Document:

Exhibit 4.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration
Rights Agreement (the “Agreement”) is made and entered into as of this 12th day of February, 2013 by and among Precision
Optics Corporation, Inc., a Massachusetts corporation (the “Company”), and the “Holders” named in that
certain Settlement Agreement by and among the Company and the Holders (the “Settlement Agreement”). Capitalized terms
used herein have the respective meanings ascribed thereto in the Settlement Agreement unless otherwise defined herein.

 

The parties hereby
agree as follows:

 

1.       Certain
Definitions.

 

As used in this Agreement,
the following terms shall have the following meanings:

 

“Affiliate”
means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.

 

“Business
Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction
of business.

 

“Common
Stock” means the Company’s common stock, par value $0.01 per share, and any securities into which such shares may
hereinafter be reclassified.

 

“Control”
(including the terms “controlling”, “controlled by” or “under common control with”) means the
possession, direct or indirect, of the power 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.

 

“Investors”
means the Holders identified in the Settlement Agreement and any Affiliate or permitted transferee of any Holder who is a subsequent
holder of any Warrants or Registrable Securities.

 

“Person”
means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

 

“Prospectus”
means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference
in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act.

 

“Register,”
“registered” and “registration” refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as defined below) which is declared effective by the SEC.

 

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“Registrable
Securities” means (i) the Shares, (ii) the Warrant Shares, and (iii) any other securities issued or issuable with respect
to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that, a security shall
cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or (B) such
security becoming eligible for sale without restriction by the Investors pursuant to Rule 144.

 

“Registration
Statement” means any registration statement of the Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required
Investors” means the Investors holding a majority of the Registrable Securities.

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

“Shares”
means the shares of Common Stock issued pursuant to the Settlement Agreement.

 

“Warrants”
means, the warrants to purchase shares of Common Stock issued to the Investors pursuant to the Settlement Agreement, the form
of which is attached to the Settlement Agreement as Exhibit A.

 

“Warrant
Shares” means the shares of Common Stock issuable upon the exercise of the Warrants.

 

“1933 Act”
means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

“1934 Act”
means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

 

2.       Registration.

 

(a)      Registration
Statements.

 

(i)       Promptly
following the execution and delivery of this Agreement but no later than thirty (30) Business Days thereafter, the Company shall
prepare and file with the SEC a Registration Statement on Form S-1 (or, if Form S-1 is not then available to the Company, on such
form of registration statement as is then available to the Company to effect a registration for resale of the Registrable Securities),
covering the resale of the Registrable Securities in an amount at least equal to the Shares and the Warrant Shares. Subject to
any SEC comments, such Registration Statement shall include the Plan of Distribution substantially in the form attached hereto
as Exhibit A; provided, however, that no Investor shall be named as an “underwriter” in the Registration Statement
without the Investor’s prior written consent. Such Registration Statement also shall cover, to the extent allowable under
the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common
Stock due to an increase in the number of Warrant Shares resulting from changes in the Warrant Price pursuant to the terms of the
Warrants. Such Registration Statement shall not include any shares of Common Stock or other securities for the account of any other
holder without the prior written consent of the Required Investors. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors
and their counsel prior to its filing or other submission.

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(ii)       S-3 Qualification.
Promptly following the date (the “Qualification Date”) upon which the Company becomes eligible to use a registration
statement on Form S-3 to register the Registrable Securities for resale, the Company shall file a registration statement on Form
S-3 covering the Registrable Securities (or a post-effective amendment on Form S-3 to the registration statement on Form S-1) (a
“Shelf Registration Statement”) and shall use commercially reasonable efforts to cause such Shelf Registration Statement
to be declared effective as promptly as practicable thereafter.

 

(b)     Expenses.
The Company will pay all expenses associated with effecting the registration of the Registrable Securities, including filing and
printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities
for sale under applicable state securities laws, listing fees, but excluding fees and expenses of the Investors’ counsel,
discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with
respect to the Registrable Securities being sold.

 

(c)     Effectiveness.

