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<SEC-DOCUMENT>0001047469-03-033333.txt : 20031015
<SEC-HEADER>0001047469-03-033333.hdr.sgml : 20031013
<ACCEPTANCE-DATETIME>20031014200728
ACCESSION NUMBER:		0001047469-03-033333
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20031111
FILED AS OF DATE:		20031015
EFFECTIVENESS DATE:		20031015

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRECISION OPTICS CORPORATION INC
		CENTRAL INDEX KEY:			0000867840
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				042795294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-10647
		FILM NUMBER:		03940578

	BUSINESS ADDRESS:	
		STREET 1:		22 EAST BROADWAY
		CITY:			GARDNER
		STATE:			MA
		ZIP:			01440-3338
		BUSINESS PHONE:		9786301800

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PRECISION OPTICS CORP INC
		DATE OF NAME CHANGE:	19600201
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>a2119964zdef14a.htm
<DESCRIPTION>DEF 14A
<TEXT>
<HTML>
<HEAD>

</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<BR>
<FONT SIZE=3 ><A HREF="#03BOS2420_1">QuickLinks</A></FONT>
<font size=3> -- Click here to rapidly navigate through this document</font>
<P ALIGN="CENTER"><FONT SIZE=2><B>SCHEDULE 14A INFORMATION</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Proxy Statement Pursuant to Section 14 of<BR>
the Securities Exchange Act of 1934  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="79%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2><BR>
Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-11(c) or &sect;240.14a-12<BR></FONT>
</TD>
</TR>
</TABLE>
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<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><BR><FONT SIZE=2><B>Precision Optics Corporation, Inc.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2> (Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2> (Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
No fee required</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
</TABLE>
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<HR NOSHADE>
<!-- ZEQ.=1,SEQ=1,EFW="2119964",CP="PRECISION OPTICS CORPORATION,INC",DN="1",CHK=881360,FOLIO='blank',FILE='DISK016:[03BOS0.03BOS2420]BA2420A.;4',USER='HYUNG',CD=';9-OCT-2003;20:01' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=4><B>PRECISION OPTICS CORPORATION, INC.<BR>  </B></FONT><FONT SIZE=2><B>22 East Broadway<BR>
Gardner, Massachusetts 01440  </B></FONT></P>

<P ALIGN="RIGHT"><FONT SIZE=2>October 15, 2003 </FONT></P>

<P><FONT SIZE=2>To
the Shareholders: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors and Officers of Precision Optics Corporation,&nbsp;Inc. invite you to attend the 2003 Annual Meeting of Stockholders to be held Tuesday, November&nbsp;11,
2003, at 10:00&nbsp;a.m. at the offices of Ropes&nbsp;&amp; Gray LLP, One International Place, Boston, Massachusetts. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
copy of the Proxy Statement and the Company's 2003 Annual Report to Stockholders are enclosed. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
you cannot be present at the meeting, please mark, date, and sign the enclosed proxy card and return it as soon as possible in the enclosed envelope. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P><FONT SIZE=2>Very
truly yours, </FONT></P>

<P><FONT SIZE=2>RICHARD E. FORKEY<BR></FONT> <FONT SIZE=2><I>President</I></FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
<HR NOSHADE>
<!-- ZEQ.=1,SEQ=2,EFW="2119964",CP="PRECISION OPTICS CORPORATION,INC",DN="1",CHK=710333,FOLIO='blank',FILE='DISK016:[03BOS0.03BOS2420]DA2420A.;3',USER='HYUNG',CD=';9-OCT-2003;20:01' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=4><B>PRECISION OPTICS CORPORATION, INC.<BR>  </B></FONT><FONT SIZE=2><B>22 East Broadway<BR>
Gardner, Massachusetts 01440  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=3><B>NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS<BR>
November 11, 2003  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2003 Annual Meeting of Stockholders of Precision Optics Corporation,&nbsp;Inc. (the "Company") will be held on Tuesday, November&nbsp;11,
2003, at 10:00&nbsp;a.m. at the offices of Ropes&nbsp;&amp; Gray LLP, Boston, Massachusetts, for the following purposes: </FONT></P>

<UL>

<P><FONT SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;To
elect two Class&nbsp;I directors to hold office for a three-year term and until their respective successors shall have been duly elected and qualified. </FONT></P>

<P><FONT SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;To
consider and act on a proposal to approve an Amended and Restated 1997 Incentive Plan of the Company. </FONT></P>

<P><FONT SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;To
transact any and all other business that may properly come before the meeting or any adjournment thereof. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
stockholders of record at the close of business on Tuesday, September&nbsp;30, 2003, are entitled to notice of and to vote at the meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
are requested to sign and date the enclosed proxy and return it in the enclosed envelope. The envelope requires no postage if mailed in the United States. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P><FONT SIZE=2>By
Order of the Board of Directors </FONT></P>

<P><FONT SIZE=2>JACK P. DREIMILLER<BR></FONT> <FONT SIZE=2><I>Clerk</I></FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>

<P><FONT SIZE=2>October
15, 2003 </FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=3,EFW="2119964",CP="PRECISION OPTICS CORPORATION,INC",DN="1",CHK=162828,FOLIO='blank',FILE='DISK016:[03BOS0.03BOS2420]DC2420A.;4',USER='HYUNG',CD=';9-OCT-2003;20:01' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=4><B>PRECISION OPTICS CORPORATION, INC.  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=2><B>Annual Meeting of Stockholders<BR>
November 11, 2003  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> PROXY STATEMENT  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=2><B> <A NAME="de2420_information_concerning_solicitation_and_voting"> </A>
<A NAME="toc_de2420_1"> </A>
INFORMATION CONCERNING SOLICITATION AND VOTING    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>General  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Proxy Statement and form of proxy are furnished in connection with the solicitation of proxies by the Board of Directors of Precision Optics
Corporation,&nbsp;Inc., a Massachusetts corporation (the "Company"), for the 2003 Annual Meeting of Stockholders of the Company to be held on November&nbsp;11, 2003, at 10:00&nbsp;a.m. at the
offices of Ropes&nbsp;&amp; Gray LLP, One International Place, Boston, Massachusetts, and any adjournments thereof, for the purposes set forth in the notice of meeting. The Company was incorporated in
1982, and its principal executive offices are at 22 East Broadway, Gardner, Massachusetts 01440 (telephone 978-630-1800). This Proxy Statement and form of proxy are first being
distributed to stockholders on or about October&nbsp;15, 2003. </FONT></P>

<P><FONT SIZE=2><B>Stockholders Entitled to Vote  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of September&nbsp;30, 2003, the Company had outstanding 1,752,052 shares of Common Stock, $0.01 par value (the "Common Stock"). Each share of Common Stock
entitles the holder of record thereof at the
close of business on September&nbsp;30, 2003 to one vote in person or by proxy on the matters to be voted upon at the meeting. </FONT></P>

<P><FONT SIZE=2><B>Voting Procedures  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent with Massachusetts law and the Company's by-laws, the holders of a majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such matter. Votes cast by proxy or in person at the annual meeting will be counted by persons appointed by the Company to act as
election inspectors for the meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the enclosed form of proxy is properly signed and returned and not revoked, the shares represented thereby will be voted at the annual meeting. If the stockholder specifies in the
proxy how the shares are to be voted, they will be voted as specified. If the stockholder does not specify how the shares are to be voted, such shares will be voted in favor of the proposals described
in Proposal Number 1 and Proposal Number 2 below. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
stockholder has the right to revoke his or her proxy at any time before it is voted by: (1)&nbsp;attending the meeting and voting in person, (2)&nbsp;by filing with the Clerk of
the Company a written instrument revoking the proxy or (3)&nbsp;delivering to the Clerk another newly executed proxy bearing a later date. </FONT></P>

<P><FONT SIZE=2><B>Required Vote  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The election of the Class&nbsp;I directors described in Proposal Number 1 requires a plurality of votes cast. Should either person so named below as nominee for
the Board of Directors be unable or unwilling to serve as director, the persons named in the form of proxy for the annual meeting may, in their discretion, </FONT></P>

<HR NOSHADE>
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<A NAME="page_de2420_1_2"> </A>
<BR>

<P><FONT SIZE=2>vote
for such other person or may vote to fix the number of directors at such number less than five, as the Board of Directors may recommend. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
approval of the Amended and Restated 1997 Incentive Plan of the Company described in Proposal Number 2 requires the affirmative vote of a majority of the shares represented and
entitled to vote at the meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Abstentions
and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum, but will not be counted as votes properly cast for
purposes of determining the outcome of voting on any matter. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under the rules of the New York Stock Exchange applicable to
member firms, brokers (i)&nbsp;will have discretionary authority to vote shares held in their name for the election of directors even if they do not receive instructions from the beneficial owners
and (ii)&nbsp;will not have discretionary authority to vote shares held in their name for the approval of the Amended and Restated 1997 Incentive Plan. </FONT></P>

<P><FONT SIZE=2><B>Voting on Other Matters  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the date hereof, the Company's management has no knowledge of any business other than that described in the notice for the annual meeting which will be
presented for consideration at such meeting. If any other business should come before such meeting, the persons appointed by the enclosed form of proxy may, in their discretion, vote all such proxies
in accordance with their own judgment. The persons appointed by the enclosed form of proxy also may, in their discretion, vote all proxies with respect to matters incident to the conduct of the
meeting. </FONT></P>

