Document:

PURCHASE
      AGREEMENT

    

    THIS
      AGREEMENT is made as of the [__] day of [____], 2006, by and between Precision
      Optics Corporation (the “Company”),
      a
      corporation organized under the laws of The Commonwealth of Massachusetts,
      with
      its principal offices at 22 East Broadway, Gardner, MA 01440, and the purchaser
      whose name and address is set forth on the signature page hereof (the
“Purchaser”).
      

    

    IN
      CONSIDERATION of the mutual covenants contained in this Agreement, the Company
      and the Purchaser agree as follows: 

    

    SECTION
      1. Authorization
      of Sale of the Shares.
      Subject
      to the terms and conditions of this Agreement, the Company has authorized the
      issuance and sale of up to 10,000,000.00 shares of its common stock, $.01 par
      value (the “Common Stock”).

    

    SECTION
      2. Agreement
      to Sell and Purchase the Shares.
      At the
      Closing (as defined in Section 3), the Company will, subject to the terms of
      this Agreement, issue and sell to the Purchaser and the Purchaser will buy
      from
      the Company, upon the terms and conditions hereinafter set forth, the number
      of
      shares of Common Stock (at the purchase price) shown below (the
“Shares”):

     

    
      	
               

              Number
                of Shares to Be 

                Purchased   

            	 	
              Price
                Per

              Share

            	 	
              Aggregate
                

                 Price   

            
	 	 	 	 	
              $

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    SECTION
      3. Delivery
      of the Shares at the Closing.
      The
      completion of the purchase and sale of the Shares (the “Closing”)
      shall
      occur as soon as practicable and as agreed to by the parties hereto, within
      three business days following the execution of this Agreement, or on such later
      date as the parties shall agree in writing, but not prior to the date that
      the
      conditions for Closing set forth below have been satisfied or waived by the
      appropriate party (the “Closing
      Date”).

    

    At
      the
      Closing, the Purchaser shall deliver, in immediately available funds, the full
      amount of the purchase price for the Shares being purchased hereunder by wire
      transfer to an account designated by the Company and the Company shall deliver
      to the Purchaser one or more stock certificates registered in the name of the
      Purchaser, representing the number of Shares set forth in Section 2 above and
      bearing an appropriate legend referring to the fact that the Common Stock was
      sold in reliance upon the exemption from registration under the Securities
      Act
      of 1933, as amended (the “Securities
      Act”),
      provided by Section 4(2) thereof and Rule 506 thereunder. The name(s) in which
      the stock certificates are to be registered are set forth in the Securities
      Certificate Questionnaire attached hereto as part of Appendix
      I.
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      Company’s obligation to complete the purchase and sale of the Shares and deliver
      such stock certificate(s) to the Purchaser at the Closing shall be subject
      to
      the following conditions, any one or more of which may be waived by the Company:
      (a) receipt by the Company of same-day funds in the full amount of the purchase
      price for the Shares being purchased hereunder; and (b) the accuracy of the
      representations and warranties made by the Purchaser and the fulfillment of
      those undertakings of the Purchaser to be fulfilled prior to the Closing. The
      Purchaser’s obligation to accept delivery of such stock certificate(s) and to
      pay for the Shares evidenced thereby shall be subject to the following
      conditions: (a) each of the representations and warranties of the Company made
      herein (i) that are not qualified by Material Adverse Effect (as defined in
      Section 4.5 below) shall be accurate as of the Closing Date except to the extent
      the failure of the representations and warranties would not have a Material
      Adverse Effect and (ii) that are qualified by Material Adverse Effect will
      be
      accurate as of the Closing Date as so qualified and (b) the fulfillment in
      all
      material respects of those undertakings of the Company to be fulfilled prior
      to
      Closing.

    

    SECTION
      4. Representations,
      Warranties and Covenants of the Company.
      The
      Company represents and warrants to, and covenants with, the Purchaser as
      follows: 

    

    4.1. Organization
      and Qualification.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of its jurisdiction of incorporation and the Company
      is
      qualified to do business as a foreign corporation in each jurisdiction in which
      qualification is required, except where failure to so qualify would not have
      a
      Material Adverse Effect (as defined herein). The Company’s subsidiaries (each a
“Subsidiary”
and
      collectively the “Subsidiaries”)
      are
      listed on Exhibit
      A
      to this
      Agreement. Each Subsidiary is a direct or indirect wholly owned subsidiary
      of
      the Company (except for a qualifying share held by the managing director of
      the
      subsidiary). Each Subsidiary is duly organized, validly existing and in good
      standing under the laws of its jurisdiction of incorporation and is qualified
      to
      do business as a foreign corporation in each jurisdiction in which qualification
      is required, except where failure to so qualify would not have a Material
      Adverse Effect.

    

    4.2. Reporting
      Company; Form S-3.
      The
      Company is not an “ineligible issuer” (as defined in Rule 405 promulgated under
      the Securities Act) and is eligible to register the Shares for resale by the
      Purchaser on a registration statement on Form S-3 under the Securities Act.
      The
      Company is subject to the reporting requirements of the Securities Exchange
      Act
      of 1934, as amended (the “Exchange
      Act”),
      and
      has filed all reports required thereby. Provided the Purchaser is not deemed
      to
      be an underwriter with respect to the Shares, to the Company’s knowledge, there
      exist no facts or circumstances (including without limitation any required
      approvals or waivers or any circumstances that may delay or prevent the
      obtaining of accountant’s consents) that reasonably could be expected to
      prohibit or delay the preparation and filing of a registration statement on
      Form
      S-3 that will be available for the resale of the Shares by the
      Purchaser.

    

    4.3. Authorized
      Capital Stock.
      The
      issued and outstanding shares of Common Stock have been duly authorized and
      validly issued, are fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, were not issued in violation of
      or
      subject to any preemptive rights or other rights to subscribe for or purchase
      securities, and conform in all material respects to the description thereof
      contained in the Company’s filings with the Securities and Exchange Commission.
      Except as set forth in the Company’s SEC filings and except for options and
      other awards that may be granted under the Company’s Amended and Restated 1997
      Incentive Plan, the Company does not have outstanding any options to purchase,
      or any preemptive rights or other rights to subscribe for or to purchase, any
      securities or obligations convertible into, or any contracts or commitments
      to
      issue or sell, shares of its capital stock or any such options, rights,
      convertible securities or obligations. Following the sale of Shares, consistent
      with its past practice and in order to provide incentives for its employees,
      the
      Company intends to update its Amended and Restated 1997 Incentive Plan to allow
      for the grant of options amounting to up to 20% of the total outstanding shares
      of stock. With respect to each of the Subsidiaries (i) all the issued and
      outstanding shares of such Subsidiary’s capital stock have been duly authorized
      and validly issued, are fully paid and nonassessable, have been issued in
      compliance with all federal and state securities laws, were not issued in
      violation of or subject to any preemptive rights or other rights to subscribe
      for or purchase securities, and (ii) there are no outstanding options to
      purchase, or any preemptive rights or other rights to subscribe for or to
      purchase, any securities or obligations convertible into, or any contracts
      or
      commitments to issue or sell, shares of such Subsidiary’s capital stock or any
      such options, rights, convertible securities or obligations.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    4.4. Issuance,
      Sale and Delivery of the Shares.
      The
      Shares have been duly authorized and, when issued, delivered and paid for in
      the
      manner set forth in this Agreement, will be validly issued, fully paid and
      nonassessable. No preemptive rights or other rights to subscribe for or purchase
      any shares of common stock of the Company exist with respect to the issuance
      and
      sale of the Shares by the Company pursuant to this Agreement. No stockholder
      of
      the Company has any right (which has not been waived or has not expired by
      reason of lapse of time following notification of the Company’s intention to
      file the Registration Statement (as hereinafter defined)) to require the Company
      to register the sale of any capital stock owned by such stockholder under the
      Registration Statement. No further approval or authority of the stockholders
      or
      the Board of Directors of the Company will be required for the issuance and
      sale
      of the Shares to be sold by the Company as contemplated herein.