 

(i)       The Company
shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after filing.
The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four
(24) hours, after any Registration Statement is declared effective and shall simultaneously provide the Investors with copies of
any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

 

(ii)       For not
more than twenty (20) consecutive days or for a total of not more than forty-five (45) days in any twelve (12) month period, the
Company may delay the disclosure of material non-public information concerning the Company, by suspending the use of any Prospectus
included in any Registration Statement contemplated by this Section containing such information, the disclosure of which at the
time is not, in the good faith opinion of the Company, in the best interests of the Company (an “Allowed Delay”); provided,
that the Company shall promptly (a) notify the Investors in writing of the existence of (but in no event, without the prior written
consent of an Investor, shall the Company disclose to such Investor any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement
until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

(d)      Rule
415.

 

If at any time the
SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible
to be made on a delayed or continuous basis under the provisions of Rule 415 under the 1933 Act or requires any Investor to be
named as an “underwriter”, the Company shall use its best efforts to persuade the SEC that the offering contemplated
by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as
defined in Rule 415 and that none of the Investors is an “underwriter”. The Investors shall have the right to participate
or have their counsel participate in any meetings or discussions with the SEC regarding the SEC’s position and to comment
or have their counsel comment on any written submission made to the SEC with respect thereto. No such written submission shall
be made to the SEC to which the Investors’ counsel reasonably objects. In the event that, despite the Company’s best
efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) remove
from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree
to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure
the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided,
however, that the Company shall not agree to name any Investor as an “underwriter” in such Registration Statement without
the prior written consent of such Investor. Any cut-back imposed on the Investors pursuant to this Section 2(d) shall be allocated
among the Investors on a pro rata basis and shall be applied first to any Warrant Shares, unless the SEC Restrictions otherwise
require or provide or the Investors otherwise agree.

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(e)       Right
to Piggyback Registration.

 

(i)       If at any
time following the date of this Agreement that any Registrable Securities remain outstanding (A) there is not one or more effective
Registration Statements covering all of the Registrable Securities and (B) the Company proposes for any reason to register any
shares of Common Stock under the 1933 Act (other than pursuant to a registration statement on Form S-4 or Form S-8 (or a similar
or successor form)) with respect to an offering of Common Stock by the Company for its own account or for the account of any of
its stockholders, it shall at each such time promptly give written notice to the holders of the Registrable Securities of its
intention to do so (but in no event less than thirty (30) days before the anticipated filing date) and, to the extent permitted
under the provisions of Rule 415 under the 1933 Act, include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within fifteen (15) days after receipt of the Company’s
notice (a “Piggyback Registration”). Such notice shall offer the holders of the Registrable Securities the opportunity
to register such number of shares of Registrable Securities as each such holder may request and shall indicate the intended method
of distribution of such Registrable Securities.

 

(ii)      Notwithstanding
the foregoing, (A) if such registration involves an underwritten public offering, the Investors must sell their Registrable Securities
to, if applicable, the underwriter(s) at the same price and subject to the same underwriting discounts and commissions that apply
to the other securities sold in such offering (it being acknowledged that the Company shall be responsible for other expenses as
set forth in Section 2(b)) and subject to the Investors entering into customary underwriting documentation for selling stockholders
in an underwritten public offering, and (B) if, at any time after giving written notice of its intention to register any Registrable
Securities pursuant to Section 2(e)(i) and prior to the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to cause such registration statement to become effective under the
1933 Act, the Company shall deliver written notice to the Investors and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration.

 

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3.       Company
Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities
in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

(a)       use
commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for
a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration
Statement may be sold without restriction pursuant to Rule 144 (the “Effectiveness Period”) and advise the Investors
in writing when the Effectiveness Period has expired;

 

(b)       prepare
and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)       provide
copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements
thereto no fewer than three (3) Business Days prior to their filing with the SEC and not file any document to which such counsel
reasonably objects;

 

(d)       furnish
(which may be by email notice of a filing on EDGAR) to the Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing
date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each
preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the
Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company
has sought confidential treatment), and (ii) upon request, such number of copies of a Prospectus, including a preliminary prospectus,
and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;

 

(e)       use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if
such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

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(f)       prior
to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with
the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such domestic jurisdictions requested by the Investors and do any and all other commercially
reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in
any such jurisdiction;

 