<P><FONT SIZE=2><B>Costs of Proxy Solicitation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will bear all the costs of the solicitation of proxies. The Board of Directors may arrange with brokerage houses and other custodians, nominees, and
fiduciaries to forward solicitation materials to the beneficial owners of the stock held of record by such persons, and the Company may reimburse them for the reasonable
out-of-pocket expenses incurred in so doing. In addition to the solicitation of proxies by use of the mails, the Company may use the services of some of
its directors, officers and regular employees (who will receive no compensation therefor in addition to their regular salaries) to solicit proxies personally or by mail or telephone. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="de2420_proposal_number_1._election_of_directors"> </A>
<A NAME="toc_de2420_2"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL NUMBER 1. ELECTION OF DIRECTORS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's Board of Directors is divided into three classes that are as nearly equal in number as possible, with staggered terms of office. Only one class is
elected each year. Each director serves a three year term and until his or her successor has been duly elected and qualified. The Board of Directors has fixed the number of directors at five. At the
annual meeting it is intended that the Company's Class&nbsp;I directors (Richard E. Forkey and Edward A. Benjamin) be re-elected as Class&nbsp;I directors to hold office until the
annual meeting of stockholders in 2006 and until their respective successors have been duly elected and qualified. The directors in Class&nbsp;II (Austin W. Marxe and Joel R. Pitlor) will hold
office until the annual meeting of stockholders in 2004, and the director in Class&nbsp;III (Robert R. Shannon) will hold office until the annual meeting of stockholders in 2005 (and in each case,
until their respective successors have been duly elected and qualified). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

<HR NOSHADE>
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<A NAME="page_de2420_1_3"> </A>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
names, ages, principal occupations for at least the last five years, and certain other information regarding the directors, including the nominees are as follows: </FONT></P>

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<TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Year First Elected Director<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="54%" ALIGN="CENTER"><FONT SIZE=1><B>Principal Occupation; Directorships of Other Public Companies</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Richard E. Forkey (1982)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>63</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>President, Chief Executive Officer, Treasurer and a director of the Company since founding the Company in 1982; Clerk of the Company from May 1983 to June 1990.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Edward A. Benjamin (1990)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>65</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>Clerk of the Company from June 1990 to January 1998. Mr. Benjamin is a Trustee of the Board of Trustees of New England Zenith Fund, a Member of the Board of Managers of New England Variable Annuity Fund I, a Trustee of
the Board of Trustees of CDC Nvest Funds, AEW Real Estate Income Fund, and Loomis Sayles Funds, and a Director of Coal, Energy Investments &amp; Management, LLC. Mr. Benjamin was a partner in the law firm of Ropes &amp; Gray LLP, Boston,
Massachusetts, from 1969 to 1998.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Austin W. Marxe (1998)*</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>63</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>Mr. Marxe has been the Managing Director of Special Situations Fund&nbsp;III, L.P., a registered investment company based in New York City, and several other affiliated and predecessor investment funds, since
1990.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Joel R. Pitlor (1990)*</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>64</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>Since 1979, Mr. Pitlor has been President of J.R. Pitlor, a management consulting firm that provides strategic business planning, which Mr. Pitlor founded. Mr. Pitlor has provided business planning consultation to the
Company since 1983. Mr. Pitlor is also a director of Uroplasty, Inc.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Robert R. Shannon (1990)*</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>71</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>Since 1969, Mr.&nbsp;Shannon has been a Professor at the Optical Sciences Center of the University of Arizona and&nbsp;Director of the Center from 1983 to July 1992. Mr.&nbsp;Shannon is also a Director of Aerospace
Corporation.</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>Directors
whose terms do not expire this year. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the stockholders holding shares of the Company's Common Stock are entitled to cast one vote in person or by proxy for each share standing in their names and are entitled to elect
two Class&nbsp;I directors at the 2003 Annual Meeting. If a nominee is not available as a candidate when the election occurs, the persons named in the proxy may, in their discretion, vote for the
election of such other person as the
Board of Directors may designate or to reduce the number of directors correspondingly. The Company has no reason to believe that the nominees will not be available for election. </FONT></P>

<P><FONT SIZE=2><B>Board of Directors  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal year ended June&nbsp;30, 2003, the Company's Board of Directors held four meetings. The Board of Directors has a standing Audit Committee
composed of Messrs.&nbsp;Benjamin and Shannon. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<P><FONT SIZE=2>The
function of the Audit Committee is to provide assistance to the Board of Directors in fulfilling its responsibility to the stockholders, potential stockholders and the investment community in
respect of corporate accounting, reporting practices of the Company, and the quality and integrity of the financial reports of the Company. The Audit Committee held four meetings during the fiscal
year ended June&nbsp;30, 2003 and acted by unanimous written consent on one occasion. The Board does not have standing nominating or compensation committees. Each director attended at least 75% of
the meetings of the Board of Directors, with the exception of Mr.&nbsp;Marxe. Each of the Audit Committee members attended at least 75% of the meetings of the Audit Committee in the last year. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information
as to ownership of the Company's securities by the nominee for director is included under the heading "Security Ownership of Certain Beneficial Owners and Management." </FONT></P>

<P><FONT SIZE=2><B>Director Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company pays each director who is not also an employee of the Company $250 per Board or committee meeting that the director attends and reimburses the
director for travel expenses. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the fiscal year ended June&nbsp;30, 2003, the Company also issued, pursuant to its 1997 Incentive Plan, stock options exercisable for a total of 834 shares of the Company's
Common Stock to each of Messrs.&nbsp;Benjamin, Pitlor, Marxe and Shannon. Each of these options is immediately exercisable at a price per share of $1.74. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THE NOMINEES DESCRIBED IN PROPOSAL NUMBER 1.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> <A NAME="de2420_proposal_number_2._approval_of__pro02537"> </A>
<A NAME="toc_de2420_3"> </A>
<BR>    PROPOSAL NUMBER 2. APPROVAL OF AMENDED AND RESTATED 1997 INCENTIVE PLAN    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors has approved and proposes that stockholders approve certain amendments to the Precision Optics Corporation,&nbsp;Inc. 1997 Incentive Plan
(the "1997 Incentive Plan"). The primary purpose of amending the 1997 Incentive Plan is to increase the total number of shares of Common Stock that may be issued under the 1997 Incentive Plan from
200,000 to 300,000. The proposed Amended and Restated 1997 Incentive Plan also contains certain other changes intended to provide clarification or eliminate unnecessary language. The Board of
Directors believes that approval of the Amended and Restated 1997 Incentive Plan will advance the interests of the Company by continuing to provide eligible participants the opportunity to receive a
broad variety of equity-based and cash incentives ("Awards"). As of September&nbsp;30, 2003, 84,004 shares of Common Stock remained available for future Awards under the 1997 Incentive Plan. </FONT></P>

<P><FONT SIZE=2><B>Participation in Plan.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The grant of Awards under the 1997 Incentive Plan to eligible participants is subject to the discretion of the plan Administrator, which is currently the Board of
Directors. As of the date of this proxy statement, there has been no determination by the Administrator with respect to future awards under the 1997 Incentive Plan, except for the grant to each
non-employee director on the date of each annual meeting of shareholders of a stock option exercisable for 834 shares of Common Stock. Accordingly, future Awards are not determinable. The
following table sets forth information with respect to the grant of stock options to the executive officers named in the Summary Compensation Table, to all current executive officers as a </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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<P><FONT SIZE=2>group,
to all non-executive directors as a group, and to all other employees as a group during the last fiscal year: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="de2420_amended_plan_benefits_1997_incentive_plan"> </A>
<A NAME="toc_de2420_4"> </A>
<BR></FONT><FONT SIZE=2><B>Amended Plan Benefits<BR>  1997 Incentive Plan    <BR>    </B></FONT></P>

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<TABLE WIDTH="88%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="57%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Position<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" ALIGN="CENTER"><FONT SIZE=1><B>Securities<BR>
Underlying<BR>
Options Granted($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted Average<BR>
Exercise Price Per<BR>
Share ($/share)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Richard E. Forkey, President and Chief Executive Officer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Jack P. Dreimiller, Senior Vice President, Finance, Chief Financial Officer and Clerk</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>All current executive officers as a group</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>All non-executive directors as a group</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>3,336</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1.74</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>All non-executive officer employees as a group</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>Summary of the 1997 Incentive Plan.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary is a description of the 1997 Incentive Plan, as proposed to be amended, and is qualified in its entirety by reference to the full text of
the 1997 Incentive Plan attached to this proxy statement as </FONT><FONT SIZE=2><I>Appendix&nbsp;A.</I></FONT><FONT SIZE=2> Terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the 1997 Incentive Plan. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 1997 Incentive Plan is administered by the Administrator, which may be the Board of Directors or a
committee thereof (the "Committee"). The Board is currently the plan's Administrator. Subject to the terms of the 1997 Incentive Plan, the Administrator has authority to interpret the 1997 Incentive
Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; and otherwise do all things necessary to carry out the purposes of the 1997
Incentive Plan. In the case of any Award intended to be eligible for the performance-based compensation exception under Section&nbsp;162(m), the Administrator shall exercise its discretion
consistent with qualifying the Award for such exception. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility and Participation.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In general, the Administrator will select participants in the 1997 Incentive Plan from among
key employees of the Company and its affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company or its affiliates. The
Administrator also has discretion to include as participants in the 1997 Incentive Plan members of the Company's Board of Directors and other persons who provide services to the Company or its
affiliates. As of September&nbsp;30, 2003, approximately 40 persons were eligible to receive Awards under the 1997 Incentive Plan, including the Company's two executive officers and four
non-employee directors. The maximum number of shares for which stock options may be granted to any person, the maximum number of shares subject to stock appreciation rights granted to any
person, and the aggregate maximum number of shares of Stock which may be delivered to any person pursuant to Awards that are not stock options or stock appreciation rights are each limited to 100,000
over the life of the 1997 Incentive Plan. In addition, no more than $2&nbsp;million may be paid to any individual with respect to any annual cash performance-based bonuses and no more than
$2&nbsp;million in cash performance-based bonuses may be paid to any individual with respect to multi-year performance periods ending in the same year. No Award constituting an incentive
stock option within the meaning of Section&nbsp;422 of the Internal Revenue Code (an "ISO") may be </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
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<P><FONT SIZE=2>granted
under the 1997 Incentive Plan after September&nbsp;15, 2007, but ISO Awards previously granted may extend beyond such date. </FONT></P>