    

    4.5. Due
      Execution, Delivery and Performance of the Agreement.
      The
      Company has full legal right, corporate power and authority to enter into this
      Agreement and perform the transactions contemplated hereby. The Agreement has
      been duly authorized, executed and delivered by the Company. This Agreement
      is a
      legal, valid and binding agreement of the Company, enforceable against the
      Company in accordance with its terms, except as enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium or other laws
      of
      general application relating to or affecting the enforcement of creditors’
rights and the application of equitable principles relating to the availability
      of remedies, and except as rights to indemnity or contribution, including but
      not limited to, indemnification provisions set forth in Section 7.3 of this
      Agreement may be limited by federal or state securities law or the public policy
      underlying such laws. The execution and performance of the Agreement by the
      Company and the consummation of the transactions herein contemplated will not
      violate any provision of the certificate of incorporation or bylaws of the
      Company or the organizational documents of any Subsidiary and will not result
      in
      the creation of any lien, charge, security interest or encumbrance upon any
      assets of the Company or any Subsidiary pursuant to the terms or provisions
      of,
      or will not conflict with, result in the breach or violation of, or constitute,
      either by itself or upon notice or the passage of time or both, a default under
      any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
      permit or other instrument to which any of the Company or any Subsidiary is
      a
      party or by which any of the Company or its/or any Subsidiary or their
      respective properties may be bound or affected and in each case that would
      have
      a Material Adverse Effect, or, to the knowledge of the Company, any statute
      or
      any authorization, judgment, decree, order, rule or regulation of any court
      or
      any regulatory body, administrative agency or other governmental agency or
      body
      applicable to the Company or any Subsidiary or any of its/their respective
      properties. No consent, approval, authorization or other order of any court,
      regulatory body, administrative agency or other governmental agency or body
      is
      required for the execution and delivery of this Agreement or the consummation
      of
      the transactions contemplated by this Agreement, except for compliance with
      the
      Blue Sky laws and federal securities laws applicable to the offering of the
      Shares. For the purposes of this Agreement the term “Material
      Adverse Effect”
shall
      mean a material adverse effect on the condition (financial or otherwise),
      properties, business or results of operations of the Company and its
      Subsidiaries, taken as a whole.

     

    
      
         

      

      
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    4.6. No
      Defaults.
      Neither
      the Company nor any Subsidiary is in violation or default of any provision
      of
      its certificate of incorporation or bylaws, or other organizational documents,
      or in breach of or default with respect to any provision of any agreement,
      judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
      indenture, permit or other instrument to which it is a party or by which it
      or
      any of its properties is bound; and there does not exist any state of fact
      that,
      with notice or lapse of time or both, would constitute an event of default
      on
      the part of the Company or any Subsidiary (as defined in such documents), except
      such defaults that individually or in the aggregate would not cause a Material
      Adverse Effect.

     

    4.7. No
      Actions.
      There
      are no legal or governmental actions, suits or proceedings pending or, to the
      Company’s knowledge, threatened against the Company or any Subsidiary before or
      by any court, regulatory body or administrative agency or any other governmental
      agency or body, domestic, or foreign, which actions, suits or proceedings,
      individually or in the aggregate, might reasonably be expected to have a
      Material Adverse Effect; and no labor disturbance by the employees of the
      Company exists or, to the Company’s knowledge, is imminent, that might
      reasonably be expected to have a Material Adverse Effect. Neither the Company
      nor any Subsidiary is a party to or subject to the provisions of any injunction,
      judgment, decree or order of any court, regulatory body, administrative agency
      or other governmental agency or body that might have a Material Adverse
      Effect.

    

    4.8. Properties.
      The
      Company and each Subsidiary has good and valid title to all the properties
      and
      assets described as owned by it in the consolidated financial statements of
      the
      Company, free and clear of all liens, mortgages, pledges, or encumbrances of
      any
      kind except (i) those, if any, reflected in such consolidated financial
      statements, or (ii) those that are not material in amount and do not adversely
      affect the use made and proposed to be made of such property by the Company
      or
      its Subsidiaries. The Company and each Subsidiary holds its leased properties
      under valid and binding leases, with such exceptions as are not materially
      significant in relation to its business. The Company and any Subsidiary owns
      or
      leases all such properties as are necessary to its operations as now
      conducted.

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    4.9. No
      Material Change.
      Since
      June 30, 2005, and except as described in or contemplated by the Company filings
      with the SEC, (i) the Company and its Subsidiaries have not incurred any
      material liabilities or obligations, indirect, or contingent, or entered into
      any material agreement or other transaction that is not in the ordinary course
      of business or that could reasonably be expected to result in a material
      reduction in the future earnings of the Company; (ii) the Company and its
      Subsidiaries have not sustained any material loss or interference with their
      businesses or properties from fire, flood, windstorm, accident or other calamity
      not covered by insurance; (iii) the Company and its Subsidiaries have not paid
      or declared any dividends or other distributions with respect to their capital
      stock and none of the Company or any Subsidiary is in default in the payment
      of
      principal or interest on any outstanding debt obligations; (iv) there has not
      been any change in the capital stock of the Company or its Subsidiaries other
      than the sale of the Shares hereunder and shares or options issued pursuant
      to
      equity incentive plans or purchase plans approved by the Company’s Board of
      Directors, or indebtedness material to the Company or its Subsidiaries (other
      than in the ordinary course of business and any required scheduled payments);
      and (v) there has not occurred any event that has caused or could reasonably
      be
      expected to cause a Material Adverse Effect.

    

    4.10. Intellectual
      Property.
      Except
      as disclosed in the Company’s filings with the SEC, (i) the Company or a
      Subsidiary owns or has obtained valid and enforceable licenses for the
      inventions, patent applications, patents, trademarks (both registered and
      unregistered), trade names, copyrights and trade secrets necessary for the
      conduct of the Company’s business as currently conducted (collectively, the
“Intellectual
      Property”);
      and
      (ii) (a) to the knowledge of the Company, there are no third parties who have
      any ownership rights to any Intellectual Property that is owned by, or has
      been
      licensed to, the Company or each Subsidiary for the products described in the
      the Company’s SEC filings that would preclude the Company or any Subsidiary
      from conducting its business as currently conducted and have a Material Adverse
      Effect, except for the ownership rights of the owners of the Intellectual
      Property licensed by the Company or any Subsidiary; (b) to the Company’s
      knowledge, there are currently no sales of any products that would constitute
      an
      infringement by third parties of any Intellectual Property owned or licensed
      by
      the Company or any Subsidiary, which infringement would have a Material Adverse
      Effect; (c) there is no pending or, to the Company’s knowledge, threatened
      action, suit, proceeding or claim by others challenging the rights of the
      Company or any Subsidiary in or to any Intellectual Property owned or licensed
      by the Company or any Subsidiary, other than claims which could not reasonably
      be expected to have a Material Adverse Effect; (d) there is no pending or,
      to
      the Company’s knowledge, threatened action, suit, proceeding or claim by others
      challenging the validity or scope of any Intellectual Property owned, or
      licensed by the Company or any Subsidiary, other than non-material actions,
      suits, proceedings and claims; and (e) there is no pending or, to the Company’s
      knowledge, threatened action, suit, proceeding or claim by others that the
      Company or any of any Subsidiaries infringes or otherwise violates any patent,
      trademark, copyright, trade secret or other proprietary right of others, other
      than non-material actions, suits, proceedings and claims.

