executed and delivered in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their respective terms.

2.5 Liabilities. The Company has no material liabilities and, to the best of its knowledge, knows of no material contingent liabilities, except current liabilities incurred in the ordinary course of business and liabilities disclosed in the Company’s Exchange Act Filings (collectively, the “Exchange Act Filings”) made prior to the date of this Agreement.

2.6 Agreements; Action. Except as set forth on Schedule 2.6:

(a) All of the agreements, understandings, instruments, contracts and proposed transactions, to which the Company is a party or by which it is bound, that are required to be filed under Item 601 of Regulation SB promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) have been so filed by the Company with the SEC. All material judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound, have been disclosed by the Company on a current report on Form 8-K pursuant to the Exchange Act. Notwithstanding the foregoing, there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound which may involve (i) the transfer or license of any patent, copyright, trade secret or other proprietary right to or from the Company (other than licenses arising from the purchase of “off the shelf” or other standard products), or (ii) provisions restricting the development, manufacture or distribution of the Company’s products or services, or (iii) indemnification by the Company with respect to infringements of proprietary rights.

(b) The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital

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stock, (ii) since December 31, 2006, incurred any indebtedness for money borrowed or any other liabilities individually in excess of $250,000 or, in the case of indebtedness and/or liabilities individually less than $50,000, in excess of $150,000 in the aggregate, (iii) made any loans or advances to any person or entity in excess, individually or in the aggregate, of $100,000, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. Neither the Company nor any subsidiary is in default with respect to any indebtedness.

(c) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

2.7 Obligations to Related Parties. There are no obligations of the Company to officers, directors, stockholders or employees of the Company other than (a) for payment of salary for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company, (c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company) and (d) obligations listed in the Company’s financial statements or disclosed in any of its Exchange Act Filings. Except as described above or set forth on Schedule 2.7, none of the officers, directors or, to the best of the Company’s knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $50,000 or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded companies (representing less than 1% of such company) which may compete with the Company. Except as described above, no officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated between the Company and any such person. Except as set forth on Schedule 2.7, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

2.8 Changes. Since March 31, 2007, except as disclosed in any Schedule to this Agreement or to any of the other Transaction Documents, there has not been:

(a) Any change in the assets, liabilities, financial condition, or operations of the Company, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is reasonably expected to have a material adverse effect on such assets, liabilities, financial condition or operations of the Company;

(b) Any resignation or termination of any officer, key employee or group of employees of the Company;

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(c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d) Any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties, business or financial condition of the Company;

(e) Any waiver by the Company of a valuable right or of a material debt owed to it;

(f) Any direct or indirect material loans made by the Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business;

(g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

(h) Any declaration or payment of any dividend or other distribution of the assets of the Company;

(i) Any labor organization activity related to the Company;

(j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;

(k) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(l) Any change in any material agreement to which the Company is a party or by which it is bound which may materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company;

(m) Any other event or condition of the character that, either individually or cumulatively, has or could reasonably be expected to materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company; or

(n) Any arrangement or commitment by the Company to do any of the acts described in subsection (a) through (m) above.

2.9 Title to Properties and Assets; Liens, Etc. The Company has good and marketable title to its properties and assets, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, (c) those that have otherwise arisen in the ordinary course of business and (d) those set forth on Schedule 2.9. All facilities, machinery, equipment, fixtures,

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vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. The Company is in compliance with all material terms of each lease to which it is a party or is otherwise bound.

2.10 Intellectual Property.

(a) The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and to the Company’s knowledge as presently proposed to be conducted (the “Intellectual Property”), without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing proprietary rights, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of “off the shelf” or standard products.

(b) Except as set forth on Schedule 2.10(b), the Company has not received any communications alleging that the Company has violated any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity, nor is the Company aware of any basis therefor.

(c) The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been rightfully assigned to the Company.

2.11 Compliance with Other Instruments. The Company is not in violation or default of any term of its Charter or its bylaws as currently in effect (the “Bylaws”), or of any material provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order or writ. The execution, delivery and performance of and compliance with this Agreement and the other Transaction Documents to which it is a party, and the issuance and sale of the Note and the Closing Shares by the Company and the other Securities by the Company each pursuant hereto and thereto, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term or provision, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

2.12 Litigation. There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any subsidiary that prevents the Company from entering into this Agreement or the other Transaction Documents, or from consummating the transactions contemplated hereby or thereby. Except as set forth on Schedule 2.12 hereto, there is no action, suit, proceeding or investigation pending or,

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to the knowledge of the Company, threatened, against or involving the Company, any subsidiary of the Company or any of their respective properties or assets which individually or in the aggregate would have a Material Adverse Effect. The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.

2.13 Tax Returns and Payments. The Company has timely filed all tax returns (federal, state and local) required to be filed by it of which the failure to file would have a material adverse effect. All taxes shown to be due and payable on such returns, any assessments imposed, and to the Company’s knowledge all other taxes due and payable by the Company on or before the Closing, have been paid or will be paid prior to the time they become delinquent. The Company has not been advised (a) that any of its returns, federal, state or other, have been or are being audited as of the date hereof, or (b) of any deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any liability of any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for.

2.14 Employees. The Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company’s knowledge, threatened with respect to the Company. The Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company; and to the Company’s knowledge the continued employment by the Company of its present employees, and the performance of the Company’s contracts with its independent contractors, will not result in any such violation. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company. The Company has not received any notice alleging that any such violation has occurred. Except for employees who have a current effective employment agreement with the Company, no employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. The Company is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee or group of employees.

2.15 Registration Rights and Voting Rights. Except as listed on Schedule 2.15, the Company is presently not under any obligation, and has not granted any rights, or a party to any agreement, to register any of the Company’s presently outstanding securities or any of its securities that may hereafter be issued that have not been satisfied. To the Company’s knowledge, no stockholder of the Company has entered into any agreement with respect to the voting or transfer of any equity securities of the Company.

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2.16 Compliance with Laws; Permits. To its knowledge, the Company is not in violation in any material respect of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of any of the Securities, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. The Company has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which would materially and adversely affect the business, properties or financial condition of the Company.