<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Types of Awards.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator, in its discretion, may award (i)&nbsp;options to purchase Common Stock,
(ii)&nbsp;stock appreciation rights, (iii)&nbsp;restricted or unrestricted Stock, (iv)&nbsp;promises to deliver Common Stock or other securities in the future, (v)&nbsp;convertible securities,
(vi)&nbsp;cash bonuses, and (vii)&nbsp;cash bonuses or loans to help defray the costs of the foregoing Awards. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deductibility of Performance Awards.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certain payments to executive officers under the 1997 Incentive Plan may be eligible for
treatment as "performance-based" compensation under Section&nbsp;162(m) of the Internal Revenue Code ("Section&nbsp;162(m)"). Section&nbsp;162(m) generally limits to $1&nbsp;million the annual
corporate income tax deduction for compensation paid to the chief executive officer or any of the four other highest paid executive officers of a publicly-held corporation which is not
"performance-based" compensation. The 1997 Incentive Plan is intended to enable the Company to comply with Section&nbsp;162(m) by allowing Awards granted under the 1997 Incentive Plan to qualify as
performance-based compensation. (See "Certain Federal Income Tax Consequences"). Under current regulations, in those cases where an Award under the 1997 Incentive Plan would qualify for the
Section&nbsp;162(m) performance-based exception in part by reason of being conditioned upon one or more of the specific performance criteria described below (see "Performance Criteria"), continued
availability of the exception will depend upon re-approval by stockholders of the material terms of the performance criteria not later than the first stockholder meeting that occurs in the
fifth year following the year in which the stockholders previously approved such terms. By approving the proposed amended 1997 Incentive Plan, stockholders will also be re-approving the
material terms of the performance criteria. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Criteria.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Awards under the 1997 Incentive Plan may be conditioned upon satisfaction of specified performance
criteria. In the case of any such Award that is intended to qualify for exemption from the deduction limitation rules of Section&nbsp;162(m) (an "Exempt Award"), the criteria used in connection with
the Award shall be one or any combination of the following (determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business or geographical basis or
in combinations thereof): (i)&nbsp;sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation or amortization, whether or not on a
continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; gross margin; inventory level or turns; one or more operating ratios; borrowing levels,
leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; or other objective operating contributions; or (ii)&nbsp;acquisitions or
divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings
(issuance of debt or equity) and refinancings; or other transactions that involve a change in the equity ownership of the Company. A Performance Criterion measure and any targets with respect thereto
determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. In the case of an Exempt Award, the Committee will preestablish the particular
performance goals in writing no later than 90&nbsp;days after the commencement of the period of service to which the performance relates (or earlier if so required under applicable regulations) and
will certify prior to payment whether the performance goal or goals have been attained. If the performance goal with respect to an Exempt Award is not attained, no other Award shall be provided in
substitution. To date, the Company has not granted any Exempt Awards. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rules Applicable to Awards.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Neither ISOs nor, except as the Administrator otherwise expressly provides, other Awards may be
transferred other than by will or by the laws of descent and distribution, and during a Participant's lifetime ISOs (and, except as the Administrator otherwise expressly provides, other
non-transferable Awards requiring exercise) may be exercised only by the Participant. The Administrator may determine the time or times at which an Award will vest or become exercisable.
Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from
such acceleration. Unless the Administrator expressly provides otherwise, immediately upon the cessation of the Participant's Employment, an Award requiring exercise will cease to be exercisable and
will terminate, and all other Awards to the extent not already vested will be forfeited, except that: (a)&nbsp;Stock Options and SARs held by the Participant or the Participant's permitted
transferee, if any, immediately prior to the cessation of the Participant's Employment, to the extent then exercisable, will remain exercisable for the lesser of (i)&nbsp;a period of 30&nbsp;days
or (ii)&nbsp;the period ending on the latest date on which such Stock Option or SAR could have been exercised, and will thereupon terminate; (b)&nbsp;Stock Options and SARs held by a Participant
or the Participant's permitted transferee, if any, immediately prior to the Participant's death, to the extent then exercisable, will remain exercisable for the lesser of (i)&nbsp;the period ending
90&nbsp;days after the Participant's death or (ii)&nbsp;the period ending on the latest date on which such Stock Option or SAR could have been exercised and will thereupon terminate, and
(c)&nbsp;Stock Options and SARs held by a Participant or the Participant's permitted transferee, if any, immediately prior to the cessation of the Participant's Employment will immediately terminate
upon such cessation
if the Administrator in its sole discretion determines that such cessation of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of
the Award. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Options.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will determine the exercise price, if any, of each Award requiring exercise. Unless the
Administrator determines otherwise, each stock option will have an exercise price not less than the fair market value of the Stock subject to the stock option, determined as of the date of grant. A
stock option intended to be an ISO granted to a person who owns (or by application of attribution rules is deemed to own) more than 10% of the total combined voting power of all classes of stock of
the Company will have an exercise price equal to 110% of such fair market value. Options awarded under the 1997 Incentive Plan will not be ISOs except as expressly provided otherwise. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of Certain Transactions.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of a majority of the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of all or substantially all of the Company's assets or a dissolution or liquidation of the Company, all outstanding Awards requiring exercise will cease to be
exercisable, and all other Awards to the extent not fully vested (including Awards subject to performance conditions not yet satisfied or determined) will be forfeited, as of the effective time of
such transaction; provided, however, that immediately prior to the consummation of such a transaction, the vesting or exercisability of Awards shall be accelerated unless, in the case of any Award,
the Administrator provides for one or more substitute or replacement awards from, or the assumption of existing Awards by, the acquiring entity (if any) or its affiliates. </FONT></P>


<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equitable Adjustment.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a stock dividend, stock split or combination of shares, recapitalization or other
change in the Company's capital structure, the Administrator will make appropriate adjustments to the maximum number of shares that may be delivered under the 1997 Incentive Plan, to the maximum share
limits under the 1997 Incentive Plan, to the number and kind of shares of </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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<P><FONT SIZE=2>stock
or securities subject to Awards then outstanding or subsequently granted, to any exercise prices relating to Awards, and to any other provision of Awards affected by such change. In connection
with the one-for-six reverse split of the Company's Common Stock that was consummated on January&nbsp;29, 2003, the Administrator made such adjustments accordingly. The
Administrator also may make such adjustments to take into account other distributions or events, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation
of the 1997 Incentive Plan and to preserve the value of Awards; provided, however, that no such adjustment shall be made to the maximum share limits, or otherwise to an Award intended to be eligible
for the performance-based exception under Section&nbsp;162(m), except to the extent consistent with that exception. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the Administrator's obligation to exercise its discretion consistent with qualifying Awards for the
performance-based exception under Section&nbsp;162(m) if such Awards are intended to so qualify, the Administrator may at any time or times amend the 1997 Incentive Plan or any outstanding Award for
any purpose which may at the time be permitted by law, or may at any time terminate the 1997 Incentive Plan as to any further grants of Awards, provided that, except to the extent expressly required
or permitted by the 1997 Incentive Plan, no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required in order for
the 1997 Incentive Plan to continue to qualify under Section&nbsp;422 of the Internal Revenue Code or for Awards to be eligible for the performance-based exception under Section&nbsp;162(m). </FONT></P>


<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Compensation.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The existence of the 1997 Incentive Plan and the grant of Awards will not affect the Company's right to
pay other bonuses or compensation in addition to Awards under the 1997 Incentive Plan. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Price of Common Stock.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The closing price of the Company's Common Stock on NASDAQ on October&nbsp;7, 2003 was $2.15. </FONT></P>

<P><FONT SIZE=2><B>Certain Federal Income Tax Consequences.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion summarizes certain federal income tax consequences of the issuance and exercise of stock options awarded under the 1997 Incentive Plan
and is based on the law as in effect on September&nbsp;30, 2003. The summary does not address all federal tax consequences, nor does it cover state, local or non-U.S. tax consequences. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
general, a participant realizes no taxable income on either the grant or the vesting of a stock option. The exercise of an option that does not qualify as an ISO results in ordinary
income (generally subject to withholding if the option was awarded to an Employee) equal to the difference (the "Option Spread") between the value of the stock purchased and the option exercise price.
A corresponding deduction is available to the Company. In general, the ordinary income associated with the exercise is measured and taken into account at the time of exercise. Any subsequent sale of
stock purchased under a nonstatutory option may result in a capital gain or loss. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
exercise of an ISO does not produce ordinary taxable income. However, because the Option Spread constitutes "alternative minimum taxable income" (measured and taken into account, in
general, at the time of exercise), exercise of an ISO may result in an alternative minimum tax liability. In addition, shares purchased under an ISO ("ISO Shares") are subject to special tax holding
rules. If a participant holds on to ISO Shares for at least two years from the date of the ISO grant and at least one year after exercise, any gain or loss recognized for tax purposes upon a
subsequent sale of the shares will be a </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
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<A NAME="page_de2420_1_9"> </A>
<BR>