    

    4.11. Additional
      Information.
      The
      information contained or incorporated in the Company’s SEC filings, taken as a
      whole as of the date hereof do not contain an untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      to make the statements therein in light of the circumstances in which they
      were
      made not misleading.

    

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    4.12. Financial
      Statements.
      The
      consolidated financial statements of the Company and the related notes and
      schedules thereto included in its Exchange Act filings fairly present the
      financial position, results of operations, stockholders’ equity and cash flows
      of the Company and its consolidated Subsidiaries at the dates and for the
      periods specified therein. Such financial statements and the related notes
      and
      schedules thereto have been prepared in accordance with generally accepted
      accounting principles consistently applied throughout the periods involved
      (except as otherwise noted therein) and all adjustments necessary for a fair
      presentation of results for such periods have been made; provided, however,
      that
      the unaudited financial statements are subject to normal year-end audit
      adjustments (which are not expected to be material) and do not contain all
      footnotes required under generally accepted accounting principles.

    

    SECTION
      5. Representations,
      Warranties and Covenants of the Purchaser.
      The
      Purchaser represents and warrants to, and covenants with, the Company that:
      

    

    5.1. Experience.
      (i) The
      Purchaser is knowledgeable, sophisticated and experienced in making, and is
      qualified to make, decisions with respect to investments in shares representing
      an investment decision like that involved in the purchase of the Shares,
      including investments in securities issued by the Company, has reviewed
      carefully the Company’s filings with the SEC and has requested, received,
      reviewed and considered all information it deems relevant in making an informed
      decision to purchase the Shares; (ii) the Purchaser is acquiring the Shares
      set
      forth in Section 2 above in the ordinary course of its business and for its
      own
      account for investment only and with no present intention of distributing any
      of
      such Shares or any arrangement or understanding with any other persons regarding
      the distribution of such securities (this representation and warranty not
      limiting the Purchaser’s right to sell pursuant to the Registration Statement or
      in compliance with the Securities Act and the Rules and Regulations, or, other
      than with respect to any claims arising out of a breach of this representation
      and warranty, the Purchaser’s right to indemnification under Section 7.3); (iii)
      the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer
      or
      otherwise dispose of (or solicit any offers to buy, purchase or otherwise
      acquire or take a pledge of) any of the Shares nor will the Purchaser engage
      in
      any short sale that results in a disposition of any of the Shares, except in
      compliance with the Securities Act and the Rules and Regulations and any
      applicable state securities laws; (iv) the Purchaser has completed or caused
      to
      be completed the Registration Statement Questionnaire attached hereto as part
      of
Appendix
      I,
      for use
      in preparation of the Registration Statement, and the answers thereto are true
      and correct as of the date hereof and will be true and correct as of the
      effective date of the Registration Statement and the Purchaser will notify
      the
      Company immediately of any material change in any such information provided
      in
      the Registration Statement Questionnaire until such time as the Purchaser has
      sold all of its Shares or until the Company is no longer required to keep the
      Registration Statement effective; (v) the Purchaser has, in connection with
      its
      decision to purchase the number of Shares set forth in Section 2 above, relied
      solely upon the Company’s filings with the SEC and the documents included
      therein or incorporated by reference and the representations and warranties
      of
      the Company contained herein; (vi) the Purchaser has had an opportunity to
      discuss this investment with representatives of the Company and ask questions
      of
      them and has had the opportunity to obtain such additional information which
      the
      Company possesses or can acquire without unreasonable effort or expense that
      is
      necessary to make an informed investment decision with respect to the
      investment; and (vii) the Purchaser is an “accredited investor” within the
      meaning of Rule 501(a) promulgated under the Securities Act.

    

    
      
         

      

      
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    5.2. Reliance
      on Exemptions.
      The
      Purchaser understands that the Shares are being offered and sold to it in
      reliance upon specific exemptions from the registration requirements of the
      Securities Act, the Rules and Regulations and state securities laws and that
      the
      Company is relying upon the truth and accuracy of, and the Purchaser’s
      compliance with, the representations, warranties, agreements, acknowledgments
      and understandings of the Purchaser set forth herein in order to determine
      the
      availability of such exemptions and the eligibility of the Purchaser to acquire
      the Shares.

    

    5.3. Investment
      Decision.
      The
      Purchaser understands that nothing in the Agreement or any other materials
      presented to the Purchaser in connection with the purchase and sale of the
      Shares constitutes legal, tax or investment advice. The Purchaser has consulted
      such legal, tax and investment advisors as it, in its sole discretion, has
      deemed necessary or appropriate in connection with its purchase of the Shares.
      

    

    5.4. Risk
      of Loss.
      The
      Purchaser understands that its investment in the Shares involves a significant
      degree of risk, including a risk of total loss of Purchaser’s investment, and
      the Purchaser has full cognizance of and understands all of the risk factors
      related to Purchaser’s purchase of the Shares, including, but not limited to,
      those set forth under or incorporated by reference in the caption “Risk Factors”
in the Company’s SEC filings. The Purchaser understands that the market price of
      the Common Stock has been volatile and that no representation is being made
      as
      to the future value of the Common Stock. The Purchaser has the knowledge and
      experience in financial and business matters as to be capable of evaluating
      the
      merits and risks of an investment in the Shares and has the ability to bear
      the
      economic risks of an investment in the Shares. 

    

    5.5. No
      Government Review.
      The
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed upon or made any recommendation
      or
      endorsement of the Shares. 

    

    5.6. Transfer
      of Resale.
      The
      Purchaser understands that, until such time as the Registration Statement has
      been declared effective or the Shares may be sold pursuant to Rule 144 under
      the
      Securities Act without any restriction as to the number of securities as of
      a
      particular date that can then be immediately sold, the Shares will bear a
      restrictive legend in substantially the following form:

    

    “THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”)
      OR THE
      SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT
      BE
      OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN
      EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
      ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
      JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
      THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
      THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT
      AND
      SUCH OTHER APPLICABLE LAWS.”

    

    
      
         

      

      
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    5.7. Stop
      Transfer.
      The
      certificates representing the Shares will be subject to a stop transfer order
      with the Company’s transfer agent that restricts the transfer of such shares
      except upon receipt by the transfer agent of a written confirmation from the
      Purchaser to the effect that the Purchaser has satisfied its prospectus delivery
      requirements, in the form attached as Exhibit
      B
      hereto.

    

    5.8. Residency.
      The
      Purchaser’s principal executive offices are in the jurisdiction set forth
      immediately below the Purchaser’s name on the signature pages hereto.

