Exhibit 10.5
THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE
RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4
OF THIS WARRANT
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Number of Shares:
2,375,000
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Date of Issuance: October 31,
2006
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(subject to adjustment)
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StockerYale, Inc.
Common Stock Purchase
Warrant
(Void after October 31, 2016
(the “Expiration Date”))
StockerYale, Inc., a Massachusetts
corporation (the “Company”), for value received, hereby
certifies that The Eureka Interactive Fund Limited, or its
registered assigns (the “Registered Holder”), is
entitled, subject to the terms and conditions set forth below, to
purchase from the Company, at any time or from time to time on or
after the date of issuance and on or before 5:00 p.m. (Boston time)
on October 31, 2016, an aggregate of 2,375,000 nonassessable
shares of Common Stock, $0.001 par value per share, of the Company,
at a purchase price of $1.15 per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as
adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the “Warrant
Shares” and the “Purchase Price,”
respectively.
1. Exercise .
(a) This Warrant may be exercised by
the Registered Holder, in whole or in part, by surrendering this
Warrant, with the purchase form appended hereto as
Exhibit I duly executed by the Registered Holder or by
the Registered Holder’s duly authorized attorney, at the
principal office of the Company, or at such other office or agency
as the Company may designate, accompanied by payment in full, in
lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such
exercise.
(b) The Registered Holder may, at
its option, elect to pay some or all of the Purchase Price payable
upon an exercise of this Warrant by cancelling a portion of this
Warrant exercisable for such number of Warrant Shares as is
determined by dividing (i) the total Purchase Price payable in
respect of the number of Warrant Shares being purchased upon such
exercise by (ii) the excess of the Fair Market Value per share
of Common Stock (as defined below) as of the Exercise Date (as
defined in subsection 1(c) below) over the Purchase Price per
share. If the Registered Holder wishes to exercise this Warrant
pursuant to this method of payment with respect to the maximum
number of Warrant Shares purchasable pursuant to this method, then
the number of Warrant Shares so purchasable shall be equal to the
total number of Warrant Shares, minus the product obtained by
multiplying (x) the total number of Warrant Shares by
(y) a fraction, the numerator of which shall be the Purchase
Price per share and the denominator of
which shall be the Fair Market Value
per share of Common Stock as of the Exercise Date. The Fair Market
Value per share of Common Stock shall be determined as
follows:
(i) If the Common Stock is listed on
a national securities exchange, the Nasdaq Global Market or another
nationally recognized trading system as of the Exercise Date, the
Fair Market Value per share of Common Stock shall be deemed to be
the average of the high and low reported sale prices per share of
Common Stock thereon on the trading day immediately preceding the
Exercise Date (provided that if no such price is reported on such
day, the Fair Market Value per share of Common Stock shall be
determined pursuant to clause (ii)).
(ii) If the Common Stock is not
listed on a national securities exchange, the Nasdaq Global Market
or another nationally recognized trading system as of the Exercise
Date, the Fair Market Value per share of Common Stock shall be
deemed to be the amount most recently determined by the Board of
Directors to represent the fair market value per share of the
Common Stock (including without limitation a determination for
purposes of granting Common Stock options or issuing Common Stock
under an employee benefit plan of the Company); and, upon request
of the Registered Holder, the Board of Directors (or a
representative thereof) shall promptly notify the Registered Holder
of the Fair Market Value per share of Common Stock. Notwithstanding
the foregoing, if the Board of Directors has not made such a
determination within the three-month period prior to the Exercise
Date, then (A) the Board of Directors shall make a
determination of the Fair Market Value per share of the Common
Stock within 15 days of a request by the Registered Holder that it
do so, and (B) the exercise of this Warrant pursuant to this
subsection 1(b) shall be delayed until such determination is
made.
(c) Notwithstanding anything to the
contrary herein, each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on
such day which is 61 days subsequent to the date on which this
Warrant shall have been surrendered to the Company as provided in
subsection 1(a) above (such subsequent day the “Exercise
Date”). On the Exercise Date and not before, the person or
persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise as provided in subsection 1(d)
below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
Prior to the Exercise Date such person or persons shall continue to
be deemed to be owners of this Warrant and not of any corresponding
underlying Warrant Shares. Provided this Warrant is surrendered on
or prior to the Expiration Date, this Warrant may be exercised in
accordance with the terms and conditions herein notwithstanding the
fact that the Exercise Date may be later than the Expiration Date.
This Section 1(c) shall survive the termination or voiding of
this Warrant and continue in full force and effect.
(d) As soon as practicable after the
exercise of this Warrant in full or in part on the Exercise Date,
and in any event within 3 business days thereafter, the Company, at
its expense, will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates
for the number of full Warrant Shares to which the Registered
Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to
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which the Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; and
(ii) in case such exercise is in
part only, a new warrant or warrants (dated the date hereof) of
like tenor, calling in the aggregate on the face or faces thereof
for the number of Warrant Shares equal (without giving effect to
any adjustment therein) to the number of such shares called for on
the face of this Warrant minus the sum of (a) the number of
such shares purchased by the Registered Holder upon such exercise
and paid for in cash pursuant to subsection 1(a) (if any) plus
(b) the number of Warrant Shares (if any) covered by the
portion of this Warrant cancelled in payment of the Purchase Price
payable upon such exercise pursuant to subsection 1(b)
above.
2. Adjustments .
(a) Adjustment for Stock Splits
and Combinations . If the Company shall at any time or from
time to time after the date on which this Warrant was first issued
(the “Original Issue Date”) effect a subdivision of the
outstanding Common Stock, the Purchase Price then in effect
immediately before that subdivision shall be proportionately
decreased. If the Company shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of
Common Stock, the Purchase Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment
under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes
effective.
(b) Adjustment for Certain
Dividends and Distributions . In the event the Company at any
time, or from time to time after the Original Issue Date shall make
or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such
event the Purchase Price then in effect immediately before such
event shall be decreased as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of
business on such record date, by multiplying the Purchase Price
then in effect by a fraction:
(1) the numerator of which shall be
the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date, and
(2) the denominator of which shall
be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record
date shall have been fixed and such dividend is not fully paid or
if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Purchase Price
shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.
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(c) Adjustment in Number of
Warrant Shares . When any adjustment is required to be made in
the Purchase Price pursuant to subsections 2(a) or 2(b), the
number of Warrant Shares purchasable upon the exercise of this
Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect
