Exhibit 10.3


 


THIS WARRANT AND THE
COMMON STOCK ISSUABLE PURUSUANT TO THIS WARRANT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE
BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT AND SUCH REGISTRATION STATEMENT REMAINS EFFECTIVE, (II) SUCH
SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) COMPANY COUNSEL HAS OPINED THAT SUCH TRANSFER MAY LAWFULLY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT.


 


SUBJECT TO THE PROVISIONS OF SECTION
10 HEREOF, THIS WARRANT SHALL VEST ON OCTOBER 2, 2017 (THE “VESTING DATE”) AND SHALL EXPIRE ON OCTOBER 16, 2017,
AT 5:00 P.M. EASTERN TIME (THE “EXPIRATION DATE”).


 


No. [●]


 


PRECISION OPTICS CORPORATION, INC.


 


WARRANT TO PURCHASE [____] SHARES OF


 


COMMON STOCK, PAR VALUE $0.01 PER SHARE


 


For VALUE RECEIVED,
[___] (the “Holder”), is entitled to purchase, subject to the provisions of this Warrant, from Precision Optics
Corporation, Inc., a Massachusetts corporation (“Company”), at any time not later than 5:00 P.M., Eastern time,
on the Expiration Date (as defined above), at a variable exercise price per share as defined in Section 3(b) herein (the exercise
price in effect being herein called the “Warrant Price”), [___] shares (“Warrant Shares”)
of the Company’s common stock, par value $0.01 (“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 Securities Purchase Agreement, dated as of November 22, 2016 (the “Purchase Agreement”),
among the Company and the initial holders of the Company Warrants (as defined in Section 20 of this Warrant). Capitalized terms
used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein. The Company
may, in its sole discretion, decrease the Warrant Price or extend the expiration date of this Warrant.


 


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


 


Section 2.       Transfers.
As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under 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 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. (a) Subject to the provisions hereof, the Holder may exercise this Warrant, in whole or in part, at any time during
the period from the Vesting Date to the Expiration Date 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 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 (as defined below) at the Company’s principal
executive offices (or such other office or agency of the Company as it may designate by notice to the Holder). The Warrant Shares
so purchased shall be deemed to be issued to the Holder or the Holder’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 Holder 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 Holder and shall be
registered in the name of the Holder or such other name as shall be designated by the Holder, 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 Holder 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 the Commonwealth of Massachusetts are open for the general transaction
of business. Each exercise hereof shall constitute the re-affirmation by the Holder 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 Holder as of the time
of such exercise.


 


 


 






    	 	1	 



     


    

 


(b)        Subject
to adjustment pursuant to Section 8, the variable Warrant Price for which the Warrant may be exercised shall be determined as follows:


 


(i) The Warrant Price
shall be $0.40 per share of Common Stock if the Company achieves both of the following performance criteria:


 


The Company achieves
at least $1.85 million of revenue in any one (1) quarter during the fiscal year ending June 30, 2017 (the “Revenue Criterion”)
as determined under U.S. Generally Accepted Accounting Principles (“GAAP”) and as shown by the Company’s audited
consolidated financial statements on Form 10-K and its quarterly financial statements on Form 10-Q periodically filed with the
U.S. Securities and Exchange Commission; and


 


The Company achieves
positive net income in any two (2) quarters (which quarters do not have to be successive) during the fiscal year ending June 30,
2017 (the “Income Criterion”) as determined under GAAP and as shown by the Company’s audited consolidated
financial statements on Form 10-K and its quarterly financial statements on Form 10-Q periodically filed with the U.S. Securities
and Exchange Commission.


 


The Revenue Criterion
and the Income Criterion shall not include revenue from extraordinary non-recurring events such as proceeds from strategic agreements
that are not tied directly to the delivery of goods and services.


 


(ii) The Warrant price
shall be $0.20 per share of Common Stock if the Company achieves either the Revenue Criterion or the Income Criterion..