    

    5.9. Organization;
      Validity; Enforcements.
      The
      Purchaser further represents and warrants to, and covenants with, the Company
      that (i) the Purchaser has power, authority and capacity to enter into this
      Agreement and to consummate the transactions contemplated hereby and has taken
      all necessary action to authorize the execution, delivery and performance of
      this Agreement, (ii) the making and performance of this Agreement by the
      Purchaser and the consummation of the transactions herein contemplated will
      not
      violate any provision of the organizational documents of the Purchaser or
      conflict with, result in the breach or violation of, or constitute, either
      by
      itself or upon notice or the passage of time or both, a default under any
      material agreement, mortgage, deed of trust, lease, franchise, license,
      indenture, permit or other instrument to which the Purchaser is a party or,
      any
      statute or any authorization, judgment, decree, order, rule or regulation of
      any
      court or any regulatory body, administrative agency or other governmental agency
      or body applicable to Purchaser, (iii) no consent, approval, authorization
      or
      other order of any court, regulatory body, administrative agency or other
      governmental agency or body is required on the part of the Purchaser for the
      execution and delivery of this Agreement or the consummation of the transactions
      contemplated by this Agreement, (iv) upon the execution and delivery of this
      Agreement, this Agreement shall constitute a legal, valid and binding obligation
      of the Purchaser, enforceable in accordance with its terms, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or other laws of general application relating to
      or
      the enforcement of creditor’s rights and the application of equitable principles
      relating to the availability of remedies, and except as rights to indemnity
      or
      contribution, including, but not limited to, the indemnification provisions
      set
      forth in Section 7.3 of this Agreement, may be limited by federal or state
      securities law or the public policy underlying such laws and (v) there is not
      in
      effect any order enjoining or restraining the Purchaser from entering into
      or
      engaging in any of the transactions contemplated by this Agreement.

    

    SECTION
      6. Intentionally
      Omitted.

    

    SECTION
      7. Registration
      of the Shares; Compliance with the Securities Act.
      

    

    7.1. Registration
      Procedures and Expenses.  The
      Company shall: 

    

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (a) as
      soon
      as practicable, but in no event later than ten (10) days following the Closing
      Date, prepare and file with the Commission a Registration Statement on Form
      S-3
      (the “Registration
      Statement”)
      relating to the resale of the Shares;

    

    (b) use
      its
      reasonable best efforts, subject to receipt of necessary information from the
      Purchaser, to cause the Commission to declare the Registration Statement
      effective as soon as possible;

    

    (c) promptly
      prepare and file with the Commission such amendments and supplements to the
      Registration Statement and the prospectus used in connection therewith as may
      be
      necessary to keep the Registration Statement effective until the earlier of
      (i)
      two years after the date of the Closing (ii) such time as all of the Shares
      have been sold pursuant to the Registration Statement, or (iii) the date on
      which the Shares may be resold by the Purchaser without registration by reason
      of Rule 144(k) under the Securities Act or any other rule of similar effect;
      or
      (iii) such time as all Shares purchased by such Purchaser under this Agreement
      have been sold;

    

    (d) so
      long
      as the Registration Statement is effective covering the resale of the Shares
      owned by the Purchaser, furnish to the Purchaser with respect to the Shares
      registered under the Registration Statement (and to each underwriter, if any,
      of
      such Shares) such number of copies of prospectuses and such other documents
      as
      the Purchaser may reasonably request, in order to facilitate the public sale
      or
      other disposition of all or any of such securities by the Purchaser;

    

    (e) in
      consultation with its counsel, file documents required of the Company for
      compliance with Blue Sky requirements in states specified in writing by the
      Purchaser; provided,
      however,
      that
      the Company shall not be required to qualify to do business or consent to
      service of process in any jurisdiction in which it is not now so qualified
      or
      has not so consented; 

    

    (f) bear
      all
      expenses in connection with the procedures in paragraphs (a) through (e) of
      this
      Section 7.1 and the registration of the Shares pursuant to the Registration
      Statement, other than fees and expenses, if any, of counsel or other advisers
      to
      the Purchaser or underwriting discounts, brokerage fees and commissions incurred
      by the Purchaser, if any in connection with the offering of the Shares pursuant
      to the Registration Statement;

    

    (g) advise
      the Purchaser (via e-mail address provided pursuant to Section 9(b)) on the
      same
      day that: (i) the prospectus or any prospectus supplement or post-effective
      amendment has been filed, and, with respect to the Registration Statement or
      any
      post-effective amendment thereto, when the same has become effective; (ii)
      the
      Company shall receive notice or obtain knowledge of the issuance of any stop
      order by the Commission delaying or suspending the effectiveness of the
      Registration Statement or of the initiation of any proceeding for that purpose,
      or any other order issued by any state securities commission or other regulatory
      authority suspending the qualification or exemption from qualification of such
      shares under state securities or “blue sky” laws; and (iii) the Company shall
      receive notice or obtain knowledge of the existence of any fact or the happening
      of any event that makes any statement of a material fact in the Registration
      Statement, the prospectus, any amendment or supplement thereto, or any document
      incorporated by reference therein untrue, or which results in an omission of
      a
      material fact necessary in order to make the statement contained therein in
      light of the circumstances in which it was made not misleading; 

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (h) file
      a
      Form D with respect to the Shares as required under Regulation D and to provide
      a copy thereof to the Purchaser promptly after filing; and

    

    (i) in
      order
      to enable the Purchaser to sell the Shares under Rule 144 to the Securities
      Act,
      for a period of two years from Closing, use its commercially reasonable efforts
      to comply with the requirements of Rule 144, including without limitation,
      use
      its commercially reasonable efforts to comply with the requirements of Rule
      144(c) with respect to public information about the Company and to timely file
      all reports required to be filed by the Company under the Exchange Act.

    

    The
      Company understands that the Purchaser disclaims being an underwriter, but
      the
      Purchaser being deemed an underwriter shall not relieve the Company of any
      obligations it has hereunder.

    

    7.2. Transfer
      of Shares After Registration.
      The
      Purchaser agrees that it will not effect any disposition of the Shares or its
      right to purchase the Shares that would constitute a sale within the meaning
      of
      the Securities Act or pursuant to any applicable state securities laws, except
      as contemplated in the Registration Statement referred to in Section 7.1 or
      as
      otherwise permitted by law, and that it will promptly notify the Company of
      any
      changes in the information set forth in the Registration Statement regarding
      the
      Purchaser or its plan of distribution. 

    

    7.3. Indemnification.
      For the
      purpose of this Section 7.3: 

    

    (i) the
      term
“Purchaser/Affiliate”
shall
      mean any affiliates of the Purchaser, including a transferee who is an affiliate
      of the Purchaser, and any person who controls the Purchaser or any affiliate
      of
      the Purchaser within the meaning of Section 15 of the Securities Act or Section
      20 of the Exchange Act; and

    

    (ii) the
      term
“Registration
      Statement”
shall
      include any preliminary prospectus, final prospectus, exhibit, supplement or
      amendment included in or relating to, and any document incorporated by reference
      in, the Registration Statement referred to in Section 7.1. 