(g)       use
commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)       immediately
notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any
event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include 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 not misleading in light of the circumstances then existing;

 

(i)       otherwise
use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act; file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act; promptly inform the Investors in writing if, at any time during
the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors
are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as
may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose
of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter); and

 

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(j)       With a view to making
available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may
at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees
to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earliest of
(A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant
to Rule 144 or any other rule of similar effect; (B) such date as all of the Registrable Securities shall have been resold; or
(C) the seventh (7th) anniversary of the effective date of this Agreement (the “Public Information Period”); (ii) during
the Public Information Period, file with the SEC in a timely manner all reports and other documents required of the Company under
the 1934 Act; and (iii) during the Public Information Period, furnish to each Investor upon request, as long as such Investor owns
any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the
1934 Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such
other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits
the selling of any such Registrable Securities without registration.

 

4.       Due
Diligence Review; Information. The Company shall make available, through EDGAR if applicable, during normal business hours,
for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated
with the Investors and who are reasonably acceptable to the Company), all financial and other records, true and complete copies
of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended June 30, 2012 (the “10-K”)
and all other reports filed by the Company pursuant to the 1934 Act since the filing of the 10-K (collectively, the “SEC
Filings”) and other filings with SEC, and all other corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable
time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter
in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries
reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investors and such representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration
Statement.

 

The Company shall
not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as being material nonpublic information and provides
the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information
for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company
with respect thereto.

 

5.       Obligations
of the Investors.

 

(a)       Each
Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably
request. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such Investor. An Investor shall provide such information
to the Company at least three (3) Business Days prior to the first anticipated filing date of such Registration Statement if such
Investor elects to have any of the Registrable Securities included in the Registration Statement.

 

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(b)       Each
Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c)       Each
Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor
is advised by the Company in writing that such dispositions may again be made.

 

6.       Indemnification.

 

(a)       Indemnification
by the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Investor and its officers,
directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within
the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material
fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof;
(ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities
under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”);
(iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary
to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection
with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration
Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will
undertake such registration or qualification on an Investor’s behalf pursuant to an Investor’s affirmative request
under Section 3(f) hereof and will reimburse such Investor, and each such officer, director or member and each such controlling
person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or Prospectus.

 

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(b)       Indemnification
by the Investors. To the extent permitted by law, each Investor shall, severally but not jointly, indemnify and hold harmless
the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of
the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from
any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement
or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing
by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all
expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor
has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of
the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

(c)       Conduct
of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses
of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses,
or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest
exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further,
that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the
defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding
in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such claim or litigation.

 

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(d)       Contribution.
If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities giving rise to such contribution obligation.

 

7.       Miscellaneous.

 

(a)       Amendments
and Waivers. This Agreement may be amended only by a writing signed by the Company and the Required Investors. The Company
may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

(b)       Notices.
All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 5.6 of the Settlement
Agreement.

 

(c)       Assignments
and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors
and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one
or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person,
provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.

 

(d)       Assignments
and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise)
without the prior written consent of the Required Investors, provided, however, that the Company may assign its rights and delegate
its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with
another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another
corporation, without the prior written consent of the Required Investors, after notice duly given by the Company to each Investor.

 

(e)       Benefits
of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this Agreement.

 

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(f)       Counterparts;
Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also be executed via facsimile or scanned PDF documents,
each of which shall be deemed an original.

 

(g)       Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

(h)       Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable
in any respect.

 

(i)       Further
Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions
as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements
herein contained.

 

(j)       Entire
Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

(k)       Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to the choice of law principles thereof (other than Section 5-1401 of
the New York General Obligation Law). Each of the parties hereto 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 Agreement 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 Agreement. Each of the parties
hereto 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. Each party hereto 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 MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

 

    	11

    	 	

    
 

IN WITNESS WHEREOF,
the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

 

	The Company:	PRECISION OPTICS CORPORATION,
INC.
	 	 
	 	By: 	/s/ Joseph N. Forkey
	 	Name:

        Title:
	Joseph N. Forkey
President and Chief Executive
Officer

 

 

 

 

 

 

 

 

[Signature Page for Investors Follows]

 

 

    	12

    	 	

    
 

 

 

	 	Special Situations Fund III QP, L.P.
	 	 