<P><FONT SIZE=2>long-term
capital gain or loss. However, a disposition of ISO Shares by the participant within either of these special holding periods (a so-called "disqualifying disposition")
results in ordinary compensation income in the year of the disposition equal, in general, to the Option Spread at the time the option was exercised. The ordinary income realized upon a disqualifying
disposition of ISO Shares is deductible to the Company but is not subject to withholding. Any additional gain recognized for tax purposes in a disqualifying disposition will be taxed as
short-term or long-term capital gain. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
ISO that is exercised by the participant more than three months following termination of employment (one year, if termination occurred by reason of total and permanent disability) is
treated for tax purposes as a nonstatutory option. ISOs granted to a participant under the 1997 Incentive Plan (together with ISOs granted to the participant after 1986 under any other plans of the
Company and certain affiliates) are also treated as nonstatutory options to the extent that, in the aggregate, they first become exercisable in any calendar year for shares of Stock having a fair
market value (determined at time of grant) in excess of $100,000. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Section&nbsp;162(m) of the Code, in general, the deduction a public corporation may claim for remuneration in any year to the corporation's chief executive officer or any of its
other four top officers (ranked by pay) is limited to $1,000,000. Stock-option related deductions are, in general, subject to this limit. An exception to the $1,000,000 deduction limit applies to
certain qualified performance-based compensation, including compensation under certain stock options, but the exception is not available with respect to an award unless, among other requirements, the
award is made by a committee of the Board of Directors of the corporation consisting solely of two or more "outside directors" (as defined). As the Board of Directors of the Company is currently
constituted, awards under the 1997 Incentive Plan would not satisfy this requirement. The Board of Directors would therefore be required to become qualified for Section&nbsp;162(m) purposes before
the performance-based exception would apply to awards made pursuant to the 1997 Incentive Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the so-called "golden parachute" provisions of the Code, certain Awards vested or paid in connection with a change of control of the Company may also be
non-deductible to the Company and may be subject to an additional 20% federal excise
tax. Non-deductible "parachute payments" will in general reduce the $1&nbsp;million limit on deductible compensation under Section&nbsp;162(m) of the Code, to the extent such limit is
applicable to remuneration paid under the 1997 Incentive Plan or otherwise. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>THE BOARD OF DIRECTORS RECOMMENDS STOCKHOLDERS VOTE FOR THE AMENDED AND RESTATED 1997 INCENTIVE PLAN DESCRIBED IN PROPOSAL NUMBER 2.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dk2420_1_10"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2420_equity_compensation_plan_information"> </A>
<A NAME="toc_dk2420_1"> </A>
<BR></FONT><FONT SIZE=2><B>EQUITY COMPENSATION PLAN INFORMATION    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information about the Company's Common Stock that may be issued upon the exercise of options, warrants and rights under all of its
existing equity compensation plans as of June&nbsp;30, 2003, including, but not limited to, the 1989 Stock Option Plan and the 1997 Incentive Plan: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="25%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER"><FONT SIZE=1><B>Number of securities<BR>
to be issued upon<BR>
exercise of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted-average<BR>
exercise price of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER"><FONT SIZE=1><B>Number of securities remaining<BR>
available for future issuance under<BR>
equity compensation plans (excluding<BR>
securities reflected in first column)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="25%"><FONT SIZE=2>Equity compensation plans approved by shareholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>116,102</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>13.68</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>99,004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="25%"><FONT SIZE=2>Equity compensation plans not approved by shareholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>9,168</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>(2)(3)(4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>8.08</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>n/a</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="25%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="25%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>125,270</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>13.27</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>99,004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
99,004 shares of Common Stock available for future grants under the Company's 1997 Incentive Plan. No shares are available for future grants under the Company's 1989 Stock
Option Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Includes
2,500 shares of Common Stock issuable upon exercise of outstanding options granted to Mr.&nbsp;Benjamin in connection with his service on the Board of Directors. These
options may be exercised at a price of $8.25 per share and expire on December&nbsp;15, 2004.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Includes
2,500 shares of Common Stock issuable upon exercise of outstanding options granted to Mr.&nbsp;Shannon in connection with his service on the Board of Directors. These
options may be exercised at a price of $8.25 per share and expire on December&nbsp;15, 2004.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
4,168 shares of Common Stock issuable upon exercise of outstanding options granted to Werner Thiel in connection with his service as a consultant to the Company. Options
exercisable for 3,334 shares may be exercised at a price of $7.78125 and expire on July&nbsp;13, 2005. Options exercisable for 834 shares may be exercised at a price of $8.25 and expire on
December&nbsp;14, 2004. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2420_executive_officers"> </A>
<A NAME="toc_dk2420_2"> </A>
<BR></FONT><FONT SIZE=2><B>EXECUTIVE OFFICERS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's executive officers as of June&nbsp;30, 2003 were as follows: </FONT></P>

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<TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="36%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Year First Elected Director<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="54%" ALIGN="CENTER"><FONT SIZE=1><B>Principal Occupation; Directorships of Other Public Companies</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Richard E. Forkey</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>63</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>President, Chief Executive Officer, Treasurer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="36%"><FONT SIZE=2>Jack P. Dreimiller</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="54%"><FONT SIZE=2>Senior Vice President, Finance, Chief Financial Officer and Clerk</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Forkey
has been the President, Chief Executive Officer, Treasurer, and a director of the Company since he founded the Company in 1982. He was the Clerk of the Company from
May&nbsp;1983 to June&nbsp;1990. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Dreimiller
has been Senior Vice President, Finance and Chief Financial Officer since April&nbsp;1992 and Clerk since January&nbsp;1998. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

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<A NAME="page_dk2420_1_11"> </A>
<BR>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2420_compensation_and_other_material_transactions"> </A>
<A NAME="toc_dk2420_3"> </A>
<BR></FONT><FONT SIZE=2><B>COMPENSATION AND OTHER MATERIAL TRANSACTIONS    <BR>    </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2420_executive_compensation"> </A>
<A NAME="toc_dk2420_4"> </A></FONT> <FONT SIZE=2><B>Executive Compensation    <BR>    </B></FONT></P>


<P><FONT SIZE=2><B>Summary Compensation Table  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth all compensation for the last three completed fiscal years awarded to, earned by, or paid to the Company's Chief Executive Officer
at June&nbsp;30, 2003 and the executive officers during the fiscal year ended June&nbsp;30, 2003 whose total annual salary and bonuses for the fiscal year ended June&nbsp;30, 2003 exceeded
$100,000 for all services rendered in all capacities to the Company and its subsidiaries (the "Named Executive Officers"). </FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER"><FONT SIZE=1><B>Annual Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Long Term Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Awards</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Payouts</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="CENTER"><FONT SIZE=1><B>Name and Principal Position<BR>
at Fiscal Year End</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B>Salary($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>Bonus($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Other Annual<BR>
Compensation($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Securities<BR>
Underlying<BR>
Options<BR>
(Number)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>All Other<BR>
Compensation($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Richard E. Forkey<BR>
President, Chief Executive Officer and Treasurer</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2003<BR>
2002<BR>
2001</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>195,000<BR>
195,000<BR>
195,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>-0-<BR>
- -0-<BR>
- -0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>12,250<BR>
12,250<BR>
11,750</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(1)<BR>(1)<BR>(1)</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-<BR>
- -0-<BR>
- -0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>6,692<BR>
6,692<BR>
6,692</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>(2)<BR>(2)<BR>(2)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2><BR>
Jack P. Dreimiller<BR>
Senior Vice President Finance, Chief Financial Officer and Clerk</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2003<BR>
2002<BR>
2001</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
164,611<BR>
162,499<BR>
150,710</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2><BR>
- -0-<BR>
- -0-<BR>
- -0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3,166<BR>
3,187<BR>
2,705</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(3)<BR>(3)<BR>(3)</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2><BR>
- -0-<BR>
667<BR>
- -0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2,025<BR>
2,025<BR>
2,025</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>(4)<BR>(4)<BR>(4)</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
$9,250 for car expense for each of 2003, 2002 and 2001.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Represents
premiums for a life insurance policy and a disability insurance policy.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Represents
Company's matching contribution to Profit Sharing Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Represents
premiums for a life insurance policy. </FONT></DD></DL>


<P><FONT SIZE=2><B>Option Grants in Last Fiscal Year  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no individual grants of stock options made by the Company during the fiscal year ended June&nbsp;30, 2003 to its Named Executive Officers. </FONT></P>

<P><FONT SIZE=2><B>Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes for each of the Named Executive Officers (i)&nbsp;the total number of shares received upon exercise of stock options during the
fiscal year ended June&nbsp;30, 2003, (ii)&nbsp;the aggregate dollar value realized upon such exercise, (iii)&nbsp;the total number of unexercised options, if any, held at June&nbsp;30, 2003
and (iv)&nbsp;the value of unexercised in-the-money options, if any, held at June&nbsp;30, 2003. In-the-money options are options where the fair
market value of the underlying securities exceeds the exercise or base price of the option. The aggregate value realized upon exercise of a stock option is the difference between the aggregate
exercise price of the option and the fair market value of the underlying stock on the date of exercise. The value of unexercised, in-the-money options at fiscal
year-end is the difference between the exercise price of the option and the fair market value of the underlying stock on June&nbsp;30, 2003, which was $2.34 per share. With respect to
unexercised, in-the-money options, the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>