    

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (a) The
      Company agrees to indemnify and hold harmless the Purchaser and each
      Purchaser/Affiliate, against any losses, claims, damages, liabilities or
      expenses, joint or several, to which the Purchaser or Purchaser/Affiliates
      may
      become subject, under the Securities Act, the Exchange Act, or any other federal
      or state statutory law or regulation, or at common law or otherwise (including
      in settlement of any litigation, if such settlement is effected with the prior
      written consent of the Company), insofar as such losses, claims, damages,
      liabilities or expenses (or actions in respect thereof as contemplated below)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact contained in the Registration Statement, including the
      prospectus, financial statements and schedules, and all other documents filed
      as
      a part thereof, as amended at the time of effectiveness of the Registration
      Statement, including any information deemed to be a part thereof as of the
      time
      of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule
      434, of the Rules and Regulations, or the prospectus, in the form first filed
      with the Commission pursuant to Rule 424(b) of the Regulations, or filed as
      part
      of the Registration Statement at the time of effectiveness if no Rule 424(b)
      filing is required (the “Prospectus”),
      or
      any subsequent amendment or supplement thereto, or arise out of or are based
      upon the omission or alleged omission to state in any of them a material fact
      required to be stated therein or necessary to make the statements in the
      Registration Statement or any amendment or supplement thereto not misleading
      or
      in the Prospectus or any amendment or supplement thereto not misleading in
      light
      of the circumstances under which they were made; and will reimburse each
      Purchaser and each Purchaser/Affiliate for any legal and other expenses as
      such
      expenses are reasonably incurred by such Purchaser or such Purchaser/Affiliate
      in connection with investigating, defending, settling, compromising or paying
      any such loss, claim, damage, liability, expense or action; provided,
      however,
      that
      the Company will not be liable for amounts paid in settlement of any such loss,
      claim, damage, liability or action if such settlement is effected without the
      consent of the Company, and the Company will not be liable in any such case
      to
      the extent that any such loss, claim, damage, liability or expense arises out
      of
      or is based upon (i) an untrue statement or alleged untrue statement or omission
      or alleged omission made in the Registration Statement, the Prospectus or any
      amendment or supplement thereto in reliance upon and in conformity with written
      information furnished to the Company by or on behalf of the Purchaser expressly
      for use therein, or (ii) the failure of a Purchaser to comply with the covenants
      and agreements contained in Sections 5.10 or 7.2 hereof, or (iii) the inaccuracy
      of any representation or warranty made by a Purchaser herein or (iv) any
      statement or omission in any Prospectus that is corrected in any subsequent
      Prospectus that was delivered to the Purchaser prior to the pertinent sale
      or
      sales by the Purchaser.

    

    (b) The
      Purchaser will severally, but not jointly, indemnify and hold harmless the
      Company, each of its directors, each of its officers who signed the Registration
      Statement and each person, if any, who controls the Company within the meaning
      of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
      any losses, claims, damages, liabilities or expenses to which the Company,
      each
      of its directors, each of its officers who signed the Registration Statement
      or
      controlling person may become subject, under the Securities Act, the Exchange
      Act, or any other federal or state statutory law or regulation, or at common
      law
      or otherwise (including in settlement of any litigation, but only if such
      settlement is effected with the prior written consent of such Purchaser) insofar
      as such losses, claims, damages, liabilities or expenses (or actions in respect
      thereof as contemplated below) arise out of or are based upon (i) any failure
      to
      comply with the covenants and agreements contained in Sections 5.10 or 7.2
      hereof or (ii) the inaccuracy of any representation or warranty made by such
      Purchaser herein or (iii) any untrue or alleged untrue statement of any material
      fact contained in the Registration Statement, the Prospectus, or any amendment
      or supplement thereto, or arise out of or are based upon the omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements in the Registration Statement or any amendment
      or supplement thereto not misleading or in the Prospectus or any amendment
      or
      supplement thereto not misleading in the light of the circumstances under which
      they were made, in each case to the extent, but only to the extent, that such
      untrue statement or alleged untrue statement or omission or alleged omission
      was
      made in the Registration Statement, the Prospectus, or any amendment or
      supplement thereto, in reliance upon and in conformity with written information
      furnished to the Company by or on behalf of any Purchaser expressly for use
      therein; and will reimburse the Company, each of its directors, each of its
      officers who signed the Registration Statement or controlling person for any
      legal and other expense reasonably incurred by the Company, each of its
      directors, each of its officers who signed the Registration Statement or
      controlling person in connection with investigating, defending, settling,
      compromising or paying any such loss, claim, damage, liability, expense or
      action; provided, however, that each Purchaser’s aggregate liability under
      Section 7.3(b)(iii) shall not exceed the amount of proceeds received by such
      Purchaser on the sale of the Shares pursuant to the Registration
      Statement.

    

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (c) Promptly
      after receipt by an indemnified party under this Section 7.3 of notice of the
      threat or commencement of any action, such indemnified party will, if a claim
      in
      respect thereof is to be made against an indemnifying party under this Section
      7.3 promptly notify the indemnifying party in writing thereof, but the omission
      to notify the indemnifying party will not relieve it from any liability that
      it
      may have to any indemnified party for contribution or otherwise under the
      indemnity agreement contained in this Section 7.3 to the extent it is not
      prejudiced as a result of such failure. In case any such action is brought
      against any indemnified party and such indemnified party seeks or intends to
      seek indemnity from an indemnifying party, the indemnifying party will be
      entitled to participate in, and, to the extent that it may wish, jointly with
      all other indemnifying parties similarly notified, to assume the defense thereof
      with counsel reasonably satisfactory to such indemnified party; provided,
      however,
      if the
      defendants in any such action include both the indemnified party, and the
      indemnifying party and the indemnified party shall have reasonably concluded,
      based on an opinion of counsel reasonably satisfactory to the indemnifying
      party, that there is likely to be a conflict of interest between the positions
      of the indemnifying party and the indemnified party in conducting the defense
      of
      any such action or that there are likely to be legal defenses available to
      it
      and/or other indemnified parties that are different from or additional to those
      available to the indemnifying party, the indemnified party or parties shall
      have
      the right to select separate counsel to assume such legal defenses and to
      otherwise participate in the defense of such action on behalf of such
      indemnified party or parties. Upon receipt of notice from the indemnifying
      party
      to such indemnified party of its election to assume the defense of such action
      and approval by the indemnified party of counsel, the indemnifying party will
      not be liable to such indemnified party under this Section 7.3 for any legal
      or
      other expenses subsequently incurred by such indemnified party in connection
      with the defense thereof unless (i) the indemnified party shall have employed
      such counsel in connection with the assumption of legal defenses in accordance
      with the proviso to the preceding sentence (it being understood, however, that
      the indemnifying party shall not be liable for the expenses of more than one
      separate counsel, reasonably satisfactory to such indemnifying party,
      representing all of the indemnified parties who are parties to such action)
      or
      (ii) the indemnifying party shall not have employed counsel reasonably
      satisfactory to the indemnified party to represent the indemnified party within
      a reasonable time after notice of commencement of action, in each of which
      cases
      the reasonable fees and expenses of counsel shall be at the expense of the
      indemnifying party. The indemnifying party shall not be liable for any
      settlement of any action without its written consent.