		Special Situations Private Equity Fund,
L.P.
	 	 
	 	By: 	/s/ David Greenhouse
	 	Name:

        Title:
	David Greenhouse
General Partner

 

 

 

 

 

 

 

    	13

    	 	

    
  

Exhibit A

 

Plan of Distribution

 

The selling stockholders,
which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests
in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common
stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders
may use any one or more of the following methods when disposing of shares or interests therein:

 

- ordinary brokerage transactions
and transactions in which the broker-dealer solicits purchasers;

 

- block trades in which
the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to
facilitate the transaction;

 

- purchases by a broker-dealer
as principal and resale by the broker-dealer for its account;

 

- an exchange distribution
in accordance with the rules of the applicable exchange;

 

- privately negotiated
transactions;

 

- short sales effected
after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;

 

- through the writing or
settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

- broker-dealers may agree
with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

- a combination of any such methods of sale; and

 

- any other method permitted
by applicable law.

 

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The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares
of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended (the “Securities Act”),
amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which
case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

In connection with the
sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).

 

The aggregate proceeds
to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.
We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will
receive the exercise price of the warrants.

 

The selling stockholders
also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act,
provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders
and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale
of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.

 

To the extent required,
the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering
prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.

 

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In order to comply with
the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered
or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is available and is complied with.

 

We have advised the selling
stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make copies
of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose
of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under
the Securities Act.

 

We have agreed to indemnify
the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating
to the registration of the shares offered by this prospectus.

 

We have agreed with the
selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier
of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration
statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.

 

 

 

 

 

 

16Exhibit 4.3

 

 

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

 

THIS WARRANT SHALL BE VOID
AFTER 5:00 P.M. EASTERN TIME ON FEBRUARY 12, 2016 (THE “EXPIRATION DATE”).

 

No. __________

 

 

PRECISION OPTICS CORPORATION, INC.

 

WARRANT TO PURCHASE _______ SHARES OF

COMMON STOCK, PAR VALUE $0.01 PER SHARE

 

FOR VALUE
RECEIVED, ____________________ (“Warrantholder”), is entitled to purchase, subject to the provisions of this
Warrant, from Precision Optics Corporation, Inc., a Massachusetts corporation (“Company”), at any time not later
than 5:00 P.M., Eastern time, on the Expiration Date (as defined above), at an exercise price per share equal to $1.50 (the
exercise price in effect being herein called the “Warrant Price”), ______ shares (“Warrant Shares”)
of the Company’s Common Stock, par value $0.01 per share (“Common Stock”). The number of Warrant
Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as
described herein. This Warrant is being issued pursuant to the Settlement Agreement, dated as of February 12, 2013
(the “Settlement Agreement”), by and between the Company and the initial Warrantholder. Capitalized terms used
herein have the respective meanings ascribed thereto in the Settlement Agreement unless otherwise defined herein.

 

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

 

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

 

    	1

    	 	

    
 

Section
3.     Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may
exercise this Warrant, in whole or in part, at any time prior to its expiration upon surrender of the Warrant, together with
delivery of a duly executed Warrant Exercise Form, in the form attached hereto as Appendix A (the “Exercise
Agreement”) and payment by cash, certified check or wire transfer of funds (or by cashless exercise as provided in
Section 17) of the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during
normal business hours on any Business Day at the Company’s principal executive offices (or such other office or agency
of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be
issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered (or the date evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Company has been provided to the Company), the Warrant Price shall have
been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased
shall be delivered to the Warrantholder within a reasonable time, not exceeding three (3) Business Days, after this Warrant
shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the
Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the
Warrantholder, as specified in the Exercise Agreement. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the
Warrantholder a new Warrant representing the right to purchase the number of shares with respect to which this Warrant shall
not then have been exercised. As used herein, “Business Day” means a day, other than a Saturday or Sunday, on
which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the
re-affirmation by the Warrantholder that the representations and warranties contained in Section 5 of the Settlement
Agreement are true and correct in all material respects with respect to the Warrantholder as of the time of such
exercise.