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<A NAME="page_dk2420_1_12"> </A>
<BR>

<P><FONT SIZE=2>underlying
options have not been exercised, and actual gains, if any, on exercise will depend on the value of the Company's Common Stock on the date of exercise. </FONT></P>

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<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal-Year-End Option Values<BR> </B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Unexercised Options<BR>
at Fiscal-Year-End</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Value of Unexercised<BR>
In-the-Money Options<BR>
at Fiscal-Year-End ($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="CENTER"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Shares Acquired on<BR>
Exercise (Number)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Value<BR>
Realized($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Exercisable<BR>
(Number)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable<BR>
(Number)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Richard E. Forkey</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Jack P. Dreimiller</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>17,001</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>334</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>-0-</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>Long Term Incentive Plans&#151;Awards in Last Fiscal Year  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company made no awards under a long term incentive plan in the fiscal year ended June&nbsp;30, 2003. </FONT></P>

<P><FONT SIZE=2><B>Employment Contracts and Termination of Employment Arrangements  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has no employment contracts in place with any Named Executive Officers. The Company also has no compensatory plan or arrangement with respect to any
Named Executive Officer where such plan or arrangement will result in payments to such Named Executive Officer upon or following his resignation, retirement, or other termination of employment with
the Company and its subsidiaries, or as a result of a change-in-control of the Company or a change in the Named Executive Officers' responsibilities following a
change-in-control. </FONT></P>

<P><FONT SIZE=2><B>Section 16(a) Beneficial Ownership Reporting Compliance  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the Company's knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the fiscal year ended
June&nbsp;30, 2003 and Forms 5 and amendments thereto furnished to the Company with respect to such fiscal year, no person required to file reports under Section&nbsp;16(a) of the Securities
Exchange Act of 1934 failed to file such reports on a timely basis during or with respect to such fiscal year. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk2420_certain_relationships_and_related_transactions"> </A>
<A NAME="toc_dk2420_5"> </A>
<BR></FONT><FONT SIZE=2><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has an arrangement with J.R. Pitlor ("J.R. Pitlor"), a company wholly owned by Mr.&nbsp;Pitlor, a Director of the Company, under which
Mr.&nbsp;Pitlor provides consulting services to the Company for a fee currently not to exceed $2,000 a month. These consulting services consist primarily of advice regarding marketing, strategic
planning and other general business issues. Either party may terminate this arrangement at will. The Company paid J.R. Pitlor for consulting services aggregate fees of $24,000 for fiscal year 2002 and
$24,000 for fiscal year 2003. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company leases its facility in Gardner, Massachusetts from Equity Assets,&nbsp;Inc. ("Equity"), a company wholly owned by Mr.&nbsp;Forkey, the President and Treasurer and a
Director of the Company. The Company is currently a tenant-at-will paying rent of $9,000 per month. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has paid legal fees to Ropes&nbsp;&amp; Gray LLP, a law firm of which Mr.&nbsp;Benjamin, a Director of the Company, is a retired partner, of approximately $117,000 for fiscal
year 2002, and $144,000 for fiscal year 2003. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dq2420_1_13"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dq2420_security_ownership_of_certain___sec02525"> </A>
<A NAME="toc_dq2420_1"> </A>
<BR></FONT><FONT SIZE=2><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding the Company's Common Stock owned as of the close of business on September&nbsp;30, 2003, the record date
for the 2003 Annual Meeting, by the following persons: (i)&nbsp;each person who is known by the Company to own beneficially more than 5% of the Company's Common Stock, (ii)&nbsp;each of the
Company's directors and nominees for director who beneficially owns the Company's or its subsidiaries' Common Stock, other than directors' qualifying shares, (iii)&nbsp;each of the Company's Named
Executive Officers who beneficially own the Company's or its subsidiaries' Common Stock, and (iv)&nbsp;all executive officers and directors, as a group, who beneficially own the Company's or its
subsidiaries' Common Stock. The information on beneficial ownership in the table and footnotes thereto is based upon data furnished to the Company by, or on behalf of, the persons listed in the table. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="56%" ALIGN="CENTER"><FONT SIZE=1><B>Name and Address<BR>
Of Beneficial Owner</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER"><FONT SIZE=1><B>Amount and Nature of<BR>
Beneficial Ownership(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Percent of Class(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>David M. Greenhouse<BR>
c/o Special Situations Fund III, L.P.<BR>
153 East 53rd Street<BR>
New York, NY 10022</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>146,002</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>8.33</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2><B>Directors and Officers</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Edward A. Benjamin*<BR>
c/o Ropes &amp; Gray<BR>
One International Place<BR>
Boston, MA 02110</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>11,171</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Richard E. Forkey*<BR>
c/o Precision Optics Corporation, Inc.<BR>
22 East Broadway<BR>
Gardner, MA 01440</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>295,378</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>16.86</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Austin W. Marxe*<BR>
c/o Special Situations Funds<BR>
153 East 53rd Street<BR>
New York, NY 10022</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>150,172</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>8.55</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Joel R. Pitlor*<BR>
19 Chalk Street<BR>
Cambridge, MA 02139</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>34,260</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(6)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>1.95</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Robert R. Shannon*<BR>
7040 E. Taos Place<BR>
Tucson, AZ 85715</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>11,671</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>**</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>Jack P. Dreimiller<BR>
c/o Precision Optics Corporation, Inc.<BR>
22 East Broadway<BR>
Gardner, MA 01440</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>21,168</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>(7)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>1.20</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%" VALIGN="TOP"><FONT SIZE=2>All officers and directors as a group, including those named above (6&nbsp;persons)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>523,820</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>(8)</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>29.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>Director
</FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

<HR NOSHADE>
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<A NAME="page_dq2420_1_14"> </A>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>**</FONT></DT><DD><FONT SIZE=2>The
percentage of shares beneficially owned by such person does not exceed one percent of the Company's Common Stock.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Represents
shares with respect to which each beneficial owner listed has or will have, upon acquisition of such shares upon exercise or conversion of options, warrants, conversion
privileges or other rights exercisable within sixty days, sole voting and investment power.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Percentages
are calculated on the basis of the amount of outstanding Common Stock plus, for each person or group, any securities that such person or group has the right to acquire
within sixty days pursuant to options, warrants, conversion privileges or other rights.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Represents
(i)&nbsp;35,134 shares owned of record by Special Situations Private Equity Fund, L.P. ("SSPEF"); (ii)&nbsp;65,567 shares owned of record by Special Situations Fund
III, L.P. ("SSF III"); (iii)&nbsp;24,834 shares owned of record by Special Situations Technology Fund, L.P. ("SSTF"); and (iv)&nbsp;20,467 shares owned of record by Special Situations Cayman Fund,
L.P. ("SSCF"). SSPEF, SSF III, SSTF and SSCF are affiliated investment funds. David Greenhouse and Austin Marxe, a director of the Company, are principals of the investment funds and their respective
investment advisers, M.G. Advisers, L.L.C., SST Advisers, L.L.C. AWM Investment Company,&nbsp;Inc.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
10,837 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;146,002 shares owned by certain affiliated investment funds of which Mr.&nbsp;Marxe is a principal (see footnote (3)&nbsp;above) and (ii)&nbsp;4,170 shares
which may be acquired within sixty days upon exercise of outstanding stock options awarded to Mr.&nbsp;Marxe personally in his capacity as a Director of the Company.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Includes
3,544 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Includes
17,001 shares which may be acquired within sixty days upon the exercise of outstanding stock options.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Includes
46,389 shares which may be acquired within sixty days upon the exercise of outstanding stock options. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dq2420_independent_public_accountants"> </A>
<A NAME="toc_dq2420_2"> </A>
<BR></FONT><FONT SIZE=2><B>INDEPENDENT PUBLIC ACCOUNTANTS    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Independent Public Accountants  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KPMG LLP has been selected to serve as independent auditors of the Company for the fiscal year ending June&nbsp;30, 2004, and also served as the principal
accountants of the Company for the fiscal year ended June&nbsp;30, 2003. A representative of KPMG LLP is expected to be present at the annual meeting to respond to appropriate questions and will
have the opportunity to make a statement if such representative so desires. </FONT></P>

<P><FONT SIZE=2><B>Change in Independent Public Accountants  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As previously disclosed on a current report on Form&nbsp;8-K filed with the Securities and Exchange Commission on July&nbsp;2, 2002 (the
"Form&nbsp;8-K"), the Company dismissed Arthur Andersen LLP ("Arthur </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>

<HR NOSHADE>
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<A NAME="page_dq2420_1_15"> </A>
<BR>

<P><FONT SIZE=2>Andersen")
as its independent accountants on July&nbsp;1, 2002. The Company's Audit Committee and Board of Directors approved this action. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
report of Arthur Andersen on the Company's financial statements for the fiscal year ended June&nbsp;30, 2001, contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the Company's fiscal year ended June&nbsp;30, 2002 and through July&nbsp;1, 2002, there were no disagreements, resolved or unresolved, with Arthur Andersen on any matter of
accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Arthur Andersen, would have caused Arthur
Andersen to make reference thereto in connection with its reports on the financial statements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the Company's fiscal year ended June&nbsp;30, 2002 and through July&nbsp;1, 2002, Arthur Andersen did not advise the Company as to any of the matters described in Item
304(a)(1)(iv)(B) of Regulation&nbsp;S-B promulgated under the Securities Act of 1933, as amended. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has been unable, after reasonable efforts, to have Arthur Andersen review and respond to the above disclosure; however, Arthur Andersen provided a letter dated July&nbsp;2,
2002 stating that it was in agreement with the disclosure included in paragraphs 2, 3 and 4 of the Form&nbsp;8-K, which disclosure is substantially the same as the above disclosure. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July&nbsp;16, 2002, the Company engaged KPMG LLP as its new independent accountant. The Company's Audit Committee and Board of Directors approved this action. The decision to engage
KPMG LLP followed the Company's evaluation of proposals from several accounting firms. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the Company's fiscal year ended June&nbsp;30, 2002 and through July&nbsp;16, 2002, neither the Company nor any person on the Company's behalf consulted with KPMG LLP
regarding: (i)&nbsp;the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company's financial
statements, or (ii)&nbsp;any matter that was the subject of a disagreement or event described in Item 304(a)(1)(iv)&nbsp;of Regulation&nbsp;S-B. </FONT></P>