    

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    (d) If
      the
      indemnification provided for in this Section 7.3 is required by its terms but
      is
      for any reason held to be unavailable to or otherwise insufficient to hold
      harmless an indemnified party under paragraphs (a), (b) or (c) of this Section
      7.3 in respect to any losses, claims, damages, liabilities or expenses referred
      to herein, then each applicable indemnifying party shall contribute to the
      amount paid or payable by such indemnified party as a result of any losses,
      claims, damages, liabilities or expenses referred to herein (i) in such
      proportion as is appropriate to reflect the relative benefits received by the
      Company and the Purchaser from the placement of the Shares contemplated by
      this
      Agreement or (ii) if the allocation provided by clause (i) above is not
      permitted by applicable law, in such proportion as is appropriate to reflect
      not
      only the relative benefits referred to in clause (i) above but the relative
      fault of the Company and the Purchaser in connection with the statements or
      omissions or inaccuracies in the representations and warranties in this
      Agreement that resulted in such losses, claims, damages, liabilities or
      expenses, as well as any other relevant equitable considerations. The relative
      benefits received by the Company on the one hand and each Purchaser on the
      other
      shall be deemed to be in the same proportion as the amount paid by such
      Purchaser to the Company pursuant to this Agreement for the Shares purchased
      by
      such Purchaser that were sold pursuant to the Registration Statement bears
      to
      the difference (the “Difference”)
      between the amount such Purchaser paid for the Shares that were sold pursuant
      to
      the Registration Statement and the amount received by such Purchaser from such
      sale. The relative fault of the Company on the one hand and each Purchaser
      on
      the other shall be determined by reference to, among other things, whether
      the
      untrue or alleged statement of a material fact or the omission or alleged
      omission to state a material fact or the inaccurate or the alleged inaccurate
      representation and/or warranty relates to information supplied by the Company
      or
      by such Purchaser and the parties’ relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission.
      The amount paid or payable by a party as a result of the losses, claims,
      damages, liabilities and expenses referred to above shall be deemed to include,
      subject to the limitations set forth in paragraph (c) of this Section 7.3,
      any
      legal or other fees or expenses reasonably incurred by such party in connection
      with investigating or defending any action or claim. The provisions set forth
      in
      paragraph (c) of this Section 7.3 with respect to the notice of the threat
      or
      commencement of any threat or action shall apply if a claim for contribution
      is
      to be made under this paragraph (d); provided,
      however,
      that no
      additional notice shall be required with respect to any threat or action for
      which notice has been given under paragraph (c) for purposes of indemnification.
      The Company and the Purchaser agree that it would not be just and equitable
      if
      contribution pursuant to this Section 7.3 were determined solely by pro rata
      allocation (even if the Purchaser were treated as one entity for such purpose)
      or by any other method of allocation which does not take account of the
      equitable considerations referred to in this paragraph. Notwithstanding the
      provisions of this Section 7.3, no Purchaser shall be required to contribute
      any
      amount in excess of the amount by which the Difference exceeds the amount of
      any
      damages that such Purchaser has otherwise been required to pay by reason of
      such
      untrue or alleged untrue statement or omission or alleged omission. No person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any person who was
      not guilty of such fraudulent misrepresentation. The Purchaser’s obligation to
      contribute pursuant to this Section 7.3 are several and not joint.

    

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    7.4. Termination
      of Conditions and Obligations.
      The
      conditions precedent imposed by Section 5.10 or Section 7.2 upon the
      transferability of the securities purchased pursuant to this Agreement shall
      cease and terminate as to any particular number of securities upon the earlier
      of (i) the passage of two years from the effective date of the Registration
      Statement and (ii) at such time as an opinion of counsel satisfactory in
      form and substance to the Company shall have been rendered to the effect that
      such conditions are not necessary in order to comply with the Securities Act.
      

    

    7.5. Information
      Available.
      The
      Company, upon the reasonable request of the Purchaser, shall make available
      for
      inspection by the Purchaser, any underwriter participating in any disposition
      pursuant to the Registration Statement and any attorney, accountant or other
      agent retained by the Purchaser or any such underwriter, all financial and
      other
      records, pertinent corporate documents and properties of the Company, and cause
      the Company’s officers, employees and independent accountants to supply all
      information reasonably requested by the Purchaser or any such underwriter,
      attorney, accountant or agent in connection with the Registration
      Statement.

    

    SECTION
      8. Intentionally
      Omitted.
      

    

    SECTION
      9. Notices.
      All
      notices, requests, consents and other communications hereunder shall be in
      writing, shall be mailed by first-class registered or certified airmail, e-mail,
      confirmed facsimile or nationally recognized overnight express courier postage
      prepaid, and shall be deemed given when so mailed and shall be delivered as
      addressed as follows: 

    

    9.1. if
      to the
      Company, to:

     

    
      Precision
        Optics Corporation

      22
        East
        Broadway

      Gardner,
        MA 01440

      Attention:
        Richard Forkey

      Facsimile:
        978 630-1370

    

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    
      with
        a
        copy to:

       

      Ropes
        & Gray LLP

      One
        International Place

      Boston,
        MA 02110

      Attention:
        Patrick O’Brien

      Facsimile:
        617-951-7050

      E-mail:
        Patrick.obrien@ropesgray.com

    

    

    or
      to
      such other person at such other place as the Company shall designate to the
      Purchaser in writing or by e-mail; and

    

    9.2. if
      to the
      Purchaser, at its address as set forth at the end of this Agreement, or at
      such
      other address or addresses as may have been furnished to the Company in
      writing.

    

    SECTION
      10. Changes.
      This
      Agreement may not be modified or amended except pursuant to an instrument in
      writing signed by the Company and the Purchaser. Any amendment or waiver
      effected in accordance with this Section 10 shall be binding upon each holder
      of
      any securities purchased under this Agreement at the time outstanding, each
      future holder of all such securities, and the Company.

    

    SECTION
      11. Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be part of this
      Agreement. 

    

    SECTION
      12. Severability.
      In case
      any provision contained in this Agreement should be invalid, illegal or
      unenforceable in any respect, the validity, legality and enforceability of
      the
      remaining provisions contained herein shall not in any way be affected or
      impaired thereby. 

    

    SECTION
      13. Governing
      Law.
      This
      Agreement is to be construed in accordance with and governed by the federal
      law
      of the United States of America and the internal laws of the Commonwealth of
      Massachusetts without giving effect to any choice of law rule that would cause
      the application of the laws of any jurisdiction other than the internal laws
      of
      the Commonwealth of Massachusetts to the rights and duties of the
      parties.

    

    SECTION
      14. Counterparts.
      This
      Agreement may be executed in counterparts, each of which shall constitute an
      original, but all of which, when taken together, shall constitute but one
      instrument, and shall become effective when one or more counterparts have been
      signed by each party hereto and delivered to the other parties. Facsimile
      signatures shall be deemed original signatures.

    

    SECTION
      15. Entire
      Agreement.
      This
      Agreement and the instruments referenced herein contain the entire understanding
      of the parties with respect to the matters covered herein and therein and,
      except as specifically set forth herein or therein, neither the Company nor
      the
      Purchaser makes any representation, warranty, covenant or undertaking with
      respect to such matters. Each party expressly represents and warrants that
      it is
      not relying on any oral or written representations, warranties, covenants or
      agreements outside of this Agreement.

    

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    SECTION
      16. Fees
      and Expenses.
      Except
      as set forth herein, each of the Company and the Purchaser shall pay its
      respective fees and expenses related to the transactions contemplated by this
      Agreement. 

    

    SECTION
      17. Parties.
      This
      Agreement is made solely for the benefit of and is binding upon the Purchaser
      and the Company and to the extent provided in Section 7.3, any person
      controlling the Company or the Purchaser, the officers and directors of the
      Company, and their respective executors, administrators, successors and assigns
      and subject to the provisions of Section 7.3, no other person shall acquire
      or
      have any right under or by virtue of this Agreement. The term “successor and
      assigns” shall not include any subsequent purchaser, as such purchaser, of the
      Shares sold to the Purchaser pursuant to this Agreement. 

    

    [Remainder
      of Page Left Intentionally Blank]

    

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
      duly authorized representatives as of the day and year first above
      written.

