EXHIBIT
      4.2

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE TRANSFERRED UNLESS (I) SUCH
      SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE ACT, (II) SUCH
      SECURITIES MAY BE SOLD WITHOUT RESTRICTION PURSUANT TO RULE 144, OR (III) THE
      COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
      SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
      ACT
      OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

    


    SUBJECT
      TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00
      P.M. EASTERN TIME ON JUNE 25, 2015 (THE “EXPIRATION DATE”).

    


    No.
      __________

     

    PRECISION
      OPTICS CORPORATION, INC.

    


    FORM
      OF WARRANT TO PURCHASE _______ SHARES OF

    COMMON
      STOCK, PAR VALUE $0.01 PER SHARE

    


    For
      VALUE
      RECEIVED, ____________________ (“Warrantholder”), is entitled to purchase,
      subject to the provisions of this Warrant, from Precision Optics Corporation,
      Inc., a Massachusetts corporation (“Company”), at any time from and after the
      Amendment Effective Date and not later than 5:00 P.M., Eastern time, on the
      Expiration Date (as defined above), at an exercise price per share equal to
      $0.07 (the exercise price in effect being herein called the “Warrant Price”),
      ______ shares (“Warrant Shares”) of the Company’s Common Stock, par value $0.01
      per share (“Common Stock”). The number of Warrant Shares purchasable upon
      exercise of this Warrant and the Warrant Price shall be subject to adjustment
      from time to time as described herein. This Warrant is being issued pursuant
      to
      the Purchase Agreement, dated as of June 25, 2008 (the “Purchase Agreement”),
      among the Company and the initial holders of the Company Warrants (as defined
      below). Capitalized terms used herein have the respective meanings ascribed
      thereto in the Purchase Agreement unless otherwise defined herein.

    


    Section
      1. Registration.
      The
      Company shall maintain books for the transfer and registration of the Warrant.
      Upon the initial issuance of this Warrant, the Company shall issue and register
      the Warrant in the name of the Warrantholder.

    


    Section
      2. Transfers.
      As
      provided herein, this Warrant may be transferred only pursuant to a registration
      statement filed under the Securities Act of 1933, as amended (the “Securities
      Act”), or an exemption from such registration. Subject to such restrictions, the
      Company shall transfer this Warrant from time to time upon the books to be
      maintained by the Company for that purpose, upon surrender hereof for transfer,
      properly endorsed or accompanied by appropriate instructions for transfer and
      such other documents as may be reasonably required by the Company, including,
      if
      required by the Company, an opinion of its counsel reasonably satisfactory
      to
      the Company to the effect that such transfer is exempt from the registration
      requirements of the Securities Act, to establish that such transfer is being
      made in accordance with the terms hereof, and a new Warrant shall be issued
      to
      the transferee and the surrendered Warrant shall be canceled by the
      Company.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Section
      3. Exercise
      of Warrant.
      This
      Warrant shall not be exercisable prior to the Amendment Effective Date. Subject
      to the provisions hereof, the Warrantholder may exercise this Warrant, in whole
      or in part, at any time from and after the Amendment Effective Date and prior
      to
      its expiration upon surrender of the Warrant, together with delivery of a duly
      executed Warrant exercise form, in the form attached hereto as Appendix A (the
      “Exercise Agreement”) and payment by cash, certified check or wire transfer of
      funds (or
      by
      cashless exercise as provided below) of
      the
      aggregate Warrant Price for that number of Warrant Shares then being purchased,
      to the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the Warrantholder). The Warrant Shares so purchased
      shall be deemed to be issued to the Warrantholder or the Warrantholder’s
      designee, as the record owner of such shares, as of the close of business on
      the
      date on which this Warrant shall have been surrendered (or the date evidence
      of
      loss, theft or destruction thereof and security or indemnity satisfactory to
      the
      Company has been provided to the Company), the Warrant Price shall have been
      paid and the completed Exercise Agreement shall have been delivered.
      Certificates for the Warrant Shares so purchased shall be delivered to the
      Warrantholder within a reasonable time, not exceeding three (3) business days,
      after this Warrant shall have been so exercised. The certificates so delivered
      shall be in such denominations as may be requested by the Warrantholder and
      shall be registered in the name of the Warrantholder or such other name as
      shall
      be designated by the Warrantholder, as specified in the Exercise Agreement.
      If
      this Warrant shall have been exercised only in part, then, unless this Warrant
      has expired, the Company shall, at its expense, at the time of delivery of
      such
      certificates, deliver to the Warrantholder a new Warrant representing the right
      to purchase the number of shares with respect to which this Warrant shall not
      then have been exercised. As used herein, “business day” means a day, other than
      a Saturday or Sunday, on which banks in New York City are open for the general
      transaction of business. Each exercise hereof shall constitute the
      re-affirmation by the Warrantholder that the representations and warranties
      contained in Section 5 of the Purchase Agreement are true and correct in all
      material respects with respect to the Warrantholder as of the time of such
      exercise.