2.17 Environmental and Safety Laws. Except as described on Schedule 2.17, (a) the Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation and (b) no Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company or, to the Company’s knowledge, by any other person or entity on any property owned, leased or used by the Company. For the purposes of the preceding sentence, “Hazardous Materials” shall mean (a) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state, federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous substances, including building materials, or (b) any petroleum products or nuclear materials.

2.18 Valid Offering. Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, the offer, sale and issuance of the Securities will be exempt from the registration requirements of the 1933 Act, and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.

2.19 Full Disclosure. The Company has provided the Purchaser with all information requested by the Purchaser in connection with its decision to purchase the Note and the Closing Shares. Neither this Agreement, the exhibits and schedules hereto, the other Transaction Documents nor any other document delivered by the Company to Purchaser or its attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they are made, not misleading. Any financial projections and other

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estimates provided to the Purchaser by the Company were based on the Company’s experience in the industry and on assumptions of fact and opinion as to future events which the Company, at the date of the issuance of such projections or estimates, believed to be reasonable. As of the date hereof no facts have come to the attention of the Company that would, in its opinion, require the Company to revise or amplify in any material respect the assumptions underlying such projections and other estimates or the conclusions derived therefrom.

2.20 Insurance. The Company has general commercial, product liability, fire and casualty insurance policies with coverage customary for companies similarly situated to the Company in the same or similar business.

2.21 SEC Reports. The Common Stock of the Company is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and the Company has timely filed all proxy statements, reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act. The Company has furnished the Purchaser with copies of (i) its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006, (ii) its Form 10-QSB for the fiscal quarter ended March 31, 2007 and (iii) its Form 8-K filings which it has made during the fiscal year 2007 to date (collectively, the “SEC Reports”). The Company is eligible to file a registration statement on Form S-3 with the SEC for the purpose of registering the resale of its securities. Each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed) and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

2.22 No Market Manipulation. The Company has not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock of the Company to facilitate the sale or resale of any of the Closing Shares or affect the price at which any of the Closing Shares being offered hereby may be issued.

2.23 Listing. The Company’s Common Stock is listed for trading on the Nasdaq Global Market and satisfies all requirements for the continuation of such listing. Except as set forth on Schedule 2.23, the Company has not received any written notice that its Common Stock will be delisted from the Nasdaq Global Market or that the Common Stock and the Company do not meet all requirements for the continuation of such listing.

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2.24 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the 1933 Act which would prevent the Company from selling the Securities pursuant to Rule 506 under the 1933 Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings.

2.25 Stop Transfer. The Securities are restricted securities as of the date of this Agreement. The Company will agree to promptly cause to be removed any stop transfer order or other order impeding the sale and delivery of any of the Closing Shares at such time as the Closing Shares are resold if such securities are registered for public sale, whether as a result of the Registration Rights Agreement or otherwise, or an exemption from registration is available and the conditions for use thereof are satisfied, except as required by federal securities laws.

2.26 Dilution. The Company understands the nature of the Securities being sold hereby and recognizes that they may have a potential dilutive effect. The Company specifically acknowledges that its obligation to issue the Closing Shares is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company.

2.27 Material Agreements. There is no agreement that has not been filed with the SEC as an exhibit to a registration statement or other applicable form the breach of which could reasonably be expected to have a material adverse effect as to the Company and its subsidiaries, or would prohibit or otherwise interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement in any material respect.

2.28 ERISA. Based upon the Employee Retirement Income Security Act of 1974 (“ERISA”), and the regulations and published interpretations thereunder: (i) the Company has not engaged in any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code, as amended (the “Code”); (ii) the Company has met all applicable minimum funding requirements under Section 302 of ERISA in respect of its plans; (iii) the Company does not have any knowledge of any event or occurrence which would cause the Pension Benefit Guaranty Corporation to institute proceedings under Title IV of ERISA to terminate any employee benefit plan(s); (iv) the Company does not have any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than Companies’ employees; and (v) the Company has not withdrawn, completely or partially, from any multi-employer pension plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980.

2.29 Solvency. The Company is solvent, able to pay its debts as they mature, has capital sufficient to carry on its business and all businesses in which such Company is about to engage and the fair saleable value of its assets (calculated on a going concern basis) is in excess of the amount of its liabilities.

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2.30 Form S-3 Eligibility. The Company is eligible to register the Closing Shares for resale by the Purchaser using Form S-3 promulgated under the 1933 Act.

2.31 Patriot Act. The Company certifies that, to the best of Company’s knowledge, the Company nor any of its Subsidiaries has been designated, nor is or shall be owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Company hereby acknowledges that the Purchaser seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Company hereby represents, warrants and covenants that: (i) none of the cash or property that the Company or any of its Subsidiaries will pay or will contribute to the Purchaser has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Company or any of its Subsidiaries to the Purchaser, to the extent that they are within the Company’s and/or its Subsidiaries’ control shall cause the Purchaser to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company shall promptly notify the Purchaser if any of these representations, warranties or covenants ceases to be true and accurate regarding the Company or any of its Subsidiaries. The Company shall provide the Purchaser all additional information regarding the Company or any of its Subsidiaries that the Purchaser deems necessary or convenient to ensure compliance with all applicable laws concerning money laundering and similar activities. The Company understands and agrees that if at any time it is discovered that any of the foregoing representations, warranties or covenants are incorrect, or if otherwise required by applicable law or regulation related to money laundering or similar activities, the Purchaser may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of the Purchaser’s investment in the Company. The Company further understands that the Purchaser may release confidential information about the Company and its Subsidiaries and, if applicable, any underlying beneficial owners, to proper authorities if the Purchaser, in its sole discretion, determines that it is in the best interests of the Purchaser in light of relevant rules and regulations under the laws set forth in subsection (ii) above.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

The Purchaser hereby represents and warrants to the Company as follows:

3.1 Requisite Power and Authority. The Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and the Transaction Documents and to carry out their provisions. All corporate action on Purchaser’s part required for the lawful execution and delivery of this Agreement and the Transaction Documents have been or will be effectively taken prior to the Closing. Upon their execution and delivery, this Agreement and the other Transaction Documents will be valid and binding obligations of the Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (b) as limited by general principles of equity that restrict the availability of equitable and legal remedies.

