-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QSYGR4OKP+1/5LtvcUwf0XN+sVToUyDiNe7ZFJOdMZ9u3oghcEEVorsNaWSyutio pfKoiRuo6GRHdHE07JnBIg== /in/edgar/work/20000808/0000912057-00-035318/0000912057-00-035318.txt : 20000921 0000912057-00-035318.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-035318 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRECISION OPTICS CORPORATION INC CENTRAL INDEX KEY: 0000867840 STANDARD INDUSTRIAL CLASSIFICATION: [3845 ] IRS NUMBER: 042795294 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-35884 FILM NUMBER: 688499 BUSINESS ADDRESS: STREET 1: 22 EAST BROADWAY CITY: GARDNER STATE: MA ZIP: 01440-3338 BUSINESS PHONE: 9786301800 FORMER COMPANY: FORMER CONFORMED NAME: PRECISION OPTICS CORP INC DATE OF NAME CHANGE: 19600201 S-3/A 1 s-3a.txt FORM S-3/A Registration No. 333-35884 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------------- PRECISION OPTICS CORPORATION, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-2795294 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
22 East Broadway Gardner, Massachusetts 01440 (978) 630-1800 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) JACK P. DREIMILLER Senior Vice President, Finance, and Chief Financial Officer PRECISION OPTICS CORPORATION 22 East Broadway Gardner, Massachusetts 01440 (978) 630-1800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copy to: PATRICK O'BRIEN, ESQUIRE ROPES & GRAY One International Place Boston, MA 02110-2624 (617) 951-7000 --------------------------- Approximate date of commencement of proposed sale to the public: From time to time after the effectiveness of the Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X| If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| ________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|_________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------- Title of Shares Amount to be Proposed Maximum Proposed Maximum Amount of to be Registered Registered Offering Price Per Aggregate Offering Registration Fee Unit (1) Price (1) - -------------------------------------------------------------------------------------------------------------------- Common Stock - $.01 Par 1,255,261 $8.703125 $10,924,693.39 $2,885(2) Value - --------------------------------------------------------------------------------------------------------------------
(1) Estimated, pursuant to Rule 457(c), solely for purposes of calculating the registration fee based on the average of the high and low sales prices of the Registrant's Common Stock on April 24, 2000 as reported on the Nasdaq SmallCap Market, which date is within five business days of the date of this Registration Statement. (2) Previously paid on April 27, 2000. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THE COMMON STOCK COVERED BY THIS PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL STOCK AND IT IS NOT SOLICITING AN OFFER TO BUY STOCK IN ANY STATE WHERE AN OFFER AND SALE IS NOT PERMITTED. ================================================================================ PROSPECTUS SUBJECT TO COMPLETION __________ __, 2000 PRECISION OPTICS CORPORATION, INC. ----------------- We design, develop, manufacture and sell a variety of products that make use of sophisticated lenses, prisms, mirrors and other devices that detect and transmit light and visual images. Our products include: - arthroscopes, which are used in joint surgery; - laryngoscopes, which are used in the diagnosis of diseases of the throat; - laparoscopes, which are used in abdominal surgery; and - stereo endoscopes, which are currently being tested for use in heart surgery. In addition, we are currently developing, producing and marketing filter components for devices designed to increase the amount of data that can be transmitted over fiber optic cable lines. Our principal executive offices are located at 22 East Broadway, Gardner, Massachusetts 01440 and our phone number is (978) 630-1800. The persons listed as "selling stockholders" beginning on page 7 of this prospectus are using the prospectus to offer for sale a total of 1,255,261 shares of our Common Stock, par value $0.01 per share. We will not receive any of the proceeds of this offering. Our Common Stock is traded on the Nasdaq SmallCap Market under the symbol "POCI." On August 1, 2000, the last reported sale price of our Common Stock was $11 7/16 per share. AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 2 OF THIS PROSPECTUS. --------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK COVERED BY THIS PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------- The date of this prospectus is __________, 2000 ================================================================================ TABLE OF CONTENTS Page ---- Risk Factors.......................................................... 2 Where You Can Find Additional Information............................. 6 Incorporation of Certain Documents By Reference....................... 7 Use of Proceeds. . . . . . ........................................... 7 Selling Stockholders.................................................. 