    


    If
      (1) a
      certificate representing the Warrant Shares is not delivered to the
      Warrantholder within three (3) Business Days of the due exercise of this Warrant
      by the Warrantholder and (2) prior to the time such certificate is received
      by
      the Warrantholder, the Warrantholder, or any third party on behalf of the
      Warrantholder or for the Warrantholder’s account, purchases (in an open market
      transaction or otherwise) shares of Common Stock to deliver in satisfaction
      of a
      sale by the Warrantholder of shares represented by such certificate (a
“Buy-In”), then the Company shall pay in cash to the Warrantholder (for costs
      incurred either directly by such Warrantholder or on behalf of a third party)
      the amount by which the total purchase price paid for Common Stock as a result
      of the Buy-In (including brokerage commissions, if any) exceeds the proceeds
      received by such Warrantholder as a result of the sale to which such Buy-In
      relates. The Warrantholder shall provide the Company written notice indicating
      the amounts payable to the Warrantholder in respect of the
      Buy-In.


    
      
        
        

      

      
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    In
      the
      event that a Change of Control (as defined in the Note) occurs prior to the
      Amendment Effective Date, the Company shall redeem as of the effective time
      of
      the Change of Control (the “Redemption Date”) this Warrant at a cash redemption
      price equal to the product of (i) the number of shares of Common Stock into
      which this Warrant would have been exercisable if the Warrant was fully
      exercisable on the Redemption Date and (ii) the amount, if any, by which the
      Fair Market Value of the consideration per share to be received by holders
      of
      Common Stock in connection with such Change of Control as of the Redemption
      Date
      exceeds the Warrant Price in effect immediately prior to the effective time
      of
      the Change of Control. For purposes of determining such “Fair Market Value”, (i)
      publicly traded securities shall be deemed to have a Fair Market Value equal
      to
      their Market Price, and (ii) any other securities or other assets shall be
      deemed to have a Fair Market Value equal to the fair market value thereof as
      determined by the Board in the good faith exercise of its reasonable business
      judgment. The Company shall provide written notice to the Warrantholder of
      any
      pending Change of Control not less than 15 days prior to the effective date
      of
      such Change of Control, which notice shall include the Company’s estimate of the
      Redemption Price. On the Redemption Date, the Company shall pay the Redemption
      Price to the Warrantholder in immediately available funds to an account
      previously specified in writing by the Warrantholder. The Warrantholder shall
      not be required to surrender this Warrant prior to payment of the Redemption
      Price. Upon the indefeasible payment in full of the Redemption Price to the
      Warrantholder as provided in this Section 3, this Warrant shall be deemed to
      have been extinguished and shall no longer be outstanding for any
      purpose.

    


    Section
      4. Compliance
      with the Securities Act of 1933.
      Except
      as provided in the Purchase Agreement, the Company may cause the legend set
      forth on the first page of this Warrant to be set forth on each Warrant, and
      a
      similar legend on any security issued or issuable upon exercise of this Warrant,
      unless counsel for the Company is of the opinion as to any such security that
      such legend is unnecessary.

    


    Section
      5. Payment
      of Taxes.
      The
      Company will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of the Warrant; provided,
      however, that the Company shall not be required to pay any tax or taxes which
      may be payable in respect of any transfer involved in the issuance or delivery
      of any certificates for Warrant Shares in a name other than that of the
      Warrantholder in respect of which such shares are issued, and in such case,
      the
      Company shall not be required to issue or deliver any certificate for Warrant
      Shares or any Warrant until the person requesting the same has paid to the
      Company the amount of such tax or has established to the Company’s reasonable
      satisfaction that such tax has been paid. The Warrantholder shall be responsible
      for income taxes due under federal, state or other law, if any such tax is
      due.

    


    Section
      6. Mutilated
      or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall
      issue in exchange and substitution of and upon surrender and cancellation of
      the
      mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
      or destroyed, a new Warrant of like tenor and for the purchase of a like number
      of Warrant Shares, but only upon receipt of evidence reasonably satisfactory
      to
      the Company of such loss, theft or destruction of the Warrant, and with respect
      to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with
      respect thereto, if requested by the Company.


    
      
        
        

      

      
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    Section
      7. Reservation
      of Common Stock.
      The
      Company hereby represents and warrants that, from and after the Amendment
      Effective Date, there will have been reserved, and, from and after the Amendment
      Effective Date, the Company shall at all applicable times keep reserved until
      issued (if necessary) as contemplated by this Section 7, out of the authorized
      and unissued shares of Common Stock, sufficient shares to provide for the
      exercise of the rights of purchase represented by this Warrant. The Company
      agrees that all Warrant Shares issued upon due exercise of the Warrant shall
      be,
      at the time of delivery of the certificates for such Warrant Shares, duly
      authorized, validly issued, fully paid and non-assessable shares of Common
      Stock
      of the Company.

    


    Section
      8. Adjustments.
      Subject
      and pursuant to the provisions of this Section 8, the Warrant Price and number
      of Warrant Shares subject to this Warrant shall be subject to adjustment from
      time to time as set forth hereinafter.