 

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

 

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

 

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

 

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

 

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 shall be, at the time of delivery of the certificates for
such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

    	5

    	 	

    
 

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

 

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

 

Section 10.   Benefits. Nothing
in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal
or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.

 

Section 11.   Notices to Warrantholder.
Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof
to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the
legality or validity of the subject adjustment.

 

Section 12.   Identity
of Transfer Agent. The Transfer Agent for the Common Stock is Computershare Investor Services. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise
of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the
name and address of such transfer agent.

 

Section 13.   Notices.
Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively
given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii)
if given by facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given
by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three (3)
Business Days after such notice is deposited in first class mail, postage prepaid, (iv) 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, and (v) if
given by electronic mail, upon receipt. All notices shall be addressed as follows: if to the Warrantholder, at its address as
set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address
as the Warrantholder or the Company may designate by ten (10) Business Days’ advance written notice to the other:

 

    	6

    	 	

    
 

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

E-mail: [______]

 

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

 

Amy Trombly, Esq.

Trombly Business Law, PC

1320 Centre Street, Suite 202

Newton, MA 02459

Fax: (617) 243-0066

E-mail:
[______]

 

Section 14.   REMOVED
AND RESERVED.

 

Section 15.   Successors.
All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.

 

Section 16.   Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law provisions thereof (other than Section 5-1401 of
the New York General Obligation Law). The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits
to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding
may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under
this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting
this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.  EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

 

    	7

    	 	

    
 

Section 17.   Cashless
Exercise. The Warrantholder may elect to receive, without the payment by the Warrantholder of the aggregate Warrant Price
in respect of the shares of Common Stock to be acquired, shares of Common Stock of equal value to the value of this Warrant, or
any specified portion hereof, by the surrender of this Warrant (or such portion of this Warrant being so exercised) together with
a Net Issue Election Notice, in the form annexed hereto as Appendix B, duly executed, to the Company. Thereupon, the Company shall
issue to the Warrantholder such number of fully paid, validly issued and nonassessable shares of Common Stock as is computed using
the following formula:

 

X = Y (A - B)

     A

 

where

 

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

 

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

 

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

 

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

 

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

 

    	8

    	 	

    
 

Section 19.   REMOVED
AND RESERVED.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

    	9

    	 	

    
 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed, as of the ___th day of February, 2013.

 

 

		PRECISION OPTICS CORPORATION, INC.
	 	 
	 	By: 	
	 	Name:

        Title:
	Joseph N. Forkey
President and Chief Executive
Officer

 

 

 

 

 

 

 

 

 

 

    	10

    	 	

    
 

APPENDIX A

PRECISION OPTICS CORPORATION, INC.

WARRANT EXERCISE FORM

 

To Precision Optics Corporation, Inc.:

 

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

 

________________________________

Name

________________________________

Address

________________________________

 

________________________________

Federal Tax ID or Social
Security No.

 

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

 

(electronically (provide
DWAC Instructions:___________________), or

 

(other (specify): __________________________________________).

 

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

 

Dated: ___________________, ____

 

Note: The signature must correspond with the
name of the Warrantholder as written on the first page of the Warrant in every particular, without alteration or enlargement or
any change whatever, unless the Warrant has been assigned.

  

	 	 
	Signature:______________________________	_______________________________
	 	Name (please print)
	 	 
	 	_______________________________
	 	_______________________________
	 	Address
	 	                                                                         
	 	Federal Identification or Social Security No.
	 	
	 	 
	 	Assignee: 
	 	_______________________________
	 	_______________________________
	 	_______________________________

 

    	11

    	 	

    
 

APPENDIX B

PRECISION OPTICS CORPORATION, INC.

NET ISSUE ELECTION NOTICE

 

 

To: Precision Optics Corporation, Inc.

 

Date: [_________________________]

 

 

The undersigned hereby
elects under Section 17 of this Warrant to surrender the right to purchase [____________] shares of Common Stock pursuant
to this Warrant and hereby requests the issuance of [_____________] shares of Common Stock. The certificate(s) for the shares issuable
upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below.

 

 

_________________________________________

Signature

 

_________________________________________

Name for Registration

 

_________________________________________

Mailing Address

 

 

 

 

 

 

12

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