    

    

    
      	
               

              Precision
                Optics Corporation 

            
	
              By:

            	 
	 	
              Name:

            	 
	 	
              Title:

            	 

    

    

    Print
      or
      Type:

    
      	 
	
              Name
                of Purchaser

              (Individual
                or Institution)

            
	 
	 
	
              Jurisdiction
                of Purchaser’s Executive Offices

            
	 
	 
	
              Name
                of Individual representing

              Purchaser
                (if an Institution)

            
	 
	 
	
              Title
                of Individual representing

              Purchaser
                (if an Institution)

            

    

    

    Signature
      by:

     

    
      	
              Individual
                Purchaser or Individual

              representing
                Purchaser:

            
	 	 
	 	 
	 	 
	Address:	 
	Telephone:	 
	Facsimile:	 
	E-mail:	 

    

     

    
      Signature
        Page

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    

    
      	
              Name
                of Subsidiary

            	 	
              State
                or Other Jurisdiction of Incorporation/Organization

            
	 	 	 
	
              Wood’s
                Precision Optics Corporation, Ltd.

            	 	
              Hong
                Kong, China

            

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Appendix
      I

    (Page
      1
      of 3)

     

    PRECISION
      OPTICS CORPORATION

    SECURITIES
      CERTIFICATE QUESTIONNAIRE

    

    Pursuant
      to Section 3 of the Agreement, please provide us with the following information:
      

     

    
      	
              1.

            	
              The
                exact name that your Shares are to be registered in (this is the
                name that
                will appear on your certificate(s)).

            	 	
               

               

            
	 	 	 	 
	
              2.

            	
              The
                relationship between the Purchaser of the securities and the Registered
                Holder listed in response to item 1 above:

            	 	
               

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              3.

            	
              The
                mailing address of the Registered Holder listed in response to item
                1
                above:

            	 	
               

            
	 	 	 	 
	
              4.

            	
              The
                Social Security Number or Tax Identification Number of the Registered
                Holder listed in response to item 1 above:

            	 	
               

            

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Appendix
      I

    (Page
      2
      of 3)

     

    PRECISION
      OPTICS CORPORATION

    REGISTRATION
      STATEMENT QUESTIONNAIRE

    

    In
      connection with the preparation of the Registration Statement, please provide
      us
      with the following information:

    

    SECTION
      1. Pursuant
      to the “Selling Stockholder” section of the Registration Statement, please state
      your or your organization’s name exactly as it should appear in the Registration
      Statement:

    
      	 
	 

    

    

    SECTION
      2. Please
      provide the number of shares that you or your organization will own immediately
      after Closing, including those Shares purchased by you or your organization
      pursuant to this Purchase Agreement and those shares purchased by you or your
      organization through other transactions and provide the number of shares that
      you have or your organization has the right to acquire within 60 days of
      Closing: 

    
      	 
	 

    

    

    

    SECTION
      3. Have
      you
      or your organization had any position, office or other material relationship
      within the past three years with the Company or its affiliates? 

    

    _____
      Yes
      _____ No 

    

    If
      yes,
      please indicate the nature of any such relationships below: 

    
      	 
	 
	 
	 

    

    

    SECTION
      4. Are
      you
      (i) an NASD Member (see definition), (ii) a Controlling (see definition)
      shareholder of an NASD Member, (iii) a Person Associated with a Member of the
      NASD (see definition), or (iv) an Underwriter or a Related Person (see
      definition) with respect to the proposed offering; or (b) do you own any shares
      or other securities of any NASD Member not purchased in the open market; or
      (c)
      have you made any outstanding subordinated loans to any NASD
      Member?

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    Answer:
      [
      ] Yes [ ] No  If
“yes,”
      please describe below

     

    
      	 
	 
	 
	 

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Appendix
      I

    (Page
      3
      of 3)

    

    NASD
      Member.
      The
      term “NASD member” means either any broker or dealer admitted to membership in
      the National Association of Securities Dealers, Inc. (“NASD”). (NASD Manual,
      By-laws Article I, Definitions)

    

    Control.
      The
      term “control” (including the terms “controlling,” “controlled by” and “under
      common control with”) means the possession, direct or indirect, of the power,
      either individually or with others, to direct or cause the direction of the
      management and policies of a person, whether through the ownership of voting
      securities, by contract, or otherwise. (Rule 405 under the Securities Act of
      1933, as amended)

    

    Person
      Associated with a member of the NASD.
      The
      term “person associated with a member of the NASD” means every sole proprietor,
      partner, officer, director, branch manager or executive representative of any
      NASD Member, or any natural person occupying a similar status or performing
      similar functions, or any natural person engaged in the investment banking
      or
      securities business who is directly or indirectly controlling or controlled
      by a
      NASD Member, whether or not such person is registered or exempt from
      registration with the NASD pursuant to its bylaws. (NASD Manual, By-laws Article
      I, Definitions)

    

    Underwriter
      or a Related Person.
      The
      term “underwriter or a related person” means, with respect to a proposed
      offering, underwriters, underwriters’ counsel, financial consultants and
      advisors, finders, members of the selling or distribution group, and any and
      all
      other persons associated with or related to any of such persons. (NASD
      Interpretation)

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    APPENDIX
      II

     

    [Transfer
      Agent]

    [Address]

    

    Attention:

     

    PURCHASER’S
      CERTIFICATE OF SUBSEQUENT SALE

    

    The
      undersigned, [an officer of, or other person duly authorized by]

    _____________________________________________________________
      hereby certifies

    [fill
      in official name of individual or
      institution]

    that
      he/she [said institution] is the Purchaser of the shares evidenced by the
      attached certificate,

    and
      as
      such, sold such shares on _______________ in accordance with the terms of the
      

    [date]

    Purchase
      Agreement and in accordance with Registration Statement

    number
      ____________________________________________ or otherwise in accordance with
       

    [fill
      in
      the number of or otherwise identify Registration Statement]

    the
      Securities Act of 1933, as amended, and, in the case of a transfer pursuant
      to
      the Registration Statement,
      the requirement of delivering a current prospectus by the Company has
      been complied
      with in connection with such sale. 

    

    Print
      or
      Type: 

     

    
      	
              Name
                of Purchaser

              (Individual
                or

              Institution):

            	 
	 
	
              Name
                of Individual

              representing

              Purchaser
                (if an

              Institution)

            	 
	 
	
              Title
                of Individual

              representing

              Purchaser
                (if an

              Institution):

            	 
	
              Signature
                by:

            
	
              Individual
                Purchaser

              or
                Individual repre-

              senting
                Purchaser:

            	 

    

    

    
      
         

      

      
        7Exhibit
      10.1

     

    AGREEMENT

     

    This
      agreement is entered into among Patriot Scientific Corporation (“Patriot”),
      Russell H. Fish, III (“Fish”) and The Fish Family Trust (“Trust”) on July
      27, 2004:

     

    WHEREAS,
      Patriot owns an undivided interest in U.S. Patent Nos. 5,809,336, “High
      Performance Microprocessor Having Variable Speed System Clock,” issued on
      September 15, 1998 (“‘336 Patent”); 6,598,148, “High Performance
      Microprocessor Having Variable Speed System Clock,” issued on July 22,
      2003; 5,440,749 entitled “High Performance, Low Cost Microprocessor
      Architecture,” issued on August 8, 1995; 5,530,890 entitled “High
      Performance, Low Cost Microprocessor,” issued on June 25, 1996; 5,604,915
      entitled “Data Processing System Having Load Dependent Bus Timing,” issued on
      February 18, 1997; 5,659,703 entitled “Microprocessor System with
      Hierarchical Stack and Method of Operation,” issued on August 19, 1997; and
      5,784,584 entitled “High Performance Microprocessor Using Instructions That
      Operate Within Instruction Groups,” issued on July 21, 1998, and any
      related patents or patent applications claiming priority thereto (collectively,
      the “Patents”);

     

    WHEREAS,
      Patriot has commenced a litigation and licensing program involving the
      Patents;

     

    WHEREAS,
      Patriot desires to enter into an agreement under which Fish could share in
      the
      proceeds of its litigation and licensing program;

     

    WHEREAS,
      Patriot seeks the cooperation of Fish in its litigation and licensing
      program.