    


    (a) If
      the
      Company shall, at any time or from time to time while this Warrant is
      outstanding, pay a dividend or make a distribution on its Common Stock in shares
      of Common Stock, subdivide its outstanding shares of Common Stock into a greater
      number of shares or combine its outstanding shares of Common Stock into a
      smaller number of shares or issue by reclassification of its outstanding shares
      of Common Stock any shares of its capital stock (including any such
      reclassification in connection with a consolidation or merger in which the
      Company is the continuing corporation), then (i) the Warrant Price in effect
      immediately prior to the date on which such change shall become effective shall
      be adjusted by multiplying such Warrant Price by a fraction, the numerator
      of
      which shall be the number of shares of Common Stock outstanding immediately
      prior to such change and the denominator of which shall be the number of shares
      of Common Stock outstanding immediately after giving effect to such change
      and
      (ii) the number of Warrant Shares purchasable upon exercise of this Warrant
      shall be adjusted by multiplying the number of Warrant Shares purchasable upon
      exercise of this Warrant immediately prior to the date on which such change
      shall become effective by a fraction, the numerator of which is shall be the
      Warrant Price in effect immediately prior to the date on which such change
      shall
      become effective and the denominator of which shall be the Warrant Price in
      effect immediately after giving effect to such change, calculated in accordance
      with clause (i) above. Such adjustments shall be made successively whenever
      any
      event listed above shall occur.

    


    (b) If
      any
      capital reorganization, reclassification of the capital stock of the Company,
      consolidation or merger of the Company with another corporation in which the
      Company is not the survivor, or sale, transfer or other disposition of all
      or
      substantially all of the Company’s assets to another corporation shall be
      effected, then, as a condition of such reorganization, reclassification,
      consolidation, merger, sale, transfer or other disposition, lawful and adequate
      provision shall be made whereby each Warrantholder shall thereafter have the
      right to purchase and receive upon the basis and upon the terms and conditions
      herein specified and in lieu of the Warrant Shares immediately theretofore
      issuable upon exercise of the Warrant, such shares of stock, securities or
      assets as would have been issuable or payable with respect to or in exchange
      for
      a number of Warrant Shares equal to the number of Warrant Shares immediately
      theretofore issuable upon exercise of the Warrant, had such reorganization,
      reclassification, consolidation, merger, sale, transfer or other disposition
      not
      taken place, and in any such case appropriate provision shall be made with
      respect to the rights and interests of each Warrantholder to the end that the
      provisions hereof (including, without limitation, provision for adjustment
      of
      the Warrant Price) shall thereafter be applicable, as nearly equivalent as
      may
      be practicable in relation to any shares of stock, securities or assets
      thereafter deliverable upon the exercise hereof. The Company shall not effect
      any such consolidation, merger, sale, transfer or other disposition unless
      prior
      to or simultaneously with the consummation thereof the successor corporation
      (if
      other than the Company) resulting from such consolidation or merger, or the
      corporation purchasing or otherwise acquiring such assets or other appropriate
      corporation or entity shall assume the obligation to deliver to the
      Warrantholder, at the last address of the Warrantholder appearing on the books
      of the Company, such shares of stock, securities or assets as, in accordance
      with the foregoing provisions, the Warrantholder may be entitled to purchase,
      and the other obligations under this Warrant. The provisions of this paragraph
      (b) shall similarly apply to successive reorganizations, reclassifications,
      consolidations, mergers, sales, transfers or other
      dispositions.


    
      
        
        

      

      
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    (c) In
      case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock (including any such distribution made in connection
      with
      a consolidation or merger in which the Company is the continuing corporation)
      of
      evidences of indebtedness or assets (other than cash dividends or cash
      distributions payable out of consolidated earnings or earned surplus or
      dividends or distributions referred to in Section 8(a)), or subscription rights
      or warrants, the Warrant Price to be in effect after such payment date shall
      be
      determined by multiplying the Warrant Price in effect immediately prior to
      such
      payment date by a fraction, the numerator of which shall be the total number
      of
      shares of Common Stock outstanding multiplied by the Market Price (as defined
      below) per share of Common Stock immediately prior to such payment date, less
      the fair market value (as determined by the Company’s Board of Directors in good
      faith) of said assets or evidences of indebtedness so distributed, or of such
      subscription rights or warrants, and the denominator of which shall be the
      total
      number of shares of Common Stock outstanding multiplied by such Market Price
      per
      share of Common Stock immediately prior to such payment date. “Market Price” as
      of a particular date (the “Valuation Date”) shall mean the following: (a) if the
      Common Stock is then listed on the Nasdaq Global Market or the Nasdaq Capital
      Market (“Nasdaq”) or any other national stock exchange, the closing sale price
      of one share of Common Stock on such exchange on the last trading day prior
      to
      the Valuation Date; (b) if the Common Stock is then quoted on the National
      Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin
      Board”) or such similar quotation system or association, the closing sale price
      of one share of Common Stock on the Bulletin Board or such other quotation
      system or association on the last trading day prior to the Valuation Date or,
      if
      no such closing sale price is available, the average of the high bid and the
      low
      asked price quoted thereon on the last trading day prior to the Valuation Date;
      or (c) if the Common Stock is not then listed on a national stock exchange
      or
      quoted on the Bulletin Board or such other quotation system or association,
      the
      fair market value of one share of Common Stock as of the Valuation Date, as
      determined in good faith by the Board of Directors of the Company and the
      Warrantholder. If the Common Stock is not then listed on a national securities
      exchange, the Bulletin Board or such other quotation system or association,
      the
      Board of Directors of the Company shall respond promptly, in writing, to an
      inquiry by the Warrantholder prior to the exercise hereunder as to the fair
      market value of a share of Common Stock as determined by the Board of Directors
      of the Company. In the event that the Board of Directors of the Company and
      the
      Warrantholder are unable to agree upon the fair market value in respect of
      subpart (c) of this paragraph, the Company and the Warrantholder shall jointly
      select an appraiser, who is experienced in such matters. The decision of such
      appraiser shall be final and conclusive, and the cost of such appraiser shall
      be
      borne equally by the Company and the Warrantholder. Such adjustment shall be
      made successively whenever such a payment date is fixed.