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3.2 Investment Representations. The Purchaser understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the 1933 Act based in part upon the Purchaser’s representations contained in this Agreement, including, without limitation, that the Purchaser is an “accredited investor” within the meaning of Regulation D. The Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the Company’s business, management and financial affairs and the terms and conditions of the offering and the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Purchaser or to which the Purchaser had access.

3.3 Purchaser Bears Economic Risk. The Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Purchaser must bear the economic risk of this investment until the Securities are sold pursuant to (i) an effective registration statement under the 1933 Act, or (ii) an exemption from registration is available.

3.4 Acquisition for Own Account. The Purchaser is acquiring the Note and the Closing Shares for its own account and for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution.

3.5 Purchaser Can Protect Its Interest. The Purchaser represents that by reason of its, or of its management’s, business and financial experience, the Purchaser has the capacity to evaluate the merits and risks of its investment in the Securities and to protect its own interests in connection with the transactions contemplated in this Agreement, and the other Transaction Documents. Further, the Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement or the other Transaction Documents.

3.6 Accredited Investor. The Purchaser represents that it is an accredited investor within the meaning of Regulation D.

3.7 Legends. The Closing Shares, except as provided in Section 4.17, shall bear a legend which shall be in substantially the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IF APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO STOCKERYALE, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

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3.8 Market Manipulation. The Purchaser has not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock of the Company to facilitate the sale or resale of any of the Closing Shares or affect the price at which any of the Closing Shares being offered hereby may be issued. Notwithstanding the foregoing, nothing contained herein shall limit or be deemed in any manner whatsoever to limit any Purchaser hedging transactions following payment in full of the Note.

4. COVENANTS OF THE COMPANY.

The Company covenants and agrees with the Purchaser as follows:

4.1 Stop-Orders. The Company will advise the Purchaser, promptly after it receives notice of issuance by the SEC, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose.

4.2 Listing. The Company will use commercially reasonable efforts to maintain the listing of its Common Stock on the Nasdaq Stock Market (including the Nasdaq Capital Market and the Nasdaq OTC Bulletin Board, but excluding the pink and yellow sheets), American Stock Exchange or New York Stock Exchange (a “Principal Market”), and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers (“NASD”) and such exchanges, as applicable. The Company will provide the Purchaser copies of all notices it receives notifying the Company of the threatened and actual delisting of the Common Stock from any Principal Market.

4.3 Market Regulations. The Company shall notify the SEC, NASD and applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Purchaser and promptly provide copies thereof to the Purchaser.

4.4 Reporting Requirements. The Company will timely file with the SEC all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. Within fifteen (15) days after the end of each month, the Company will deliver to the Purchaser unaudited trial balances as at the end of such month.

4.5 Use of Funds. The Company agrees that it will use the proceeds of the sale of the Note and the Closing Shares for general corporate purposes and will not use any of such proceeds to repay any indebtedness of the Company (other than trade payables in the ordinary course and such obligations to the Purchaser) to any current executive officers, directors or principal stockholders of the Company.

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4.6 Access to Facilities. The Company will permit any representatives designated by the Purchaser (or any transferee of the Purchaser), upon reasonable notice and during normal business hours, at such person’s expense and accompanied by a representative of the Company, to (a) visit and inspect any of the properties of the Company, (b) examine the corporate and financial records of the Company (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom and (c) discuss the affairs, finances and accounts of any such corporations with the directors, officers and independent accountants of the Company.

4.7 Intentionally Omitted.

4.8 Insurance. The Company will keep its assets which are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Company; and the Company will maintain, with financially sound and reputable insurers, insurance against other hazards and risks and liability to persons and property to the extent and in the manner customary for companies in similar business similarly situated as the Company and to the extent available on commercially reasonable terms.

4.9 Intellectual Property; Corporate Existence. The Company shall maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business.

4.10 Financial Information. The Company agrees to send the following to the Purchaser: (i) unless the following are filed with the SEC through EDGAR and are available to the public through EDGAR, within one (1) day after the filing thereof with the SEC, a copy of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act; (ii) on the same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries, unless available through Bloomberg Financial Markets (or any successor thereto) contemporaneously with the release; and (iii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.

4.11 Intentionally Omitted.

4.12 Confidentiality. The Company agrees that it will not disclose, and will not include in any public announcement, the name of the Purchaser, unless expressly agreed to by the Purchaser or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.

4.13 Corporate Existence. So long as the Purchaser beneficially owns any of the Securities, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale or transfer of all or substantially all of the Company’s assets where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and the Transaction Documents and (ii) is a publicly traded company whose common stock is quoted or listed on a Principal Market.

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4.14 Reissuance of Securities. The Company agrees to reissue certificates representing the Securities without the legends set forth in Section 5.7 above at such time as (a) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the 1933 Act, or (b) upon resale subject to an effective registration statement after such Securities are registered under the 1933 Act. The Company agrees to cooperate with the Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and, subject to satisfaction of all requirements of such rules, to provide legal opinions or such transfer agent instructions necessary to allow such resales provided the Company and its counsel receive reasonably requested representations from the selling Purchaser and broker, if any.

4.15 Priority of Notes. Except as set forth on Schedule 4.15 hereto, for so long as the Note is outstanding, in the event that the Company or any of its Subsidiaries issues or incurs any indebtedness, it shall, or it shall cause any Subsidiary to, first enter into, and cause the lender to enter into, a Subordination Agreement, containing terms and conditions acceptable to the Purchaser.

4.16 Expenses and Other Payments. The Company shall reimburse the Purchaser for its reasonable legal fees for services rendered to the Purchaser in preparation of this Agreement and the other Transaction Documents, and expenses in connection with the Purchaser’s due diligence review of the Company and relevant matters, subject to reasonable documentation of such expenses. Amounts payable hereunder and under Section 6.10 of the Note shall be withheld by the Purchaser from the Purchase Price to be paid at Closing.