<P><FONT SIZE=2><B>Audit Fees  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate fees billed or estimated to be billed for professional services rendered by the Company's independent auditors for the audit of the Company's annual
financial statements for the fiscal year
ended June&nbsp;30, 2003 and for the reviews of the financial statements included in the Company's quarterly reports on Form&nbsp;10-QSB for that fiscal year were $86,240. </FONT></P>


<P><FONT SIZE=2><B>Financial Information Systems Design and Implementation Fees  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's independent auditors did not perform any financial information systems design or implementation work for the Company during the fiscal year ended
June&nbsp;30, 2003. </FONT></P>

<P><FONT SIZE=2><B>All Other Fees  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate fees billed for nonaudit-related tax services rendered by the Company's independent auditors for the fiscal year ended June&nbsp;30, 2003 were
$10,975. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

<HR NOSHADE>
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<A NAME="page_dq2420_1_16"> </A>
<BR>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dq2420_audit_committee_report"> </A>
<A NAME="toc_dq2420_3"> </A>
<BR></FONT><FONT SIZE=2><B>AUDIT COMMITTEE REPORT    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee is composed of Messrs.&nbsp;Benjamin, and Shannon, each of whom is "independent" as defined in Rule&nbsp;4200(a)(15) of the National
Association of Securities Dealers' listing standards. The Board of Directors has adopted a written charter for the Audit Committee. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has submitted the following report: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has reviewed and discussed with management the audited consolidated financial statements for the fiscal year ended June&nbsp;30, 2003, and has discussed with the
Company's independent auditors the matters required to be discussed by Statement on Auditing Standards No.&nbsp;61 (SAS 61). SAS 61 requires independent auditors to communicate to the Audit
Committee various matters, including, if applicable: (1)&nbsp;methods used to account for certain unusual transactions; (2)&nbsp;the effect of certain accounting policies in controversial or
emerging areas for which there is a lack of authoritative
guidance or consensus; (3)&nbsp;the process used by management in formulating certain accounting estimates and the basis for the auditor's conclusions regarding the reasonableness of those estimates
and (4)&nbsp;disagreements with management over the application of accounting principles and certain other matters. The Audit Committee has received the written disclosures and the letter from the
Company's independent accountants required by Independence Standards Board Standard No.&nbsp;1 (requiring auditors to make written disclosures to, and to discuss with, the Audit Committee, various
matters relating to the auditor's independence), has discussed with the accountants their independence and has considered whether the provision of non-audit services by the accountants is
compatible with maintaining that independence. Based on the foregoing and further review and discussion, the Audit Committee has recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form&nbsp;10-KSB for the fiscal year ended June&nbsp;30, 2003 for filing with the Securities and Exchange Commission. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P><FONT SIZE=2>Edward
A. Benjamin<BR>
Robert R. Shannon </FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dq2420_shareholder_proposals"> </A>
<A NAME="toc_dq2420_4"> </A>
<BR></FONT><FONT SIZE=2><B>SHAREHOLDER PROPOSALS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders may present proposals for inclusion in the 2004 Proxy Statement and form of proxy relating to that meeting provided they are received by the Clerk of
the Company no later than June&nbsp;17, 2004 and are otherwise in compliance with applicable Securities and Exchange Commission regulations. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a Stockholder who wishes to present a proposal at the Company's 2004 Annual Meeting that will not be included in the Company's proxy statement for such Annual Meeting fails to notify
the Company of his or her desire to do so by August&nbsp;31, 2004, then the proxies that the Board of Directors solicits for the 2004 Annual Meeting will include discretionary authority to vote on
the Stockholder's proposal, if such proposal is properly brought before the meeting. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

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<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="RIGHT"><FONT SIZE=2><A
NAME="page_ea2420_1_1"> </A> </FONT> <FONT SIZE=2><B>Appendix A  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>PRECISION OPTICS CORPORATION,&nbsp;INC.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>1997 INCENTIVE PLAN  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Amended and Restated as of November 11, 2003  </B></FONT></P>

<P><FONT SIZE=2><B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DEFINED TERMS  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms. </FONT></P>

<P><FONT SIZE=2><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PURPOSE  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan has been established to advance the interests of the Company by giving selected Employees, directors and other persons (including both individuals and
entities) who provide services to the Company or its Affiliates equity-based or cash incentives through the grant of Awards. </FONT></P>


<P><FONT SIZE=2><B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ADMINISTRATION  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant
Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to carry out the
purposes of the Plan. In the case of any Award intended to be eligible for the performance-based compensation exception under Section&nbsp;162(m), the Administrator shall exercise its discretion
consistent with qualifying the Award for such exception. The Administrator may delegate to senior management the authority to grant Awards, other than Awards to the President. </FONT></P>

<P><FONT SIZE=2><B>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LIMITS ON AWARDS UNDER THE PLAN  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>a.</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Number of Shares.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A maximum of 300,000 shares of Stock may be
delivered in satisfaction of Awards under the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>b.</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Type of Shares.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Stock delivered by the Company under the Plan
may be authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>c.</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Section 162(m) Limits.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The maximum number of shares of Stock
for which Stock Options may be granted to any person over the life of the Plan shall be 100,000. The maximum number of shares of Stock subject to SARs granted to any person over the life of the Plan
shall be 100,000. For purposes of the preceding two sentences, the repricing of a Stock Option or SAR shall be treated as a new grant to the extent required under Section&nbsp;162(m). The aggregate
maximum number of shares of Stock delivered to any person over the life of the Plan pursuant to Awards that are not Stock Options or SARs shall also be 100,000. However, Stock Options and SARs that
are granted with an exercise price that is less than the fair market value of the underlying shares on the date of the grant will also be subject to the limits imposed by the preceding sentence.
Subject to these limitations, each person eligible to participate in the Plan shall be eligible in any year to receive Awards covering up to the full number of shares of Stock then available for
Awards under the Plan. No more than $2,000,000 may be paid to any individual with respect to any Cash Performance Award. In applying the limitation of the preceding sentence: (A)&nbsp;multiple Cash
Performance </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>A-1</FONT></P>

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<A NAME="page_ea2420_1_2"> </A>
<BR>

<P><FONT SIZE=2>Awards
to the same individual that are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to
one $2,000,000 limit, and (B)&nbsp;multiple Cash Performance Awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the
same fiscal year of the Company shall be subject in the aggregate to a separate limit of $2,000,000. </FONT></P>

<P><FONT SIZE=2><B>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ELIGIBILITY AND PARTICIPATION  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will select Participants from among those key Employees, directors and individuals or entities (other than Employees or directors) providing
services to the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates. Eligibility
for ISOs is limited to Employees of the Company or of a "parent corporation" or "subsidiary corporation" of the Company as those terms are defined in Section&nbsp;424 of the Code. </FONT></P>

<P><FONT SIZE=2><B>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RULES APPLICABLE TO AWARDS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>a.</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2><B>ALL AWARDS</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(1)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Award Provisions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will determine the terms
of all Awards, subject to the limitations provided herein. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(2)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Transferability Of Awards.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Neither ISOs nor, except as the
Administrator otherwise expressly provides, other Awards may be transferred other than by will or by the laws of descent and distribution, and during a Participant's lifetime ISOs (and, except as the
Administrator otherwise expressly provides, other non-transferable Awards requiring exercise) may be exercised only the Participant. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(3)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Vesting, Etc.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator may determine the time or
times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any time
accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. Unless the Administrator expressly provides
otherwise, immediately upon the cessation of the Participant's Employment, an Award requiring exercise will cease to be exercisable and will terminate, and all other Awards to the extent not already
vested will be forfeited, except that: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;subject
to (B)&nbsp;and (C)&nbsp;below, all Stock Options and SARs held by the Participant or the Participant's permitted transferee, if any, immediately prior to
the cessation of the Participant's Employment, to the extent then exercisable, will remain exercisable for the lesser of (i)&nbsp;a period of 30&nbsp;days or (ii)&nbsp;the period ending on the
latest date on which such Stock Option or SAR could have been exercised without regard to this Section&nbsp;6.a.(3), and will thereupon terminate; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;all
Stock Options and SARs held by a Participant or the Participant's permitted transferee, if any, immediately prior to the Participant's death, to the extent then
exercisable, will remain exercisable for the lesser of (i)&nbsp;the period ending 90&nbsp;days after the Participant's death or (ii)&nbsp;the period ending on the latest date on which such Stock
Option or SAR could have been exercised without regard to this Section&nbsp;6.a.(3), and will thereupon terminate; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;all
Stock Options and SARs held by a Participant or the Participant's permitted transferee, if any, immediately prior to the cessation of the Participant's Employment
will immediately terminate upon such cessation if the Administrator in its sole discretion determines </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>A-2</FONT></P>