    
      
        
        

      

      
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    (d) An
      adjustment to the Warrant Price shall become effective immediately after the
      payment date in the case of each dividend or distribution and immediately after
      the effective date of each other event which requires an
      adjustment.

    


    (e) In
      the
      event that, as a result of an adjustment made pursuant to this Section 8, the
      Warrantholder shall become entitled to receive any shares of capital stock
      of
      the Company other than shares of Common Stock, the number of such other shares
      so receivable upon exercise of this Warrant shall be subject thereafter to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to the Warrant Shares contained
      in
      this Warrant.

    


    (f) Except
      as
      provided in subsection (g) hereof, if and whenever the Company shall issue
      or
      sell, or is, in accordance with any of subsections (f)(l) through (f)(7) hereof,
      deemed to have issued or sold, any Additional Shares of Common Stock for no
      consideration or for a consideration per share less than the Warrant Price
      in
      effect immediately prior to the time of such issue or sale, then and in each
      such case (a “Trigger Issuance”) the then-existing Warrant Price, shall be
      reduced, as of the close of business on the effective date of the Trigger
      Issuance, to a price determined as follows:

    


    
      	
              Adjusted Warrant Price = 

            	
              (A
                x B) + D

            
	 	
                    
                A+C

            


    

    


    where

    


    “A”
      equals the number of shares of Common Stock outstanding, including Additional
      Shares of Common Stock (as defined below) deemed to be issued hereunder,
      immediately preceding such Trigger Issuance (but excluding the Additional Shares
      included in “C” below);

    


    “B”
      equals the Warrant Price in effect immediately preceding such Trigger
      Issuance;

    


    “C”
      equals the number of Additional Shares of Common Stock issued or deemed issued
      hereunder as a result of the Trigger Issuance; and


    
      
        
        

      

      
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    “D”
      equals the aggregate consideration, if any, received or deemed to be received
      by
      the Company upon such Trigger Issuance;

    


    provided,
      however, that in no event shall the Warrant Price after giving effect to such
      Trigger Issuance be greater than the Warrant Price in effect prior to such
      Trigger Issuance.

    


    For
      purposes of this subsection (f), “Additional Shares of Common Stock” shall mean
      all shares of Common Stock issued by the Company or deemed to be issued pursuant
      to this subsection (f), other than Excluded Issuances (as defined in subsection
      (g) hereof).

    


    For
      purposes of this subsection (f), the following subsections (f)(l) to (f)(7)
      shall also be applicable:

    


    (f)(1)
      Issuance of Rights or Options. In case at any time the Company shall in any
      manner grant (directly and not by assumption in a merger or otherwise) any
      warrants or other rights to subscribe for or to purchase, or any options for
      the
      purchase of, Common Stock or any stock or security convertible into or
      exchangeable for Common Stock (such warrants, rights or options being called
      “Options” and such convertible or exchangeable stock or securities being called
“Convertible Securities”) whether or not such Options or the right to convert or
      exchange any such Convertible Securities are immediately exercisable, and the
      price per share for which Common Stock is issuable upon the exercise of such
      Options or upon the conversion or exchange of such Convertible Securities
      (determined by dividing (i) the sum (which sum shall constitute the applicable
      consideration) of (x) the total amount, if any, received or receivable by the
      Company as consideration for the granting of such Options, plus (y) the
      aggregate amount of additional consideration payable to the Company upon the
      exercise of all such Options, plus (z), in the case of such Options which relate
      to Convertible Securities, the aggregate amount of additional consideration,
      if
      any, payable upon the issue or sale of such Convertible Securities and upon
      the
      conversion or exchange thereof, by (ii) the total maximum number of shares
      of
      Common Stock issuable upon the exercise of such Options or upon the conversion
      or exchange of all such Convertible Securities issuable upon the exercise of
      such Options) shall be less than the Warrant Price in effect immediately prior
      to the time of the granting of such Options, then the total number of shares
      of
      Common Stock issuable upon the exercise of such Options or upon conversion
      or
      exchange of the total amount of such Convertible Securities issuable upon the
      exercise of such Options shall be deemed to have been issued for such price
      per
      share as of the date of granting of such Options or the issuance of such
      Convertible Securities and thereafter shall be deemed to be outstanding for
      purposes of adjusting the Warrant Price. Except as otherwise provided in
      subsection 8(f)(3), no adjustment of the Warrant Price shall be made upon the
      actual issue of such Common Stock or of such Convertible Securities upon
      exercise of such Options or upon the actual issue of such Common Stock upon
      conversion or exchange of such Convertible Securities.