4.17 Transfer and Depositary Agent Instructions. Other than as provided below, all certificates issued the Closing Shares shall bear the restrictive legend specified in Section 3.7. The Company warrants that the Closing Shares shall be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement, other than in accordance with applicable securities laws. If the Purchaser provides the Company with an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that a public sale, assignment or transfer of the Closing Shares may be made without registration under the 1933 Act or the Purchaser provides the Company with reasonable assurances that the Closing Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold, the Company shall permit the transfer, and promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by the Purchaser and without any restrictive legend. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 4.17 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 4.17, that the Purchaser shall be entitled, in addition to all other available remedies but subject to applicable securities laws, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

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5. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

The obligation of the Company to issue and sell the Note and the Closing Shares to the Purchaser at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Purchaser with prior written notice thereof:

5.1 Execution. The Purchaser shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

5.2 Payment. The Purchaser shall have delivered to the Company the Purchase Price (less the amounts withheld pursuant to Section 4.16) by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

5.3 Representations and Warranties. The representations and warranties of the Purchaser shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date), and the Purchaser shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

6. CONDITIONS TO THE PURCHASER’S OBLIGATION TO PURCHASE.

The obligation of the Purchaser hereunder to purchase the Note and the Closing Shares from the Company at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion by providing the Company with prior written notice thereof:

6.1 Execution. The Company shall have executed each of the Transaction Documents and delivered the same to the Purchaser.

6.2 Exchange Listing. The Common Stock (x) shall be designated for quotation or listed on the Principal Market and (y) shall not have been suspended by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market have been threatened either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market; and the Closing Shares shall be listed upon the Principal Market.

6.3 Representations and Warranties. The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Purchaser shall have received a certificate, executed by either the Chief

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Executive Officer or the Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Purchaser.

6.4 Legal Opinion. The Purchaser shall have received (a) a legal opinion, dated as of the Closing Date, in form, scope and substance reasonably satisfactory to the Purchaser and in substantially the form of Exhibit C attached hereto and (b) a legal opinion of Company’s Canadian counsel, dated as of the Closing Date, in form, scope and substance reasonably satisfactory to Purchaser.

6.5 Delivery of Securities. At the Closing, the Company shall have executed and delivered to the Purchaser the Note and delivered to the Purchaser the Closing Shares.

6.6 Board Resolutions. The Board of Directors of the Company shall have adopted resolutions consistent with Section 2.4 above and in a form reasonably acceptable to the Purchaser (the “Resolutions”).

6.7 Reservation of Shares. As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of issuing the Closing Shares.

6.8 Intentionally Omitted.

6.9 Good Standing Certificates. The Company shall have delivered to the Purchaser a certificate evidencing the incorporation and good standing of the Company and each Subsidiary in such entity’s state of incorporation or organization issued by the Secretary of State of such state of incorporation or organization as of the Closing Date.

6.10 Secretary’s Certificate. The Company shall have delivered to the Purchaser a secretary’s certificate, dated as of the Closing Date, certifying as to (A) the Resolutions, (B) the Charter, certified as of the Closing Date, by the Secretary of State of the State of Massachusetts and (C) the Bylaws, each as in effect at the Closing.

6.11 Filings. The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Securities pursuant to this Agreement in compliance with such laws.

6.12 Security Agreement. The Company shall have delivered to the Purchaser an executed copy of the Reaffirmation and Ratification Agreement.

6.13 Other Transaction Documents. The Company shall have delivered to the Purchaser such other documents relating to the transactions contemplated by this Agreement as the Purchaser or its counsel may reasonably request, including, without limitation, all documents, instruments and agreements relating to the Canadian component to the transaction contemplated hereby.

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7. COVENANTS OF THE COMPANY AND THE PURCHASER REGARDING INDEMNIFICATION.

7.1 Company Indemnification. The Company agrees to indemnify, hold harmless, reimburse and defend the Purchaser, each of the Purchaser’s officers, directors, agents, affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Purchaser which results, arises out of or is based upon the negotiation, execution or performance of this Agreement including but not limited to (i) any misrepresentation by Company or breach of any warranty by Company in this Agreement or in any exhibits or schedules attached hereto or any Transaction Document, or (ii) any breach or default in performance by Company of any covenant or undertaking to be performed by Company hereunder, or any other agreement entered into by the Company and the Purchaser relating hereto.

7.2 Purchaser’s Indemnification. The Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company and each of the Company’s officers, directors, agents, affiliates, control persons and principal shareholders, at all times against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees incurred in the defense thereof) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon any breach of the representations of the Purchaser contained in Section 3 of this Agreement.

7.3 Procedures. Promptly after receipt by an indemnified party pursuant to the provisions of Section 7.1 or 7.2 of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions such indemnified party will, if a claim thereof is to be made against the indemnifying party pursuant to the provisions of Section 7.1 or 7.2, promptly notify the indemnifying party of the commencement thereof; but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise under this Section except to the extent the defense of the claim is prejudiced. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, provided, however, if counsel for the indemnifying party concludes that a single counsel cannot under applicable legal and ethical considerations, represent both the indemnifying party and the indemnified party, the indemnified party or parties have the right to select separate counsel to participate in the defense of such action on behalf of such indemnified party or parties; provided that there shall be no more than one such separate counsel. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party pursuant to the provisions of said Section 7.1 or 7.2 for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless (i) the indemnified party shall have employed counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action or (iii) the indemnifying party has, in its sole discretion, authorized the employment of counsel for the indemnified party at the expense of the indemnifying party.

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7.4 Limitation on Acquisition of Common Stock of the Company. Notwithstanding anything to the contrary contained in this Agreement, any Transaction Document or any document, instrument or agreement entered into in connection with any other transactions between the Purchaser and the Company, the Purchaser may not acquire stock in the Company (including, without limitation, pursuant to a contract to purchase, by exercising an option or warrant, by converting any other security or instrument, by acquiring or exercising any other right to acquire, shares of stock or other security convertible into shares of stock in the Company, or otherwise, and such contracts, options, warrants, conversion or other rights shall not be enforceable or exercisable) to the extent such stock acquisition would cause any interest (including any original issue discount) payable by the Company to the Purchaser not to qualify as “portfolio interest” within the meaning of Section 881(c)(2) of the Code, by reason of Section 881(c)(3) of the Code, taking into account the constructive ownership rules under Section 871(h)(3)(C) of the Code (the “Stock Acquisition Limitation”). The Stock Acquisition Limitation shall automatically become null and void without any notice to the Company upon the existence of an Event of Default (as defined in the Note).