7 Plan of Distribution..................................................11 Legal Matters.........................................................12 Experts...............................................................12 RISK FACTORS YOU SHOULD CONSIDER CAREFULLY THE INFORMATION CONTAINED IN THIS SECTION OF THE PROSPECTUS IN DECIDING WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK. In this prospectus, and from time to time in public statements made by our management, we have made and will continue to make forward-looking statements about our business, including predictions about our future financial performance. OUR ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS PREDICTED IN THIS PROSPECTUS AND IN FUTURE PUBLIC STATEMENTS. Factors that might cause such a difference include, but are not limited to, the factors discussed below: OUR STOCK FACES SIGNIFICANT PRICE AND VOLUME VOLATILITY--AS A RESULT, YOU COULD ENCOUNTER DIFFICULTY SELLING OUR STOCK AND OUR STOCK PRICE MAY BE UNSTABLE FROM TIME TO TIME. Our common stock has had a public market since November 1990. The price of our common stock has from time to time experienced volitility. During calendar year 1999, for example, the market price of our common stock decreased by 24% in one single trading day and increased by 94% in another single trading day. Over the 52-week period ended July 28, 2000, the market price of our common stock reached a low of $15/16 in October 1999 and a high of $41 3/4 in March 2000. This compares with the last closing sale price of our common stock on August 1, 2000, which was $11 7/16. The reasons for these fluctuations are sometimes unrelated to our own operating performance. For instance, consolidation or other trends within our industry, conditions in the stock market generally, particularly conditions related to our industry, or a competitor's product failure or announcement of a new technology or product may have a significant impact on the market price of our common stock. In addition, our common stock periodically is the subject of limited trading activity and, as a result, investors may have difficulty buying or selling our common stock on any given trading day. During one four day period in calendar year 1997, for example, no trading in our common stock took place on the Nasdaq SmallCap Market. WE ARE CURRENTLY INCURRING NET OPERATING LOSSES--WE CANNOT BE CERTAIN THAT WE WILL ACHIEVE PROFITABILITY IN THE FUTURE. We have incurred net operating losses in each of the last three fiscal years ending June 30, 1999, 1998 and 1997, respectively. These net operating losses totaled approximately $4,072,000 during this three-year period, and we had an accumulated deficit of approximately $3,801,000 at June 30, 1999. We attribute these recent losses largely to our transition away from night vision products and services sold primarily under contracts or subcontracts with the United States Government, and our concentration of research and product development resources on new products, principally filters for -2- Dense Wavelength Division Multiplexers (DWDMs). Our DWDM filter product line is still in development and has not yet resulted in appreciable revenues. Given the uncertainties surrounding the development and marketing of our DWDM filters, it remains to be seen whether we will achieve profitability as a result of our initiatives in the DWDM area. THE SUCCESS OF OUR DWDM INITIATIVE IS NOT GUARANTEED--IF THIS INITIATIVE IS UNSUCCESSFUL, OUR OPERATING RESULTS MAY BE SEVERELY IMPAIRED. We plan to devote the majority of our research and development resources to the development and marketing of new products, particularly filters made of specially treated glass which will be used as components in Dense Wavelength Division Multiplexers (DWDMs). DWDMs are devices which, when inserted in fiber optic cable lines, increase significantly the amount of data that such lines can carry. The Company is in the process of developing DWDM filter prototypes which can reliably meet a set of performance requirements supplied to us by potential customers. While in recent months we have begun to market, produce and distribute DWDM filters which meet certain of our customers' performance requirements, we cannot guarantee that our DWDM initiative as a whole will be successful or that we will succeed in developing and marketing DWDM filters or any other new products. Also, certain domestic and foreign companies have begun marketing products which employ technologies similar to our DWDM filter technology. We cannot predict whether the DWDM filters, which we have developed or will develop in the future, will be perceived in the marketplace as more cost-effective, efficient or reliable than these competing products. Based upon our expectations about market acceptance of our DWDM filters, we expect to continue to increase our research and development expenditures in the DWDM area. Our operating results may be severely impaired if these development efforts are unsuccessful or if sales of our new products are below expectations. OUR QUARTERLY FINANCIAL RESULTS DEPEND ON A LARGE NUMBER OF FACTORS AND THEREFORE MAY VARY QUARTER TO QUARTER--AS A RESULT, WE CANNOT PREDICT WITH