    
      
        
        

      

      
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    (f)(2)
      Issuance of Convertible Securities. In case the Company shall in any manner
      issue (directly and not by assumption in a merger or otherwise) or sell any
      Convertible Securities, whether or not the rights to exchange or convert any
      such Convertible Securities are immediately exercisable, and the price per
      share
      for which Common Stock is issuable upon such conversion or exchange (determined
      by dividing (i) the sum (which sum shall constitute the applicable
      consideration) of (x) the total amount received or receivable by the Company
      as
      consideration for the issue or sale of such Convertible Securities, plus (y)
      the
      aggregate amount of additional consideration, if any, payable to the Company
      upon the conversion or exchange thereof, by (ii) the total number of shares
      of
      Common Stock issuable upon the conversion or exchange of all such Convertible
      Securities) shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, then the total maximum number of shares of
      Common Stock issuable upon conversion or exchange of all such Convertible
      Securities shall be deemed to have been issued for such price per share as
      of
      the date of the issue or sale of such Convertible Securities and thereafter
      shall be deemed to be outstanding for purposes of adjusting the Warrant Price,
      provided that (a) except as otherwise provided in subsection 8(f)(3), no
      adjustment of the Warrant Price shall be made upon the actual issuance of such
      Common Stock upon conversion or exchange of such Convertible Securities and
      (b)
      no further adjustment of the Warrant Price shall be made by reason of the issue
      or sale of Convertible Securities upon exercise of any Options to purchase
      any
      such Convertible Securities for which adjustments of the Warrant Price have
      been
      made pursuant to the other provisions of subsection 8(f).

     

    (f)(3)
      Change in Option Price or Conversion Rate. Upon the happening of any of the
      following events, namely, if the purchase price provided for in any Option
      referred to in subsection 8(f)(l) hereof, the additional consideration, if
      any,
      payable upon the conversion or exchange of any Convertible Securities referred
      to in subsections 8(f)(l) or 8(f)(2), or the rate at which Convertible
      Securities referred to in subsections 8(f)(l) or 8(f)(2) are convertible into
      or
      exchangeable for Common Stock shall change at any time (including, but not
      limited to, changes under or by reason of provisions designed to protect against
      dilution), the Warrant Price in effect at the time of such event shall forthwith
      be readjusted to the Warrant Price which would have been in effect at such
      time
      had such Options or Convertible Securities still outstanding provided for such
      changed purchase price, additional consideration or conversion rate, as the
      case
      may be, at the time initially granted, issued or sold. On the termination of
      any
      Option for which any adjustment was made pursuant to this subsection 8(f) or
      any
      right to convert or exchange Convertible Securities for which any adjustment
      was
      made pursuant to this subsection 8(f) (including without limitation upon the
      redemption or purchase for consideration of such Convertible Securities by
      the
      Company), the Warrant Price then in effect hereunder shall forthwith be changed
      to the Warrant Price which would have been in effect at the time of such
      termination had such Option or Convertible Securities, to the extent outstanding
      immediately prior to such termination, never been issued.

     

    
      
        
        

      

      
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    (f)(4)
      Stock Dividends. Subject to the provisions of this Section 8(f), in case the
      Company shall declare or pay a dividend or make any other distribution upon
      any
      stock of the Company (other than the Common Stock) payable in Common Stock,
      Options or Convertible Securities, then any Common Stock, Options or Convertible
      Securities, as the case may be, issuable in payment of such dividend or
      distribution shall be deemed to have been issued or sold without
      consideration.

    


    (f)(5)
      Consideration for Stock. In case any shares of Common Stock, Options or
      Convertible Securities shall be issued or sold for cash, the consideration
      received therefor shall be deemed to be the net amount received by the Company
      therefor, after deduction therefrom of any expenses incurred or any underwriting
      commissions or concessions paid or allowed by the Company in connection
      therewith. In case any shares of Common Stock, Options or Convertible Securities
      shall be issued or sold for a consideration other than cash, the amount of
      the
      consideration other than cash received by the Company shall be deemed to be
      the
      fair value of such consideration as determined in good faith by the Board of
      Directors of the Company, after deduction of any expenses incurred or any
      underwriting commissions or concessions paid or allowed by the Company in
      connection therewith. In case any Options shall be issued in connection with
      the
      issue and sale of other securities of the Company, together comprising one
      integral transaction in which no specific consideration is allocated to such
      Options by the parties thereto, such Options shall be deemed to have been issued
      for such consideration as determined in good faith by the Board of Directors
      of
      the Company. If Common Stock, Options or Convertible Securities shall be issued
      or sold by the Company and, in connection therewith, other Options or
      Convertible Securities (the “Additional Rights”) are issued, then the
      consideration received or deemed to be received by the Company shall be reduced
      by the fair market value of the Additional Rights (as determined using the
      Black-Scholes option pricing model or another method mutually agreed to by
      the
      Company and the Warrantholder). The Board of Directors of the Company shall
      respond promptly, in writing, to an inquiry by the Warrantholder as to the
      fair
      market value of the Additional Rights. In the event that the Board of Directors
      of the Company and the Warrantholder are unable to agree upon the fair market
      value of the Additional Rights, the Company and the Warrantholder shall jointly
      select an appraiser, who is experienced in such matters. The decision of such
      appraiser shall be final and conclusive, and the cost of such appraiser shall
      be
      borne evenly by the Company and the Warrantholder.

    


    (f)(6)
      Record Date. In case the Company shall take a record of the holders of its
      Common Stock for the purpose of entitling them (i) to receive a dividend or
      other distribution payable in Common Stock, Options or Convertible Securities
      or
      (ii) to subscribe for or purchase Common Stock, Options or Convertible
      Securities, then such record date shall be deemed to be the date of the issue
      or
      sale of the shares of Common Stock deemed to have been issued or sold upon
      the
      declaration of such dividend or the making of such other distribution or the
      date of the granting of such right of subscription or purchase, as the case
      may
      be.