8. MISCELLANEOUS.

8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York; provided, however that the Purchaser may choose to waive this provision and bring an action outside the state of New York. Both parties and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under 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 prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.

8.2 Survival. The representations, warranties, indemnities, agreements, covenants and other statements of the Company made herein shall survive execution of this Agreement and delivery of the Note and the Closing Shares. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

8.3 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be

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enforceable by each person who shall be a holder of the Securities from time to time, other than the holders of Common Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective registration statement. The Purchaser may assign and/or grant participations (in whole or in part) in this Agreement and the other Transaction Documents.

8.4 Entire Agreement; Survival. This Agreement, the exhibits and schedules hereto, the other Transaction Documents and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof, including, but not limited to, the purchase and sale of the Note and the Closing Shares. No party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. The Purchaser shall not be deemed to have made any representation or warranty to the Company other than as expressly made by the Purchaser in Section 3 hereof. Without limiting the generality of the foregoing, and notwithstanding any otherwise express representations and warranties made by the Purchaser in Section 3 hereof, the Purchaser makes no representation or warranty to the Company with respect to the timing or the manner in which the Company’s Common Stock will be sold. Nothing contained in this Agreement, any Transaction Document or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum rate permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Purchaser and thus refunded to the Company.

8.5 Severability. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

8.6 Amendment and Waiver.

(a) This Agreement may be amended or modified only upon the written consent of the Company and the Purchaser.

(b) The obligations of the Company and the rights of the Purchaser under this Agreement may be waived only with the written consent of the Purchaser.

8.7 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or non-compliance by another party under this Agreement or the Transaction Documents, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement, the Note or the other Transaction Documents, by law or otherwise afforded to any party, shall be cumulative and not alternative.

8.8 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b)

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when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof, with a copy to Thomas B. Rosedale, c/o BRL Law Group LLC, 31 St. James Avenue, Suite #850, Boston, Massachusetts 02116, facsimile number (617) 399-6930, and to the Purchaser at the address set forth on the signature page hereto for such Purchaser, with a copy in the case of the Purchaser to Scott J. Giordano, Esq., Loeb & Loeb, LLP, 345 Park Avenue, New York, NY 10154, facsimile number (212) 407-4990, or at such other address as the Company or the Purchaser may designate by ten days advance written notice to the other parties hereto.

8.9 Titles and Subtitles. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

8.10 Facsimile Signatures; Counterparts. This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

8.11 Broker’s Fees. Each party hereto represents and warrants that, except as each party may have notified the other in writing on or prior to the date hereof, no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 8.11 being untrue.

8.12 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Agreement 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 Agreement to favor any party against the other.

[Balance of page intentionally left blank; signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement as of the date set forth in the first paragraph hereof.

COMPANY:		PURCHASER:
STOCKERYALE, INC.		LAURUS MASTER FUND, LTD.
By:	/s/ Marianne Molleur	By:	/s/ Eugene Grin
Name:	Marianne Molleur	Name:	Eugene Grin
Title:	Senior Vice President and Chief Financial Officer	Title:	Director
Address:		Address:
32 Hampshire Road Salem, New Hampshire 03079		c/o M&C Corporate Services Limited P.O. Box 309 GT, Ugland House, South Church Street George Town, Grand Cayman Cayman Islands

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EX-10.2

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of June 19, 2007, by and between StockerYale, Inc., a Massachusetts corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands company (the “Purchaser”).

This Agreement is being entered into in connection with a Securities Purchase Agreement dated as of the date hereof by and between the Purchaser and the Company (as amended, modified and supplemented from time to time, the “Purchase Agreement”).

The Company and the Purchaser hereby agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Effectiveness Date” means the 90th day following the Closing Date.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Filing Date” means, with respect to the Registration Statement required to be filed hereunder, the 135th day following the Closing Date.

“Holder” or “Holders” means the Purchaser or any of its affiliates or transferees to the extent any of them hold Registrable Securities.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Losses” shall have the meaning set forth in Section 5(a).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act of 1933, as amended (the “Securities Act”), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means the Closing Shares.

“Registration Statement” means the registration statement required to be filed hereunder, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

2. Registration.

(a) On or prior to the Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of the Registrable Securities in an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). The Company shall use its reasonable commercial efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date, and shall use its reasonable commercial efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earliest date of when (i) all Registrable Securities have been sold, (ii) all Registrable Securities may be sold immediately without registration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holders and (iii) four (4) years after the Closing Date (the “Effectiveness Period”).

(b) If: (i) any Registration Statement is not filed on or prior to the Filing Date; (ii) a Registration Statement filed hereunder is not declared effective by the SEC by the Effectiveness Date; (iii) after a Registration Statement is filed with and declared effective by the SEC, such Registration Statement ceases to be effective (by suspension or otherwise) as to all Registrable Securities to which it is required to relate at any time prior to the expiration of the Effectiveness Period (without being succeeded as promptly as practicable by an additional registration statement filed and declared effective), for a period of time which shall exceed sixty (60) days in the aggregate per year or more than thirty (30) consecutive calendar days (defined as a period of 365 days commencing on the date the Registration Statement is declared effective); or (iv) the Common Stock is not listed or quoted, or is suspended from trading on any Trading Market (as defined below) for a period of three (3) consecutive Trading Days (provided the

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Company shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the Common Stock on any of the NASD OTC Bulletin Board, BBX Exchange, NASDAQ SmallCap Market, the Nasdaq National Market, American Stock Exchange or New York Stock Exchange (the “Trading Market”)) (any such failure or breach being referred to as an “Event”; and for purposes of clause (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such sixty (60) day or thirty (30) consecutive day period (as the case may be) is exceeded, or for purposes of clause (iv) the date on which such three (3) Trading Day period is exceeded, being referred to as “Event Date”), then until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to one percent (1.0%) for each thirty (30) day period (prorated on a daily basis for partial periods) of the original principal amount of the Note. Such liquidation damages shall be paid not less than each thirty (30) days during an Event and within three (3) business days following the date on which such Event has been cured by the Company.