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<A NAME="page_ea2420_1_3"> </A>
<UL>
<UL>
<BR>

<P><FONT SIZE=2>that
such cessation of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(4)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Taxes.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will make such provision for the
withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in
satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law). </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(5)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Dividend Equivalents, Etc.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator may provide for
the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(6)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Rights Limited.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Nothing in the Plan shall be construed as
giving any person the right to continued Employment or service with the Company or its Affiliates, or any rights as a stockholder, except as to shares of Stock actually issued under the Plan. The loss
of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment or service for any reason, even if the termination is in violation of an
obligation of the Company or Affiliate to the Participant. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(7)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Section 162(m).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This Section&nbsp;6.a.(7) applies to any
Performance Award intended to qualify as performance-based for the purposes of Section&nbsp;162(m) other than a Stock Option or SAR with an exercise price at least equal to the fair market value of
the underlying Stock on the date of grant. In the case of any Performance Award to which this Section&nbsp;6.a.(7) applies, the Plan and such Award will be construed to the maximum extent permitted
by law in a manner consistent with qualifying the Award for such exception. With respect to such Performance Awards, the Administrator will preestablish, in writing, one or more specific Performance
Criteria no later than 90&nbsp;days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based
under Section&nbsp;162(m)). The Performance Criteria so established shall serve as a condition to the grant, vesting or payment of the Performance Award, as determined by the Administrator. Prior to
grant, vesting or payment of the Performance Award, as the case may be, the Administrator will certify whether the Performance Criteria have been attained and such determination will be final and
conclusive. If the Performance Criteria with respect to the Award are not attained, no other Award will be provided in substitution of the Performance Award. No Performance Award to which this
Section&nbsp;6.a.(7) applies may be granted after the first meeting of the stockholders of the Company held in 2008 until the Performance Criteria (as originally approved or as subsequently amended)
have been resubmitted to and reapproved by the stockholders of the Company in accordance with the requirements of Section&nbsp;162(m) of the Code, unless such grant is made contingent upon such
approval. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>b.</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;</I></B></FONT><FONT SIZE=2><B>AWARDS REQUIRING EXERCISE</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(1)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Time And Manner Of Exercise.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unless the Administrator
expressly provides otherwise, (a)&nbsp;an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a written notice of exercise (in form
acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award; and (b)&nbsp;if the Award is exercised by any person other than the
Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(2)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will determine the
exercise price, if any, of each Award requiring exercise. Unless the Administrator determines otherwise, the exercise price of an Award requiring exercise will not be less than the fair market value
of the Stock subject to the Award, </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>A-3</FONT></P>

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<A NAME="page_ea2420_1_4"> </A>
<UL>
<BR>

<P><FONT SIZE=2>determined
as of the date of grant. An ISO granted to an Employee described in Section&nbsp;422(b)(6) of the Code will have an exercise price equal to 110% of such fair market value. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(3)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Payment Of Exercise Price.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Where the exercise of an Award is
to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a)&nbsp;all payments will be by cash or check acceptable to the
Administrator, or, if so permitted by the Administrator and if legally permissible, (i)&nbsp;through the delivery of shares of Stock that have been outstanding for at least six months (unless the
Administrator approves a shorter period) and that have a fair market value equal to the exercise price, (ii)&nbsp;by delivery to the Company of a promissory note of the person exercising the Award,
payable on such terms as are specified by the Administrator, (iii)&nbsp;through a broker-assisted exercise program acceptable to the Administrator, or (iv)&nbsp;by any combination of the foregoing
permissible forms of payment; and (b)&nbsp;where shares of Stock issued under an Award are part of an original issue of shares, the Award will require that at least so much of the exercise price as
equals the par value of such shares be paid other than by delivery of a promissory note or its equivalent. The delivery of shares in payment of the exercise price under
clause&nbsp;(a)(i)&nbsp;above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(4)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;ISOs.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No ISO may be granted under the Plan after
September&nbsp;15, 2007, but ISOs previously granted may extend beyond that date. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>c.</B></FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;</I></FONT><FONT SIZE=2><B>AWARDS NOT REQUIRING EXERCISE</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Awards
of Restricted Stock and Unrestricted Stock may be made in return for either (i)&nbsp;services determined by the Administrator to have a value not less than the par value of the
awarded shares of Stock, or (ii)&nbsp;cash or other property having a value not less than the par value of the awarded shares of Stock plus such additional amounts (if any) as the Administrator may
determine payable in such combination and type of cash, other property (of any kind) or services as the Administrator may determine. </FONT></P>

<P><FONT SIZE=2><B>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EFFECT OF CERTAIN TRANSACTIONS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>a.</B></FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;</I></FONT><FONT SIZE=2><B>MERGERS, ETC.</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of (i)&nbsp;a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of a majority of the Company's then
outstanding voting common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii)&nbsp;a sale or transfer of all or substantially all the Company's
assets, or (iii)&nbsp;a dissolution or liquidation of the Company (any of the foregoing, a "covered transaction"), all outstanding Awards requiring exercise will cease to be exercisable, and all
other Awards to the extent not fully vested (including Awards subject to performance conditions not yet satisfied or determined) will be forfeited, as of the effective time of the covered transaction; </FONT> <FONT SIZE=2><I>provided, however,
</I></FONT><FONT SIZE=2> that immediately prior to the consummation of such covered transaction the vesting or exercisability of Awards shall be accelerated
unless, in the case of any Award, the Administrator provides for one or more substitute or replacement awards from, or the assumption of the existing Award by, the acquiring entity (if any) or its
affiliates. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Administrator may provide in the case of any Award that the provisions of the preceding paragraph shall also apply to (i)&nbsp;mergers or consolidations involving the Company that
do not constitute a covered transaction, or (ii)&nbsp;other transactions, not constituting a covered transaction, that involve the acquisition of the Company's outstanding Stock. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>A-4</FONT></P>

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<A NAME="page_ea2420_1_5"> </A>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>b.</B></FONT><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;</I></FONT><FONT SIZE=2><B>CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(1)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Basic Adjustment Provisions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a stock
dividend, stock split or combination of shares, recapitalization or other change in the Company's capital structure, the Administrator will make appropriate adjustments to the maximum number of shares
that may be delivered under the Plan under Section&nbsp;4.a. and to the maximum share limits described in Section&nbsp;4.c., and will also make appropriate adjustments to the number and kind of
shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(2)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Certain Other Adjustments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To the extent consistent with
qualification of ISOs under Section&nbsp;422 of the Code and with the performance-based compensation rules of Section&nbsp;162(m), where applicable, the Administrator may also make adjustments of
the type described in paragraph&nbsp;(1) above to take into account distributions to stockholders other than those provided for in Section&nbsp;7.a. and 7.b.(1), or any other event, if the
Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>(3)</B></FONT><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;Continuing Application of Plan Terms.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;References in the Plan
to shares of Stock shall be construed to include any stock or securities resulting from an adjustment pursuant to this Section&nbsp;7. </FONT></P>

</UL>


<P><FONT SIZE=2><B>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONDITIONS ON DELIVERY OF STOCK  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under
the Plan until: the Company's counsel has approved all legal matters in connection with the issuance and delivery of such shares; if the outstanding Stock is at the time of delivery listed on any
stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and all conditions of the
Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear
an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions. </FONT></P>

<P><FONT SIZE=2><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENT AND TERMINATION  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the last sentence of Section&nbsp;3, the Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at
the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards; </FONT><FONT SIZE=2><I>provided,</I></FONT><FONT SIZE=2> that (except to the extent expressly
required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required in order for the Plan
to continue to qualify under Section&nbsp;422 of the Code and for Awards to be eligible for the performance-based exception under Section&nbsp;162(m). </FONT></P>

<P><FONT SIZE=2><B>10.&nbsp;&nbsp;&nbsp;NON-LIMITATION OF THE COMPANY'S RIGHTS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The existence of the Plan or the grant of any Award shall not in any way affect the Company's right to award a person bonuses or other compensation in addition to
Awards under the Plan. </FONT></P>

<P><FONT SIZE=2><B>11.&nbsp;&nbsp;&nbsp;GOVERNING LAW  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be construed in accordance with the laws of the Commonwealth of Massachusetts. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>A-5</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ec2420_1_6"> </A> </FONT> <FONT SIZE=2><B>EXHIBIT A  </B></FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Definition of Terms  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following terms, when used in the Plan, shall have the meanings and be subject to the provisions set forth below: </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Administrator":</B></FONT><FONT SIZE=2> The Board or, if one or more has been appointed, the Committee. The Administrator may delegate ministerial tasks to such
persons as it deems appropriate. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Affiliate":</B></FONT><FONT SIZE=2> Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in
which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Award":</B></FONT><FONT SIZE=2>&nbsp;Any or a combination of the following: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;Options
("Stock Options") entitling the recipient to acquire shares of Stock upon payment of the exercise price. Each Stock Option awarded under the Plan will be deemed
to have been designated as a non-ISO, unless the Administrator expressly provides for ISO treatment. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;Rights
("SARs") entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using
such factors as it deems appropriate) of the amount by which the Stock has appreciated in value since the date of the Award. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;Stock
subject to restrictions ("Restricted Stock") under the Plan requiring that such Stock be redelivered to the Company if specified conditions are not satisfied.
The conditions to be satisfied in connection with any Award of Restricted Stock, the terms on which such Stock must be redelivered to the Company, the purchase price of such Stock, and all other terms
shall be determined by the Administrator. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;Stock
not subject to any restrictions under the Plan ("Unrestricted Stock"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;A
promise to deliver Stock or other securities in the future on such terms and conditions as the Administrator determines. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;Securities
(other than Stock Options) that are convertible into or exchangeable for Stock on such terms and conditions as the Administrator determines. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;Cash
bonuses tied to Performance Criteria as described below ("Cash Performance Awards"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;Performance
Awards </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;Grants
of cash, or loans, made in connection with other Awards in order to help defray in whole or in part the economic cost (including tax cost) of the Award to the
Participant. The terms of any such grant or loan shall be determined by the Administrator. </FONT></P>