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    (f)(7)
      Treasury Shares. The number of shares of Common Stock outstanding at any given
      time shall not include shares owned or held by or for the account of the Company
      or any of its wholly-owned subsidiaries, and the disposition of any such shares
      (other than the cancellation or retirement thereof) shall be considered an
      issue
      or sale of Common Stock for the purpose of this subsection (f).

    


    (g) Anything
      herein to the contrary notwithstanding, the Company shall not be required to
      make any adjustment of the Warrant Price in the case of the issuance of
(A)
      capital stock, Options or Convertible Securities issued to directors, officers,
      employees or consultants of the Company in connection with their service as
      directors of the Company, their employment by the Company or their retention
      as
      consultants by the Company pursuant to an equity compensation program approved
      by the Board of Directors of the Company or the compensation committee of the
      Board of Directors of the Company, (B) shares of Common Stock issued upon the
      conversion or exercise of Options or Convertible Securities issued prior to
      the
      date hereof, provided such securities are not amended after the date hereof
      to
      increase the number of shares of Common Stock issuable thereunder or to lower
      the exercise or conversion price thereof, (C) securities issued pursuant to
      the
      Purchase Agreement and securities issued upon the exercise or conversion of
      those securities, and (D) shares of Common Stock issued or issuable by reason
      of
      a dividend, stock split or other distribution on shares of Common Stock (but
      only to the extent that such a dividend, split or distribution results in an
      adjustment in the Warrant Price pursuant to the other provisions of this
      Warrant) (collectively, “Excluded Issuances”).

    


    (h) Upon
      any
      adjustment to the Warrant Price pursuant to Section 8(f) above, the number
      of
      Warrant Shares purchasable hereunder shall be adjusted by multiplying such
      number by a fraction, the numerator of which shall be the Warrant Price in
      effect immediately prior to such adjustment and the denominator of which shall
      be the Warrant Price in effect immediately thereafter.

    


    (i) To
      the
      extent permitted by applicable law and the listing requirements of any stock
      market or exchange on which the Common Stock is then listed, the Company from
      time to time may decrease the Warrant Price by any amount for any period of
      time
      if the period is at least twenty (20) days, the decrease is irrevocable during
      the period and the Board shall have made a determination that such decrease
      would be in the best interests of the Company, which determination shall be
      conclusive. Whenever the Warrant Price is decreased pursuant to the preceding
      sentence, the Company shall provide written notice thereof to the Warrantholder
      at least five (5) days prior to the date the decreased Warrant Price takes
      effect, and such notice shall state the decreased Warrant Price and the period
      during which it will be in effect.

    


    Section
      9. Fractional
      Interest.
      The
      Company shall not be required to issue fractions of Warrant Shares upon the
      exercise of this Warrant. If any fractional share of Common Stock would, except
      for the provisions of the first sentence of this Section 9, be deliverable
      upon
      such exercise, the Company, in lieu of delivering such fractional share, shall
      pay to the exercising Warrantholder an amount in cash equal to the Market Price
      of such fractional share of Common Stock on the date of
      exercise.


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    


    Section
      10. Extension
      of Expiration Date.
      Except
      as excused pursuant to Section 2(d) of the Registration Rights Agreement
      relating to the Warrant Shares (the “Registration Rights Agreement”), if the
      Company fails to cause any Registration Statement covering Registrable
      Securities (as defined in the Registration Rights Agreement) to be declared
      effective prior to the applicable dates set forth therein, or if any of the
      events specified in Section 2(c)(ii) of the Registration Rights Agreement
      occurs, and the Blackout Period (as defined in the Registration Rights
      Agreement) (whether alone, or in combination with any other Blackout Period)
      continues for more than 60 days in any 12 month period, or for more than a
      total
      of 90 days, then the Expiration Date of this Warrant shall be extended one
      day
      for each day beyond the 60-day or 90-day limits, as the case may be, that the
      Blackout Period continues.

    


    Section
      11. Benefits.
      Nothing
      in this Warrant shall be construed to give any person, firm or corporation
      (other than the Company and the Warrantholder) any legal or equitable right,
      remedy or claim, it being agreed that this Warrant shall be for the sole and
      exclusive benefit of the Company and the Warrantholder.

    


    Section
      12. Notices
      to Warrantholder.
      Upon
      the happening of any event requiring an adjustment of the Warrant Price, the
      Company shall promptly give written notice thereof to the Warrantholder at
      the
      address appearing in the records of the Company, stating the adjusted Warrant
      Price and the adjusted number of Warrant Shares resulting from such event and
      setting forth in reasonable detail the method of calculation and the facts
      upon
      which such calculation is based. Failure to give such notice to the
      Warrantholder or any defect therein shall not affect the legality or validity
      of
      the subject adjustment.

    


    Section
      13. Identity
      of Transfer Agent.
      The
      Transfer Agent for the Common Stock is Computershare Investor Services. Upon
      the
      appointment of any subsequent transfer agent for the Common Stock or other
      shares of the Company’s capital stock issuable upon the exercise of the rights
      of purchase represented by the Warrant, the Company will mail to the
      Warrantholder a statement setting forth the name and address of such transfer
      agent.