 


(iii)       The
Warrant Price shall be $0.01 per share of Common Stock if the Company does not achieve either the Revenue Criterion or the Income
Criterion.


 


Section 4.       Compliance
with the Securities Act. 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 this 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 Holder 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 Holder 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.


 


Section 7.       Reservation
of Common Stock. The Company hereby represents and warrants that there have been reserved, and 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 in accordance with the terms hereof 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.


 


 


 






    	 	2	 



     


    

 


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, 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 Holder 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 Holder 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 it complies with the notice provisions of Section 12(b) hereof. For avoidance
of doubt, notice made pursuant to the immediately preceding sentence shall only be made with respect to public information. The
provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers or other dispositions. Notwithstanding the foregoing, (i) if the Company enters into an agreement to sell all
or substantially all of the assets of the Company; and (ii) the Warrant has not vested, then the Holder will not have any rights
described in this paragraph above, but this Warrant becomes exercisable and the Holder may exercise the Warrant at the Warrant
Price as determined on the date the Company enters into a binding sales agreement. If the Company, on that date, has met, or could
still meet the Revenue Criterion and/or the Income Criterion in the future if it were to continue as an independent company, then
the Revenue Criterion and/or the Income Criterion will be considered achieved for purposes of determining the Warrant Price according
to section 3b.


 







(c)       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.


 


(d)       In
the event that, as a result of an adjustment made pursuant to this Section 8, the Holder 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.


 


 


 






    	 	3	 



     


    

 


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 Holder an amount in cash equal to the Market
Price of such fractional share of Common Stock on the date of exercise.


 


Section 10.       Vesting and Expiration
Date. The Expiration Date of this Warrant is as set forth on the first page of this Warrant. The Company may, in its sole discretion,
extend the expiration date of this Warrant. If such extension requires additional consideration or additional transactions, then
the Company undertakes to offer the same terms to all Holders. The Company may, in its sole discretion, accelerate the vesting
date of the Warrant. However, if the Company makes this election, the exercise price will be determined according to the criteria
in section 3b evaluated as of the accelerated vesting date and the Holder will have 14 calendar days after the accelerated vesting
date to exercise the Warrant or the Warrant will expire.


 


Section 11.       Benefits. Nothing
in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Holder) 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 Holder and its successors.


 


Section 12.       Dividends and Other
Distributions; Notices to Holder of certain Events.


 


(a)       Upon
the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof
to the Holder 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 Holder or any defect therein shall not affect the legality
or validity of the subject adjustment.


 


(b) In case at any time
(i) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger
of the Company with, or a sale of all or substantially all of its assets to, another corporation; or there shall be any voluntary
or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall
give, by first class mail, postage prepaid, addressed to each Holder at the address of such Holder as shown on the books of the
Company, (A) at least five (5) days’ prior written notice of the date on which the books of the Company shall close or a
record shall be taken for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, and (B) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, at least five (5) days’ prior written notice of the date when the same
shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.


 







Section 13.       Identity of Transfer
Agent. The Transfer Agent for the Common Stock is Computershare, located at 250 Royall Street, Canton, MA 02021.


 


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 (a) if given by personal delivery, then such notice shall be deemed given upon such delivery, (b)
if given by telex or facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (c)
if given by mail, then such notice shall be deemed given upon the earlier of (i) receipt of such notice by the recipient or (ii)
three (3) days after such notice is deposited in first class mail, postage prepaid, and (d) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one (1) Business Day after delivery to such carrier. All notices
shall be addressed as follows: if to the Holder, 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 Holder or the Company may designate by ten days’
advance written notice to the other:


 


If to the Company:


 


Precision Optics Corporation,
Inc.


22 East Broadway


Gardner, Massachusetts
01440-3338


Attention: Joseph N.
Forkey,


President and Chief
Executive Officer


Fax: (978) 630-1487


 


 


 






    	 	4	 



     


    

 


With a copy to (which
shall not constitute notice):


 


Amy Trombly, Esq.