     

    WHEREAS,
      Fish asserts that he has no prior binding agreement with Patriot that will
      compensate him for his contributions to the Patents;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    WHEREAS,
      Patriot believes that: Fish appears to be the sole inventor of several of the
      Patents; Charles H. Moore (“Moore”) appears to be the sole inventor of others;
      and Fish and Moore appear to have jointly invented the others; but the correct
      statement of inventorship for all sever patents has never been
      made;

     

    WHEREAS,
      Patriot believes that it and the Trust entered into a prior agreement dated
      April 24, 2003, under which the Trust was to receive a portion of the
      proceeds derived by Patriot from the Patents; and the Trust disputes the
      existence of such an agreement;

     

    WHEREAS,
      Patriot and the Trust desire to resolve any dispute regarding the existence
      of
      an April 24, 2003 agreement, and desire to extinguish any April 24,
      2003, agreement, if such an agreement ever existed, and instead enter into
      this
      new agreement.

     

    THE
      PARTIES, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
      SUFFICIENCY OF WHICH IS ACKNOWLEDGED, AGREE AS FOLLOWS:

     

    1.  From
      gross proceeds of any payment (whether in kind or otherwise) received relating
      to the Patents, whether in satisfaction of a judgment, in settlement of
      litigation, for a license or covenant not to sue, or otherwise relating to
      a
      resolution in its litigation and licensing program, without deduction for any
      attorneys’ fees, expenses or court costs relating to such litigation or
      licensing program (collectively, the “Proceeds”), Patriot will pay Fish and the
      Trust, on a quarterly basis, as follows:

     

    To
      Fish:

     

    
      	(a)	
              Patriot
                will pay Fish eleven and one half percent of the Proceeds until Fish
                receives $99 million;

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	(b)	
              after
                satisfaction of paragraph 1(a), Patriot will pay Fish ten percent
                of the
                Proceeds until Fish receives an additional $75 million;
                and

            

    

     

    
      	(c)	
              after
                satisfaction of paragraphs 1(a) and 1(b), Patriot will pay Fish eight
                percent of the Proceeds until Fish receives an additional
                $25 million; Patriot will thereafter owe nothing more to
                Fish.

            

    

     

    To
      the
      Trust:

     

    
      	(d)	
              Patriot
                will pay the Trust one half of one percent of the Proceeds until
                the Trust
                receives $1 million; Patriot will thereafter owe nothing more to the
                Trust.

            

    

     

    2.  The
      amounts set forth in Paragraph 1 will not apply beyond the remaining life of
      the
      Patents, except that payment under Paragraph 1 is still required after the
      expiration of the Patents if owed for third party activities which occurred
      before expiration.

     

    3.  In
      exchange for the payments under Paragraph 1, Fish will satisfy the following
      conditions:

     

    
      	(a)	
              Fish
                will, if requested by Patriot, testify live at deposition and/or
                at trial
                in any proceeding involving Patriot and any one or more of the Patents,
                Patriot to reimburse Fish for his reasonable
                expenses;

            

    

     

    
      	(b)	
              Fish
                will cooperate with Patriot and will assist Patriot by, among other
                things, supplying historical information about the Patents, his
                conception, reduction to practice, invention, and development of
                the
                Patents; in particular, during the week of July 26, 2004, at a time
                and place to be agreed to by Patriot and Fish, (1) with the exception
                of privileged attorney-client communications on or after March 1,
                1997, the date Fish retained Jenkens & Gilchrist, Fish will supply all
                documents and materials in his possession, custody, or control from
                whatever source or location, including Austin, Texas, about the Patents
                or
                issues bearing on the Patents. including conception, reduction to
                practice, invention, and development of the Patents; and (2) during
                that
                same week, at a time and place to be agreed to by Patriot and Fish,
                Fish
                will make himself available for at least, one full day to meet with
                counsel for Patriot to discuss the Patents and any relevant documents;
                satisfaction of subparts (1) and (2) will constitute full compliance
                with
                this provision;

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	(c)	
              Fish
                will cooperate with Patriot and will reasonably assist Patriot in
                determining, documenting, and correcting inventorship of the Patents,
                as
                necessary and appropriate and at Patriot’s expense, including
                conceptualization and/or reduction to practice of the devices and
                methods
                covered by the Patents in accordance with the Patent laws of the
                United
                States;

            

    

     

    
      	(d)	
              Fish
                waives the attorney-client privilege for any documents, materials,
                and
                communications relevant to the inventorship and/or prosecution history
                of
                the Patents; provided, however, that this waiver does not extend
                to any
                attorney-client communications between Fish and Jenkens &
                Gilchrist;

            

    

     

    
      	(e)	
              Fish
                will -not make any new or additional demands upon Patriot about the
                Patents or any proceeds from Patriot’s litigation and licensing
                proceeds;

            

    

     

    
      	(f)	
              the
                Trust and Fish extinguish and surrender any right to license the
                Patents
                they may have possessed, or do possess, or they might possess in
                the
                future; and

            

    

     

    
      	(g)	
              Fish
                will not assert against Patriot any claims which were previously
                litigated, were raised on appeal, or could have been raised in his
                action
                against Patriot, Nanotronics Corporation, Helmut Falk, and the Helmut
                Falk
                Trust.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    4.  This
      agreement reflects the full and complete understating of the parties, and
      supercedes all prior agreements and understandings, whether written or oral.
      It
      may not be modified except in writing signed by all parties.

     

    5.  This
      agreement may be signed in counterparts, and the separate duplicates and/or
      faxed duplicates of this agreement shall have the same force and effect as
      if
      they were the original.

     

    
      	 	 	 	 
	/s/ Jeffrey
              Wallin	 	 	 
	
              
Jeffrey
              Wallin	 	 	
            
	Chief
              Executive
              Officer 
Patriot
              Scientific Corporation
Dated: 7/27/04	 	 	 

    

    
      
        	 	 	 	 
	/s/ Russel
                H.
                Fish, III	 	 	 
	
                
Russel
                H. Fish, III	 	 	
              
	Dated:
                7/27/04	 	 	 

      

    

    
      
        	 	 	 	 
	/s/ J.
                Pat
                Heptig	 	 	 
	
                
J.
                Pat Heptig, Esq.	 	 	
              
	
                Jenkens
                  & Gilchrist

                Attorneys
                  for
                  Russell H. Fish
Dated: 7/29/04

              	 	 	 

      

    

    
      	 	 	 	 
	/s/ Janet
              L.
              Fish	 	 	 
	
              
Janet
              L. Fish	 	 	
            
	
              Trustee
                of The Fish Family Trust

              Dated:
                7/28/04

            	 	 	 

    
      
        	 	 	 	 
	/s/ Martin
                Turner	 	 	 
	
                
Martin
                Turner, Esq.	 	 	
              
	Attorney
                for The
                Fish Family Trust
Dated: 7/28/04	 	 	 

      

       

      
        
          
          

        

        
          5

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