    


    Section
      14. Notices.
      Unless
      otherwise provided, any notice required or permitted under this Warrant shall
      be
      given in writing and shall be deemed effectively given as hereinafter described
      (i) if given by personal delivery, then such notice shall be deemed given upon
      such delivery, (ii) if given by telex or facsimile, then such notice shall
      be
      deemed given upon receipt of confirmation of complete transmittal, (iii) if
      given by mail, then such notice shall be deemed given upon the earlier of (A)
      receipt of such notice by the recipient or (B) three days after such notice
      is
      deposited in first class mail, postage prepaid, and (iv) if given by an
      internationally recognized overnight air courier, then such notice shall be
      deemed given one business day after delivery to such carrier. All notices shall
      be addressed as follows: if to the Warrantholder, at its address as set forth
      in
      the Company’s books and records and, if to the Company, at the address as
      follows, or at such other address as the Warrantholder or the Company may
      designate by ten days’ advance written notice to the other:


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    


    
      	
              If
                to the Company:

            
	 
	
              Precision
                Optics Corporation, Inc.

            
	
              22
                East Broadway

            
	
              Gardner,
                Massachusetts 01440-3338

            
	
              Attention:
                Richard E. Forkey,

            
	
              President,
                Chief Executive Officer and Treasurer

            
	
              Fax:
                (978) 630-1487

            
	 
	
              With
                a copy to:

            
	 
	
              Ropes
                & Gray LLP

            
	
              One
                International Place

            
	
              Boston,
                MA 02110

            
	
              Attention:
                Patrick O’Brien

            
	
              Fax:
                (617) 951-7050

            


    

    


    Section
      15. Registration
      Rights.
      The
      initial Warrantholder is entitled to the benefit of certain registration rights
      with respect to the shares of Common Stock issuable upon the exercise of this
      Warrant as provided in the Registration Rights Agreement, and any subsequent
      Warrantholder may be entitled to such rights.

    


    Section
      16. 
      Successors.
      All the
      covenants and provisions hereof by or for the benefit of the Warrantholder
      shall
      bind and inure to the benefit of its respective successors and assigns
      hereunder. 

    


    Section
      17. Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Warrant shall be governed by, and construed in accordance with, the internal
      laws of the State of New York, without reference to the choice of law provisions
      thereof (other than Section 5-1401 of the New York General Obligation Law).
      The
      Company and, by accepting this Warrant, the Warrantholder, each irrevocably
      submits to the exclusive jurisdiction of the courts of the State of New York
      located in New York County and the United States District Court for the Southern
      District of New York for the purpose of any suit, action, proceeding or judgment
      relating to or arising out of this Warrant and the transactions contemplated
      hereby. Service of process in connection with any such suit, action or
      proceeding may be served on each party hereto anywhere in the world by the
      same
      methods as are specified for the giving of notices under this Warrant. The
      Company and, by accepting this Warrant, the Warrantholder, each irrevocably
      consents to the jurisdiction of any such court in any such suit, action or
      proceeding and to the laying of venue in such court. The Company and, by
      accepting this Warrant, the Warrantholder, each irrevocably waives any objection
      to the laying of venue of any such suit, action or proceeding brought in such
      courts and irrevocably waives any claim that any such suit, action or proceeding
      brought in any such court has been brought in an inconvenient forum.
EACH
      OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES
      ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
      WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.


    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    


    Section
      18. Call
      Provision.
      Notwithstanding any other provision contained in this Warrant to the contrary,
      from and after the second anniversary of the Closing Date (as defined in the
      Purchase Agreement) in the event that the closing bid price per share of Common
      Stock as traded on the Bulletin Board (or such other exchange or stock market
      on
      which the Common Stock may then be listed or quoted) equals or exceeds $0.50
      (appropriately adjusted for any stock split, reverse stock split, stock dividend
      or other reclassification or combination of the Common Stock occurring after
      the
      date hereof) for twenty (20) consecutive trading days commencing after the
      Registration Statement (as defined in the Registration Rights Agreement) has
      been declared effective, the Company, upon thirty (30) days prior written notice
      (the “Notice
      Period”)
      given
      to the Warrantholder within one business day immediately following the end
      of
      such twenty (20) trading day period, may call this Warrant, in whole but not
      in
      part, at a redemption price equal to $0.01 per share of Common Stock then
      purchasable pursuant to this Warrant; provided that (i) the Company
      simultaneously calls all Company Warrants (as defined below) on the same terms,
      (ii) all of the shares of Common Stock issuable hereunder either (A) are
      registered pursuant to an effective Registration Statement (as defined in the
      Registration Rights Agreement) which is not suspended and for which no stop
      order is in effect, and pursuant to which the Warrantholder is able to sell
      such
      shares of Common Stock at all times during the Notice Period or (B) no longer
      constitute Registrable Securities (as defined in the Registration Rights
      Agreement) and (iii) this Warrant is fully exercisable for the full amount
      of
      Warrant Shares covered hereby. Notwithstanding any such notice by the Company,
      the Warrantholder shall have the right to exercise this Warrant prior to the
      end
      of the Notice Period.