A HIGH DEGREE OF CERTAINTY OUR OPERATING RESULTS IN ANY PARTICULAR FISCAL QUARTER. Our quarterly operating results may vary significantly depending upon factors such as: - the timing of completion of significant orders - the timing and amount of our research and development expenditures - the costs of initial product production in connection with new products - the timing of new product introductions -- both by us and by our competitors - the timing and level of market acceptance of new products or enhanced versions of our existing products We cannot be certain whether we will be able to grow or sustain revenues or achieve or maintain profitability on a quarterly or annual basis or that levels of revenue and/or profitability may not vary from one such period to another. WE RELY ON A SMALL NUMBER OF CUSTOMERS AND CANNOT BE CERTAIN THEY WILL CONSISTENTLY PURCHASE OUR PRODUCTS IN THE FUTURE. In the fiscal year ended June 30, 1999, our largest customer represented approximately 37% of our total revenues. In the fiscal year ended June 30, 1998, our three largest customers represented approximately 22%, 14% and 10%, respectively, of our total revenues. In the fiscal year ended June -3- 30, 1997, our two largest customers represented approximately 38% and 23%, respectively, of our total revenues. No other customer accounted for more than 10% of our revenues during those periods. Two of the customers described above (one representing 22% of 1998 revenues and 38% of 1997 revenues and one representing 23% of 1997 revenues) no longer place orders with us. We attribute the loss of their business to two primary factors: declining demand for their own products (of which our products were components) and the availability to those customers of lower cost alternatives to our products sold by foreign manufacturers. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period. We cannot be certain that such customers will consistently purchase our products at any particular rate over any subsequent period. WE RELY HEAVILY UPON THE TALENTS OF OUR CHIEF EXECUTIVE OFFICER AND OUR SENIOR VICE PRESIDENT, OPTICAL THIN FILMS TECHNOLOGY--THE LOSS OF EITHER OF THEM COULD SEVERELY DAMAGE OUR BUSINESS. Our performance depends to a large extent on a small number of key scientific, technical, managerial, and marketing personnel. In particular, we believe our success is highly dependent upon the services and reputation of our Chief Executive Officer, Mr. Richard E. Forkey, and our Senior Vice President, Optical Thin Films Technology, Dr. James D. Rancourt (who has recently assumed primary operating responsibility for our optical thin films initiative). Loss of either Mr. Forkey's or Dr. Rancourt's services and scientific contributions could severely damage our business. WE MUST CONTINUE TO BE ABLE TO ATTRACT EMPLOYEES WITH THE SCIENTIFIC AND TECHNICAL SKILLS THAT OUR BUSINESS REQUIRES--IF WE ARE UNABLE TO ATTRACT AND RETAIN SUCH INDIVIDUALS, OUR BUSINESS COULD BE SEVERELY DAMAGED. Our ability to attract employees with a high degree of scientific and technical talent is crucial to the success of our business. There is intense competition for the services of such persons, and we cannot guarantee that we will be able to attract and retain individuals possessing the necessary qualifications. WE HAVE A NUMBER OF LARGE, WELL-FINANCED COMPETITORS WHO HAVE RESEARCH AND MARKETING CAPABILITIES THAT ARE SUPERIOR TO OURS. The industries in which we compete are highly competitive. Many of our existing and potential competitors have greater financial resources and manufacturing capabilities, more established and larger marketing and sales organizations and larger technical staffs than we have. Other companies, some with greater experience in the telecommunications, optics, semiconductor or medical products industries, are seeking to produce products and services that compete with our products and services. WE ARE SUBJECT TO A HIGH DEGREE OF REGULATORY OVERSIGHT--WE CANNOT BE CERTAIN THAT WE WILL CONTINUE TO RECEIVE THE NECESSARY REGULATORY APPROVALS. The FDA has allowed us to market the medical products we currently sell in the United States. However, prior FDA approval may be required before we can market additional medical products that we may develop in the future. We may also seek to sell current or future medical products in a manner that requires us to obtain FDA permission to market such products. We may also require the regulatory approval or license of other federal, state or local agencies or comparable agencies in other countries. We cannot be certain that we will continue to receive the FDA's permission to market our current products or obtain the necessary regulatory permission, approvals or licenses for the marketing of any of our future products. Also, we cannot predict the impact on our business of FDA regulations or determinations arising from future legislation or administrative action. -4- WE FACE RISKS INHERENT IN PRODUCT DEVELOPMENT AND PRODUCTION UNDER FIXED PRICE CONTRACTS--WE CANNOT BE SURE THAT THESE CONTRACTS WILL BE PROFITABLE OVER TIME. A significant portion of our business has been devoted to