</UL>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Board":</B></FONT><FONT SIZE=2>&nbsp;The Board of Directors of the Company. </FONT></P>


<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Code":</B></FONT><FONT SIZE=2>&nbsp;The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from
time to time in effect. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>A-6</FONT></P>

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<A NAME="page_ec2420_1_7"> </A>
<BR>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Committee":</B></FONT><FONT SIZE=2>&nbsp;A committee of the Board comprised solely of two or more outside directors within the meaning of
Section&nbsp;162(m). The Committee may delegate ministerial tasks to such persons (including Employees) as it deems appropriate. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Company":</B></FONT><FONT SIZE=2>&nbsp;Precision Optics Corporation,&nbsp;Inc. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Employee":</B></FONT><FONT SIZE=2>&nbsp;Any person who is employed by the Company or an Affiliate. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Employment":</B></FONT><FONT SIZE=2>&nbsp;A Participant's employment or other service relationship with the Company and its Affiliates. Employment will
be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section&nbsp;5
to the Company or its Affiliates. If a Participant's employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant's Employment will be
deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"ISO":</B></FONT><FONT SIZE=2>&nbsp;A Stock Option intended to be an "incentive stock option" within the meaning of Section&nbsp;422 of the Code. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Participant":</B></FONT><FONT SIZE=2>&nbsp;An Employee, director or other person providing services to the Company or its Affiliates who is granted an
Award under the Plan. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Performance Award":</B></FONT><FONT SIZE=2>&nbsp;An Award subject to Performance Criteria. The Committee in its discretion may grant Performance Awards
that are intended to qualify for the performance-based compensation exception under Section&nbsp;162(m) and Performance Awards that are not intended so to qualify. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Performance Criteria":</B></FONT><FONT SIZE=2>&nbsp;Specified criteria, the satisfaction of which is a condition for the grant, exercisability, vesting
or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section&nbsp;162(m), a Performance Criterion will mean an
objectively determinable measure of performance relating to any or any combination of the following (determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary,
line of business, project or geographical basis or in combinations thereof): (i)&nbsp;sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes,
depreciation or amortization, whether or not on a continuing operations or an aggregate or per
share basis; return on equity, investment, capital or assets; gross margin; inventory level or turns; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share;
capital expenditures; cash flow; stock price; stockholder return; or other objective operating contributions; or (ii)&nbsp;acquisitions and divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) and refinancings; or other
transactions that involve a change in the equity ownership of the Company. A Performance Criterion measure and any targets with respect thereto determined by the Administrator need not be based upon
an increase, a positive or improved result or avoidance of loss. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Plan":</B></FONT><FONT SIZE=2>&nbsp;Precision Optics Corporation,&nbsp;Inc. 1997 Incentive Plan as from time to time amended and in effect. </FONT></P>


<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Section&nbsp;162(m)":</B></FONT><FONT SIZE=2>&nbsp;Section&nbsp;162(m) of the Code. </FONT></P>

<P><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Stock":</B></FONT><FONT SIZE=2>&nbsp;Common stock of the Company, par value $.01 per share. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>A-7</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=3><B>PRECISION OPTICS CORPORATION, INC.  </B></FONT></P>

<P><FONT SIZE=2>Dear Shareholder, </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
take note of the important information enclosed with this Proxy Ballot. The Proposals which are discussed in detail in the enclosed proxy materials require your immediate
attention and approval. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
vote counts, and you are strongly encouraged to exercise your right to vote your shares. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and return your proxy vote in the enclosed postage paid envelope. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your
vote must be received prior to the Annual Meeting of Stockholders on November&nbsp;11, 2003. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thank
you in advance for your prompt consideration of these matters. </FONT></P>

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<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Very truly yours,</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><BR>
Precision Optics Corporation,&nbsp;Inc.</FONT></TD>
</TR>
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<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="CENTER"><FONT SIZE=2>DETACH HERE</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="CENTER"><FONT SIZE=2>ZPOPC2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<P ALIGN="CENTER"><FONT SIZE=2><B>PRECISION OPTICS CORPORATION,&nbsp;INC.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>COMMON STOCK PROXY  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned, revoking any previous instructions, hereby acknowledges receipt of the Notice and Proxy Statement dated October&nbsp;15, 2003. In connection
with the Annual Meeting mentioned below, the undersigned hereby appoint(s) Richard E. Forkey and Jack P. Dreimiller as attorneys of the undersigned, each with power to act alone and with full power of
substitution, to act and to vote all shares of stock which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Precision Optics Corporation,&nbsp;Inc. to be held on
November&nbsp;11, 2003, at 10:00&nbsp;A.M. at the offices of Ropes&nbsp;&amp; Gray LLP, One International Place, Boston, Massachusetts, and at any adjournments or postponements thereof, upon the
matters set forth in the proxy statement for such Annual Meeting. The foregoing attorneys are authorized to vote, in their discretion, upon such other business as may properly come before the meeting
or any adjournments or postponements thereof. </FONT></P>

<P><FONT SIZE=2>THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED BY THE SHAREHOLDER(S) ON THE REVERSE SIDE HEREOF. IF
NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR THE ELECTION OF THE CLASS I DIRECTOR NOMINEES DESCRIBED IN PROPOSAL NUMBER 1 AND FOR THE AMENDED AND RESTATED 1997 INCENTIVE PLAN DESCRIBED IN
PROPOSAL NUMBER 2. </FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=2><B>PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE<BR>
ENCLOSED ENVELOPE.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please sign exactly as your name appears on the books of the Company. Joint owners should each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. </FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">

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<TD WIDTH="49%"><FONT SIZE=2>HAS YOUR ADDRESS CHANGED?</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>DO YOU HAVE ANY COMMENTS?</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><BR><HR NOSHADE></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2><B>PRECISION OPTICS CORPORATION<BR>
C/O EQUISERVE TRUST COMPANY, N.A.<BR>
P.O. BOX 8694<BR>
EDISON, NJ 08818-8694  </B></FONT></P>

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<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="CENTER"><FONT SIZE=2>DETACH HERE</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="CENTER"><FONT SIZE=2>ZPOPC2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><FONT FACE="WINGDINGS">&#253;</FONT></FONT></DT><DD><FONT SIZE=2>PLEASE
MARK VOTES AS IN THIS EXAMPLE. </FONT></DD></DL>
<BR>
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<P ALIGN="CENTER"><FONT SIZE=2><B>PRECISION OPTICS CORPORATION,&nbsp;INC.  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2>Election
of two Class&nbsp;I Directors. The nominees for the Board of Directors to serve for a three-year term as Class&nbsp;I Director:<BR></FONT>
<BR>

<P><FONT SIZE=2>NOMINEES:
(01)&nbsp;Richard E. Forkey and (02)&nbsp;Edward A. Benjamin </FONT></P>

</DD></DL>

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<TR VALIGN="TOP">
<TD WIDTH="42%"><FONT SIZE=2>FOR NOMINEES&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="42%"><FONT SIZE=2>WITHHELD FROM NOMINEES</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM"><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><BR><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT>&nbsp;For all nominees except as written above.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD><FONT SIZE=2>Approval
of the Amended and Restated 1997 Incentive Plan: </FONT></DD></DL>
<BR>

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<TR VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>FOR <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>AGAINST <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="22%"><FONT SIZE=2>ABSTAIN <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<UL>

<P><FONT SIZE=2>Mark
box at right if an address change or comment has been noted on the reverse side of this card.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P><FONT SIZE=2>Please
sign this proxy exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, administrator, trustee or guardian, please give full title as
such. </FONT></P>
</UL>
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<TR VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2>Signature:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>Date:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><HR NOSHADE></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Signature:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2><BR>
Date:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><HR NOSHADE></TD>
<TD WIDTH="3%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="37%" VALIGN="BOTTOM"><HR NOSHADE></TD>
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<BR>
<P><br><A NAME="03BOS2420_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_de2420_1">INFORMATION CONCERNING SOLICITATION AND VOTING</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_de2420_2">PROPOSAL NUMBER 1. ELECTION OF DIRECTORS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_de2420_3">PROPOSAL NUMBER 2. APPROVAL OF AMENDED AND RESTATED 1997 INCENTIVE PLAN</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_de2420_4">Amended Plan Benefits 1997 Incentive Plan</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dk2420_1">EQUITY COMPENSATION PLAN INFORMATION</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dk2420_2">EXECUTIVE OFFICERS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dk2420_3">COMPENSATION AND OTHER MATERIAL TRANSACTIONS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dk2420_4">Executive Compensation</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dk2420_5">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></FONT><BR>
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<FONT SIZE=2><A HREF="#toc_dq2420_1">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dq2420_2">INDEPENDENT PUBLIC ACCOUNTANTS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dq2420_3">AUDIT COMMITTEE REPORT</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dq2420_4">SHAREHOLDER PROPOSALS</A></FONT><BR>

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