    


    Section
      19. Cashless
      Exercise.
      The
      Warrantholder may elect to receive, without the payment by the Warrantholder
      of
      the aggregate Warrant Price in respect of the shares of Common Stock to be
      acquired, shares of Common Stock of equal value to the value of this Warrant,
      or
      any specified portion hereof, by the surrender of this Warrant (or such portion
      of this Warrant being so exercised) together with a Net Issue Election Notice,
      in the form annexed hereto as Appendix B, duly executed, to the Company.
      Thereupon, the Company shall issue to the Warrantholder such number of fully
      paid, validly issued and nonassessable shares of Common Stock as is computed
      using the following formula:

    


    X
      =
Y
      (A -
      B)

        
      A

    


    where 

    


    X
      = the
      number of shares of Common Stock to which the Warrantholder is entitled upon
      such cashless exercise;

    


    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant for which the
      Warrantholder has surrendered purchase rights at such time for cashless exercise
      (including both shares to be issued to the Warrantholder and shares as to which
      the purchase rights are to be canceled as payment therefor);


    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    


    A
      = the
      “Market Price” of one share of Common Stock as at the date the net issue
      election is made; and

    


    B
      = the
      Warrant Price in effect under this Warrant at the time the net issue election
      is
      made.

    


    Section
      20. No
      Rights as Stockholder.
      Prior
      to the exercise of this Warrant, the Warrantholder shall not have or exercise
      any rights as a stockholder of the Company by virtue of its ownership of this
      Warrant.

    


    Section
      21. Amendment;
      Waiver.
      This
      Warrant is one of a series of Warrants of like tenor issued by the Company
      pursuant to the Purchase Agreement and initially covering an aggregate of
      7,920,000 shares of Common Stock (collectively, the “Company Warrants”). Any
      term of this Warrant may be amended or waived (including the adjustment
      provisions included in Section 8 of this Warrant) upon the written consent
      of
      the Company and the holders of Company Warrants representing at least 50% of
      the
      number of shares of Common Stock then subject to all outstanding Company
      Warrants (the “Majority Holders”); provided,
      that
      (x) any such amendment or waiver must apply to all Company Warrants; and (y)
      the
      number of Warrant Shares subject to this Warrant, the Warrant Price and the
      Expiration Date may not be amended, and the right to exercise this Warrant
      may
      not be altered or waived, without the written consent of the
      Warrantholder.

    


    Section
      22. Section
      Headings.
      The
      section headings in this Warrant are for the convenience of the Company and
      the
      Warrantholder and in no way alter, modify, amend, limit or restrict the
      provisions hereof.


    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as
      of
      the 25th day of June, 2008.

    


    
      	
              PRECISION
                OPTICS CORPORATION, INC.

            
	 
	
              By:

            	 
	
              Name:
                Richard E. Forkey

            
	
              Title:
                President, Chief Executive Officer and
                Treasurer

            


    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    


    APPENDIX
      A

    PRECISION
      OPTICS CORPORATION, INC.

    WARRANT
      EXERCISE FORM

    


    To
      Precision Optics Corporation, Inc.:

    


    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
      the payment of the Warrant Price and surrender of the Warrant, _______________
      shares of Common Stock (“Warrant Shares”) provided for therein, and requests
      that certificates for the Warrant Shares be issued as follows: 

    


    
      	 
	
              Name

            
	 
	
              Address

            
	 
	 
	
              Federal
                Tax ID or Social Security No.

            


    

    


    and
      delivered by  (certified
      mail to the above address, or 

    (electronically
      (provide DWAC Instructions:___________________), or 

    (other
      (specify): __________________________________________). 

    


    and,
      if
      the number of Warrant Shares shall not be all the Warrant Shares purchasable
      upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
      Shares purchasable upon exercise of this Warrant be registered in the name
      of
      the undersigned Warrantholder or the undersigned’s Assignee as below indicated
      and delivered to the address stated below.

    


    Dated:
      ___________________, ____

    


    
      	
              Note:
                The signature must correspond with

            
	
                
                Signature:______________________________

            


    

    
      	
              the
                name of the Warrantholder as written

            	 
	
              on
                the first page of the Warrant in every

            	
              ______________________________

            
	
              particular,
                without alteration or enlargement

            	
              Name
                (please print)

            
	
              or
                any change whatever, unless the Warrant

            	 
	
              has
                been assigned.

            	
              ______________________________

            
	 	
              ______________________________ 

            
	 	
              Address

            
	 	 
	 	
              Federal
                Identification or

            
	 	
              Social
                Security No.

            
	 	 
	 	
              Assignee:

            
	 	
              ______________________________ 

            
	 	
              ______________________________

            
	 	
              ______________________________ 

            


    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    


    APPENDIX
      B

    PRECISION
      OPTICS CORPORATION, INC.

    NET
      ISSUE
      ELECTION NOTICE

    


    To:
      Precision Optics Corporation, Inc.

    


    Date:[_________________________]

    


    The
      undersigned hereby elects under Section
      19
      of this
      Warrant to surrender the right to purchase [____________] shares of Common
      Stock
      pursuant to this Warrant and hereby requests the issuance of [_____________]
      shares of Common Stock. The certificate(s) for the shares issuable upon such
      net
      issue election shall be issued in the name of the undersigned or as otherwise
      indicated below.

    


    
      	 
	
              Signature

            
	 
	 
	
              Name
                for Registration

            
	 
	 
	
              Mailing
                Address

            


    

     

    
      
        
        

      

      
        -17-