3. Registration Procedures. If and whenever the Company is required by the provisions hereof to effect the registration of the Registrable Securities under the Securities Act, the Company will, as expeditiously as possible:

(a) prepare and file with the SEC a registration statement with respect to such securities, promptly as possible respond to any comments received from the SEC and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as herein provided), and promptly provide to the Purchaser copies of all filings and SEC letters of comment;

(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the registration statement and to keep such registration statement effective until the expiration of the Effectiveness Period;

(c) furnish to the Purchaser such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as the Purchaser reasonably may request to facilitate the public sale or disposition of the securities covered by such registration statement;

(d) use its commercially reasonable efforts to register or qualify the Purchaser’s Registrable Securities covered by such registration statement under the securities or “blue sky” laws of such jurisdictions as the Purchaser, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

(e) list the Registrable Securities covered by such registration statement with any securities exchange on which the Common Stock of the Company is then listed;

(f) immediately notify the Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of

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which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and

(g) make available on reasonable notice for inspection during normal business hours by the Purchaser and any attorney, accountant or other agent retained by the Purchaser, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Purchaser for the purpose of effecting the registration of the Registrable Securities pursuant to this Agreement.

4. Registration Expenses. All expenses relating to the Company’s compliance with Sections 2 and 3 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars, reasonable fees of, and reasonable disbursements incurred by, one counsel for the Holders, and costs of insurance are called “Registration Expenses”. All selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Holders beyond those included in Registration Expenses, are called “Selling Expenses” and are the responsibility of the Sellers The Company shall be responsible for all Registration Expenses.

5. Indemnification.

(a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Purchaser, and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability (i) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Purchaser or any such person in writing specifically for use in any such document, or (ii) contained in a Registration Statement or Prospectus if a corrected version of the Registration Statement or Prospectus was delivered to the Purchaser on a timely basis.

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(b) In the event of a registration of the Registrable Securities under the Securities Act pursuant to this Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact which was made in conformity with information furnished in writing by the Purchaser to the Company specifically for use in (and such information is contained in) the registration statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. Notwithstanding the provisions of this paragraph, the Purchaser shall not be required to indemnify any person or entity in excess of the amount of the aggregate proceeds received by the Purchaser of Registrable Securities in connection with any such registration under the Securities Act.

(c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 5(c) and shall only relieve it from any liability which it may have to such indemnified party under this Section 5(c) if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 5(c) for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof; if the indemnified party retains its own counsel, then the indemnified party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred.

(d) In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Purchaser, or any controlling

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person of the Purchaser, makes a claim for indemnification pursuant to this Section 5(c) but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 5(c) provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Purchaser or controlling person of the Purchaser in circumstances for which indemnification is provided under this Section 5(c); then, and in each such case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, provided, however, that, in any such case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

6. Intentionally Omitted.

7. Miscellaneous.

(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement; provided, however, so long as the Holder shall have received liquidated damages in accordance with the terms of Section 2(b) hereof, then the Holder shall not be entitled to specific performance of its rights under Section 2(b) arising from the occurrence of an Event specifically relating to the payment of such liquidated damages.

(b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 7(b) hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right for inclusion of shares in the Registration Statement to any of its security holders. Except as and to the extent specified in Schedule 7(b) hereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that has not been fully satisfied.

(c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a Discontinuation Event, such Holder will forthwith discontinue disposition of such Registrable

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Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop-transfer orders to enforce the provisions of this paragraph. For purposes of this Section 7(d), a “Discontinuation Event” shall mean (i) the date on which the SEC notifies the Company whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the SEC or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to the consent of any selling stockholder(s) under such registration statement.

(f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that

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does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence.

(g) Notices. Any notice or request hereunder may be given to the Company or Purchaser at the respective addresses set forth below or as may hereafter be specified in a notice designated as a change of address under this Section 7(g). Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery, overnight mail or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any officer of the party to whom it is addressed, in the case of those by mail or overnight mail, deemed to have been given when deposited in the mail or with the overnight mail carrier, and, in the case of a telecopy, when confirmed. The address for such notices and communications shall be as follows:

If to the Company:	StockerYale, Inc.
	32 Hampshire Road
	Salem, NH 03079
	Attention: Mark W. Blodgett
	Facsimile: (603) 898-8851
With a copy to:
	BRL Law Group LLC
	31 St. James Avenue, Suite #850
	Boston, MA 02116
	Attention: Thomas B. Rosedale
	Facsimile: (617) 399-6930
If to a Purchaser:	To the address set forth under
	such Purchaser name on the
	signature pages hereto.
If to any other Person who is then the registered Holder:
	To the address of such Holder as it
	appears in the stock transfer books
	of the Company

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Note.

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(i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

(j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that any suit, action or proceeding (“Proceedings”) concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan, State of New York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

(k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

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

STOCKERYALE, INC.
By:	/s/ Marianne Molleur
Name:	Marianne Molleur
Title:	Senior Vice President and Chief Financial Officer
LAURUS MASTER FUND, LTD.
By:	/s/ Eugene Grin
Name:	Eugene Grin
Title:	Director
Address for Notice:
c/o Laurus Capital Management, LLC
335 Madison Avenue, 10th Floor
New York, New York 10017
Attention: David Grin

EX-10.3

Exhibit 10.3

LAURUS MASTER FUND, LTD.

c/o Laurus Capital Management, LLC

335 Madison Avenue

New York, New York 10017

June 19, 2007

StockerYale, Inc.

32 Hampshire Road

Salem, New Hampshire 03079

Attention: Chief Financial Officer

Re: Note Amendment Agreement

Gentlemen:

Reference is made to (a) the Secured Term Note (the “Note”) dated December 30, 2005 made by StockerYale, Inc. (the “Company”) in favor of Laurus Master Fund, Ltd. (“Laurus”); Capitalized terms used herein that are not defined shall have the meaning given to them in the Note.