Trombly Business Law,
PC


1314 Main St., Suite
102


Louisville, CO 80027


Fax: (617) 243-0066


 


Section 15.       Registration Rights.
The Holder 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 dated as of the same date as this Agreement (the “Registration
Rights Agreement”), among the Company and the initial holders of the Company Warrants.


 


Section 16.       Successors. All
the covenants and provisions hereof by or for the benefit of the Holder, including without limitation all rights under the Registration
Rights Agreement, shall bind and inure to the benefit of Holder’s respective successors and assigns.


 


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 applicable to agreements made and to be performed entirely within the State of New York. The Company and,
by accepting this Warrant, the Holder, 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 Holder,
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 Holder, 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. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE
COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER 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.


 







Section 18.       No Rights as Stockholder.
Prior to the exercise of this Warrant, the Holder shall not have or exercise any rights as a stockholder of the Company by virtue
of its ownership of this Warrant.


 


Section 19.       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 [___] 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 hereof) upon the written consent of
the Company and the holders of Company Warrants representing more than fifty (50) percent of the number of shares of Common Stock
then subject to all outstanding Company Warrants provided, however, that any such amendment or waiver must apply to all Company
Warrants.


 


Section 20.       Section Headings.
The section headings in this Warrant are for the convenience of the Company and the Holder and in no way alter, modify, amend,
limit or restrict the provisions hereof.


 


[Signature page follows.]


 


 


 


 


 


 


 


 


 






    	 	5	 



     


    

 


IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed, as of the ___ day of November, 2016.


 





	 	PRECISION OPTICS CORPORATION, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Joseph N. Forkey
	 	Name:	Joseph N. Forkey
	 	Title:	President and Chief Executive Officer


 


 


 


 


 


 


 


 


 






    	 	6	 



     


    

 


APPENDIX A


 


PRECISION OPTICS CORPORATION, INC.


 


WARRANT EXERCISE FORM


 


 


To Precision Optics Corporation, Inc.:


 


 


PORTION OF WARRANT BEING EXERCISED:


 


	 	 	Entire Warrant ☐	 	 
	 	 	 	 	 
	 	 	_________ Warrant Shares	 	 


 


 





	ISSUE TO:	 
	 	(Name)
	 	 
	 	 
	 	 
	 	(Address, including Zip Code)
	 	 
	 	 
	 	 
	 	(Social Security or Tax Identification
Number)
	 	 
	 	 
	DELIVER TO:	 
	 	(Name)
	 	 
	 	 
	 	 
	 	(Address, including Zip Code)



 


 








In payment of the purchase price with respect
to this Warrant exercised, the undersigned hereby (check applicable box) ☐tenders payment of $___________
by (i) certified or bank cashier’s check payable to the order of the Company; or (ii) ☐a wire transfer of
such funds to an account designated by the Company.


 


If the number of Warrant Shares hereby
exercised is fewer than all the Warrant Shares represented by this Warrant, the undersigned requests that a new Warrant representing
the number of full Warrant Shares not exercised to be issued and delivered as set forth below:


 


 





	Name of Holder or Assignee:	 
	 	(Please Print)
	 	 
	 	 
	Address, including Zip Code:	 
	 	 
	 	 
	 	 



 



 


 


 






    	 	7	 



     


    

 


The Warrant Shares shall be delivered to the following DWAC
Account Number:


 


 


_______________________________


 


 


_______________________________


 


 


Name of Holder: ______________________________________________________________________


 


Signature of Authorized Signatory of Holder: _______________________________________________


 


Name of Authorized Signatory: __________________________________________________________


 


Title of Authorized Signatory: ___________________________________________________________


 


Date: _______________________________________________________________________________




 


 


 


 


 


 


 


 


 


 






    	 	8