EXHIBIT 10.1

                       PRECISION OPTICS CORPORATION, INC.

                               1997 INCENTIVE PLAN

                  AMENDED AND RESTATED AS OF NOVEMBER 11, 2003

1.    DEFINED TERMS

      Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.

2.    PURPOSE

      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.

3.    ADMINISTRATION

      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 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.

4.    LIMITS ON AWARDS UNDER THE PLAN

      a.    NUMBER OF SHARES. A maximum of 300,000 shares of Stock may be
delivered in satisfaction of Awards under the Plan.

      b.    TYPE OF SHARES. 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.

      c.    SECTION 162(M) LIMITS. 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 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) multiple Cash Performance Awards to
the same individual that are determined by


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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) 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.

5.    ELIGIBILITY AND PARTICIPATION

      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 424 of the
Code.

6.    RULES APPLICABLE TO AWARDS

      a.    ALL AWARDS

            (1)   AWARD PROVISIONS. The Administrator will determine the terms
      of all Awards, subject to the limitations provided herein.

            (2)   TRANSFERABILITY OF AWARDS. 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.

            (3)   VESTING, ETC. 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:

                  (A)   subject to (B) and (C) 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) a period of 30 days or (ii) the period ending
            on the latest date on which such Stock Option or SAR could have been
            exercised without regard to this Section 6.a.(3), and will thereupon
            terminate;

                  (B)   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) the period ending 90 days after
            the Participant's death or (ii) the period ending on the latest date
            on which such Stock Option or SAR could have been exercised without
            regard to this Section 6.a.(3), and will thereupon terminate; and

                  (C)   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


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            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.

            (4)   TAXES. 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).

            (5)   DIVIDEND EQUIVALENTS, ETC. 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.

            (6)   RIGHTS LIMITED. 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.

            (7)   SECTION 162(M). This Section 6.a.(7) applies to any
      Performance Award intended to qualify as performance-based for the
      purposes of Section 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 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 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 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 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 162(m) of the Code, unless such grant is made
      contingent upon such approval.

      b.    AWARDS REQUIRING EXERCISE

            (1)   TIME AND MANNER OF EXERCISE. Unless the Administrator
      expressly provides otherwise, (a) 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) 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.

            (2)   EXERCISE PRICE. 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

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      will not be less than the fair market value of the Stock subject to the
      Award, determined as of the date of grant. An ISO granted to an Employee
      described in Section 422(b)(6) of the Code will have an exercise price
      equal to 110% of such fair market value.

            (3)   PAYMENT OF EXERCISE PRICE. 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) all payments
      will be by cash or check acceptable to the Administrator, or, if so
      permitted by the Administrator and if legally permissible, (i) 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) 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) through a
      broker-assisted exercise program acceptable to the Administrator, or (iv)
      by any combination of the foregoing permissible forms of payment; and (b)
      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 (a)(i) 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.

            (4)   ISOs. No ISO may be granted under the Plan after September 15,
      2007, but ISOs previously granted may extend beyond that date.

      c.    AWARDS NOT REQUIRING EXERCISE

      Awards of Restricted Stock and Unrestricted Stock may be made in return
for either (i) services determined by the Administrator to have a value not less
than the par value of the awarded shares of Stock, or (ii) 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.

7.    EFFECT OF CERTAIN TRANSACTIONS

      a.    MERGERS, ETC.

         In the event of (i) 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) a sale
or transfer of all or substantially all the Company's assets, or (iii) 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; provided,
however, 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.

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


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         b.       CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

            (1)   BASIC ADJUSTMENT PROVISIONS. 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 4.a. and to the maximum share limits described in
      Section 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.

            (2)   CERTAIN OTHER ADJUSTMENTS. To the extent consistent with
      qualification of ISOs under Section 422 of the Code and with the
      performance-based compensation rules of Section 162(m), where applicable,
      the Administrator may also make adjustments of the type described in
      paragraph (1) above to take into account distributions to stockholders
      other than those provided for in Section 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.

            (3)   CONTINUING APPLICATION OF PLAN TERMS. 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 7.

8.    CONDITIONS ON DELIVERY OF STOCK

      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.

9.    AMENDMENT AND TERMINATION

      Subject to the last sentence of Section 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; provided, 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
422 of the Code and for Awards to be eligible for the performance-based
exception under Section 162(m).

10.   NON-LIMITATION OF THE COMPANY'S RIGHTS

      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.


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11.   GOVERNING LAW

      The Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.


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                                    EXHIBIT A

      DEFINITION OF TERMS

      The following terms, when used in the Plan, shall have the meanings and be
subject to the provisions set forth below:

      "ADMINISTRATOR": 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.

      "AFFILIATE": 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.

      "AWARD": Any or a combination of the following:

            (i) 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.

            (ii) 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.

            (iii) 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.

            (iv) Stock not subject to any restrictions under the Plan
      ("Unrestricted Stock").

            (v) A promise to deliver Stock or other securities in the future on
      such terms and conditions as the Administrator determines.

            (vi) Securities (other than Stock Options) that are convertible into
      or exchangeable for Stock on such terms and conditions as the
      Administrator determines.

            (vii) Cash bonuses tied to Performance Criteria as described below
      ("Cash Performance Awards").

            (viii) Performance Awards

            (ix) 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.

      "BOARD": The Board of Directors of the Company.

      "CODE": 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.


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      "COMMITTEE": A committee of the Board comprised solely of two or more
outside directors within the meaning of Section 162(m). The Committee may
delegate ministerial tasks to such persons (including Employees) as it deems
appropriate.

      "COMPANY": Precision Optics Corporation, Inc.

      "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

      "EMPLOYMENT": 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 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.

      "ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code.

      "PARTICIPANT": An Employee, director or other person providing services to
the Company or its Affiliates who is granted an Award under the Plan.

      "PERFORMANCE AWARD": 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 162(m)
and Performance Awards that are not intended so to qualify.

      "PERFORMANCE CRITERIA": 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 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) 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) 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.

      "PLAN": Precision Optics Corporation, Inc. 1997 Incentive Plan as from
time to time amended and in effect.

      "SECTION 162(M)": Section 162(m) of the Code.

      "STOCK": Common stock of the Company, par value $.01 per share.


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