The Company has requested that Laurus amend the Note and Laurus is willing to do so on the terms and conditions set forth below.

In consideration of Laurus’ agreement to provide additional financial accommodations to the Company and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree that:

1. the maturity date “December 30, 2008” appearing in the preamble of the Note is amended and replaced with the maturity date “June 30, 2010”.

2. the monthly principal amount of “$121,212”, in the second line of Section 2.1 of the Note is amended and replaced with the monthly principal amount of “$60,000”;

3. Section 3.7 of the Note is amended by adding “(as defined in the Purchase Agreement)” after (a) the word “SEC” in the first line thereof, (b) the phrase “Principal Market” in the first line thereof and (c) the phrase “Common Stock” in the third line thereof;

4. Section 3.10 of the Note is amended by adding “(the “Security Agreement”)” at the end thereof;

5. Section 5.2 of the Note is amended by deleting the last sentence thereof;

6. Section 5.10 of the Note is amended and restated in its entirety to read as follows:

“Security Interest and Guarantee. The Holder has been granted a security interest in certain assets of the Company under (a) the Security Agreement, (b) the General Hypothecations of Movables, dated as of December 30, 2005 and June 28, 2006, respectively, each made by StockerYale Canada, Inc. (“S-Canada”) in favor of the Holder, (c) the Share Pledge Agreement dated as of July 17, 2006 between Lasiris Holdings, Inc. (“Lasiris”) and the Holder, (d) the Stock Pledge Agreement dated as of June 28, 2006 between the Borrower and the Holder and (e) the General Security Agreement dated as of July 17, 2006 between Lasiris and the Holder. The obligations of the Borrower under this Note are guaranteed by S-Canada and Lasiris pursuant to the Guaranties, dated as of December [30], 2005 and June 28, 2006 each made by S-Canada in favor of the Holder and the Guarantee dated as of June 28, 2006 made by Lasiris in favor of the Holder, respectively, which such Guaranties have been reaffirmed pursuant to a Reaffirmation and Ratification Agreement dated as of the date hereof made by the Company, S-Canada and Lasiris in favor of the Holder”;

Except as specifically amended and/or waived herein, the Note shall remain in full force and effect, and is hereby ratified and confirmed. The execution, delivery and effectiveness of this letter agreement shall not operate as a waiver of any right, power or remedy of Laurus, nor constitute a waiver of any provision of the Note.

This letter agreement shall be binding upon and inure to the benefit of the parties hereto and their respective administrators, successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York.

[Remainder of the page intentionally blank.]

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This letter agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.

Very truly yours,
LAURUS MASTER FUND, LTD.
By:	/s/ Eugene Grin
Its:	Director

CONSENTED AND AGREED TO:
STOCKERYALE, INC.
By:	/s/ Marianne Molleur
Its:	Senior Vice President and Chief Financial Officer

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EX-10.4

Exhibit 10.4

SECURED TERM NOTE

FOR VALUE RECEIVED, STOCKERYALE, INC., a Massachusetts corporation (the “Borrower”), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”) or its registered assigns or successors in interest, without demand, the sum of Two Million Three Hundred Eighteen Thousand One Hundred Eighty Dollars ($2,318,180) (the “Principal Amount”), together with any accrued and unpaid interest, on June 30, 2010 (the “Maturity Date”), if not sooner paid.

The following terms shall apply to this Note:

ARTICLE I

INTEREST

1.1 Interest Rate. Interest payable on this Note shall accrue at the annual rate of Prime Rate plus two percent (2%) (but in no event less than eight percent (8%) per annum) and be payable in arrears commencing one (1) month from the date hereof and on the first business day of each consecutive calendar month thereafter, and on the Maturity Date, accelerated or otherwise, due and payable as described below (the “Interest Rate”). Interest shall be computed on the basis of actual days elapsed in a year of 360 days. “Prime Rate” means the “base rate” or “prime rate” published in the Wall Street Journal from time to time. The Prime Rate shall be increased or decreased as the case may be for each increase or decrease in the Prime Rate in an amount equal to such increase or decrease in the Prime Rate; each change to be effective as of the day of the change in such rate.

ARTICLE II

PAYMENTS OF PRINCIPAL AND INTEREST

2.1 Monthly Payments. Subject to the terms of this Article II, the Borrower shall make monthly payments to the Holder in the principal amount of $65,000 (the “Monthly Principal Amount”), together with interest accrued to date on such portion of the Principal Amount plus any and all other amounts owing under this Note but not previously paid (the “Monthly Interest Amount and, together with the Monthly Principal Amount and all other amounts owing under this Note, collectively, the “Monthly Amount”), on July 1, 2007 and on the first business day of each consecutive calendar month thereafter (each, a “Repayment Date”).

2.2 Optional Prepayments. In the event Borrower wishes to prepay all or a portion of the Principal Amount or any and all other amounts owing under this Note (collectively, the “Obligations”), Borrower shall deliver to the Holder written notice indicating the amount intended to be so prepaid (the “Prepayment Amount”) and the date on which such prepayment shall be made (the “Prepayment Date”). Such notice shall be delivered to the Holder at least five (5) Business Days’ prior to the Prepayment Date. On the Prepayment Date,

Borrower shall pay to the Holder the Applicable Percentage (as defined below) of the Prepayment Amount in satisfaction of the Prepayment Amount. All such prepayments shall be (a) applied to the Obligations in such order as the Holder shall elect and (b) credited (conditional upon final collection) to the Obligations three (3) Business Days after receipt of such amounts by Holder in good funds in dollars of the United States of America. Any amount received by Holder after 12:00 noon (New York time) on any business day shall be deemed received on the next business day. For purposes of this Section 2.2, the term “Applicable Percentage” means (i) 115% for the period commencing on the date hereof (the “Closing Date”) and ending on the first anniversary of the Closing Date, (ii) 110% for the period commencing on the first day following the first anniversary of the Closing Date and ending on the second anniversary of the Closing Date and (iii) 105% for the period commencing on the first day following the second anniversary of the Closing Date and ending on the day immediately preceding the Maturity Date.

ARTICLE III

EVENT OF DEFAULT

The occurrence of any of the following events is an Event of Default (“Event of Default”):

3.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails to pay any installment of principal, interest or other fees hereon or in respect of any other promissory note issued pursuant to the Securities Purchase Agreement dated as of the date hereof by and between the Borrower and the Holder (as amended and as may be further amended, restated, modified and/or supplemented from time to time, the “Purchase Agreement”) when due.

3.2 Breach of Covenant. The Borrower breaches any covenant or other term or condition of this Note or the Purchase Agreement in any material respect and such breach, if subject to cure, continues for a period of five (5) business days after the occurrence thereof.

3.3 Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, in the Purchase Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading.

3.4 Receiver or Trustee. The Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

3.5 Judgments. Any money judgment, writ or similar final process shall be entered or filed against the Borrower or any of its property or other assets for more than $250,000 (to the extent not covered by independent third-party insurance as to which the Holder is a lender’s loss payee and a named additional insured and the insurer has been notified of such judgment and has not denied coverage), and shall remain unvacated, unbonded or unstayed for a period of ninety (90) days.

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3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower.

3.7 Stop Trade; Delisting. (a) An SEC (as defined in the Purchase Agreement) stop trade order or Principal Market (as defined in the Purchase Agreement) trading suspension of the Common Stock for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a Principal Market or (b) Borrower’s Common Stock (as defined in the Purchase Agreement) shall fail to be listed on a Principal Market or any securities exchange or other securities market (including the Nasdaq OTC Bulletin Board, but excluding the pink and yellow sheets).

3.8 Guaranty. (a) Any guarantor of all or any part of the obligations owing under this Note (each, a “Guarantor”) attempts to terminate, challenges the validity of, or its liability under any guaranty agreement made in favor of the Holder (each, a “Guaranty”), (b) any Guarantor shall default under any Guaranty or any guaranty security agreement made in favor of the Holder (each a “Guaranty Security Agreement”), which such default is not cured within any applicable cure or grace period or (c) any Guaranty or Guaranty Security Agreement shall cease to be valid, binding and enforceable in accordance with its terms.

3.9 Further Encumbrance. The Borrower shall not encumber, mortgage, pledge, assign or grant any lien or security interest in any or all of its assets to any person or entity other than those liens and security interests set forth on Schedule 3.9 hereof.

3.10 Security Agreement. An Event of Default shall have occurred under and as defined in the Security Agreement dated as of June 10, 2004 between Borrower and Holder, as the same may be amended, modified and supplemented from time to time (the “2004 Security Agreement”).

ARTICLE IV

DEFAULT PAYMENT

4.1 Default Rate. Upon the occurrence and during the continuance of an Event of Default, a default interest rate of five percent (5%) per annum above the Interest Rate shall apply to the amounts owed hereunder.

4.2 Cumulative Remedies. The remedies under this Note shall be cumulative.

ARTICLE V

MISCELLANEOUS

5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

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5.2 Notices. Any notice herein required or permitted to be given shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Borrower at the address as set forth on the signature page to the Purchase Agreement executed in connection herewith and to the Holder at the address set forth on the signature page to the Purchase Agreement for such Holder, with a copy to Scott J. Giordano, Esq., Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154, facsimile number (212) 407-4990, or at such other address as the Borrower or the Holder may designate by ten days advance written notice to the other parties hereto.

5.3 Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

5.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder.

5.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

5.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties and the individual signing this Note on behalf of the Borrower agree to submit to the jurisdiction of such courts. 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 Note is invalid or unenforceable under 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 prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note.

5.7 Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

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5.8 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Note 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 Note to favor any party against the other.

5.9 Management Fee. Simultaneously with the execution of this Note, the Borrower shall pay to Laurus Capital Management, LLC a management fee in an amount equal to $77,000, which such amount at the Holder’s option may be deducted from funds made available by the Holder to the Borrower hereunder.

5.10 Security Interest and Guarantee. The Holder has been granted a security interest in certain assets of the Company under (a) the 2004 Security Agreement, (b) the General Hypothecations of Movables, dated as of December 30, 2005 and June 28, 2006, respectively, each made by StockerYale Canada, Inc. (“S-Canada”) in favor of the Holder, (c) the Share Pledge Agreement dated as of July 17, 2006 between Lasiris Holdings, Inc. (“Lasiris”) and the Holder, (d) the Stock Pledge Agreement dated as of June 28, 2006 between the Borrower and the Holder and (e) the General Security Agreement dated as of July 17, 2006 between Lasiris and the Holder. The obligations of the Borrower under this Note are guaranteed by S-Canada and Lasiris pursuant to the Guaranties, dated as of December [30], 2005 and June 28, 2006 each made by S-Canada in favor of the Holder and the Guarantee dated as of June 28, 2006 made by Lasiris in favor of the Holder, respectively, which such Guaranties have been reaffirmed pursuant to a Reaffirmation and Ratification Agreement dated as of the date hereof made by the Company, S-Canada and Lasiris in favor of the Holder.

5.11 Registered Obligation. This Note is intended to be a registered obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Borrower (or its agent) shall register the Note (and thereafter shall maintain such registration) as to both principal and any stated interest. Notwithstanding any document, instrument or agreement relating to this Note to the contrary, transfer of this Note (or the right to any payments of principal or stated interest thereunder) may only be effected by (a) surrender of this Note and either the reissuance by the Borrower of this Note to the new holder or the issuance by the Borrower of a new instrument to the new holder, or (b) transfer through a book entry system maintained by the Borrower (or its agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

[Signature appears on the following page]

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IN WITNESS WHEREOF, the Borrower has caused this Secured Term Note to be signed in its name effective as of this 19th day of June, 2007.

STOCKERYALE, INC.
By:	/s/ Marianne Molleur
Name:	Marianne Molleur
Title:	Senior Vice President and Chief Financial Officer

WITNESS:

/s/ Tim Major

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