research, development and production under fixed price contracts. For our purposes, a fixed price contract is any contract under which we will provide products or services for a fixed price over an extended period of time (usually six months to a year, with some government contracts extending as long as three years). In our 1999, 1998 and 1997 fiscal years, fixed price contracts represented approximately 62%, 55% and 67%, respectively, of our total revenues. We expect that revenues from fixed price contracts will continue to represent a significant portion of our total revenues in future fiscal years. Because they involve performance over time, we cannot predict with certainty the expenses involved in meeting our obligations under fixed price contracts. Therefore, we can never be sure at the time we enter into any single fixed price contract that such contract will be profitable for us. Although fixed price contracts were profitable for us overall in each of 1999, 1998 and 1997, cost overruns have caused, and will likely continue to cause, individual fixed price contracts that we enter into from time to time to be unprofitable. THIRD PARTIES MAY INFRINGE ON OUR PATENTS--AS A RESULT, WE COULD INCUR SIGNIFICANT EXPENSE IN PROTECTING OUR PATENTS OR NOT HAVE SUFFICIENT RESOURCES TO PROTECT THEM. We hold a number of patents that are important to our business. Although we are not currently aware of any past or present infringements of our patents, we plan to protect these patents from infringement and obtain additional patents whenever feasible. To this end, we have obtained confidentiality agreements from our employees and consultants and others who have access to the design of our products and other proprietary information. Protecting and obtaining patents, however, is both time consuming and expensive. We therefore may not have the resources necessary to assert all potential patent infringement claims or pursue all patents that might be available to us. THIRD PARTIES MAY CLAIM THAT WE HAVE INFRINGED ON THEIR PATENTS--AS A RESULT, WE COULD BE PROHIBITED FROM USING ALL OR PART OF ANY TECHNOLOGY USED IN OUR PRODUCTS. The technologies used or to be used in our advanced optical systems may infringe upon patents or proprietary technology held or owned by other persons. Should these persons claim a proprietary right to all or part of any technology that we use in our products, such a claim, regardless of its merit, could involve us in costly litigation. If successful, such a claim could also result in us being unable to freely to use the technology that was the subject of the claim, or sell products embodying such technology. WE DEPEND ON THE AVAILABILITY OF CERTAIN KEY SUPPLIES AND SERVICES THAT ARE AVAILABLE FROM ONLY A FEW SOURCES--IF WE EXPERIENCE DIFFICULTY WITH A SUPPLIER, WE MAY HAVE DIFFICULTY FINDING ALTERNATIVE SOURCES OF SUPPLY. Certain key supplies used in our products, particularly precision grade optical glass, are available from only a few sources, each of which is located outside the United States. Also, outside vendors grind and polish certain of our lenses and other optical components, such as prisms and windows. Based upon our ordering experience to date, we believe the materials and services required for the production of our products are currently available in sufficient quantities. Our requirements are small relative to the total supply, and we are not currently encountering problems with availability. However, this does not mean that we will continue to have timely access to adequate supplies of essential materials and services in the future or that supplies of these materials and services will be available on satisfactory terms when the need arises. Our business could be severely damaged if we become unable to procure essential materials and services in adequate quantities and at acceptable prices. -5- From time to time, certain of our products may be produced for us by subcontractors, and our business is subject to the risk that these subcontractors fail to make timely delivery. Our products and services are also from time to time used as components of the products and services of other manufacturers. We are therefore subject to the risk that manufacturers that integrate our products or services into their own products or services are unable to acquire essential supplies and services from third parties in a timely fashion. SPACE CONSTRAINTS MAY REQUIRE US TO OBTAIN ADDITIONAL FACILITIES, AND ACQUIRING ADDITIONAL SPACE COULD BE EXPENSIVE. We announced on August 1, 2000 that we plan to lease additional space commencing during the quarter ending December 31, 2000. We believe our current facilities together with the new facility will be adequate for our existing operations. However, we may require additional space if we significantly increase production, acquire substantial new equipment, begin to produce materials or supplies that we currently purchase from others or otherwise expand our manufacturing capabilities. Any acquisition of additional facilities could require us to make significant expenditures. OUR CUSTOMERS MAY CLAIM THAT THE PRODUCTS WE SOLD THEM WERE DEFECTIVE--IF OUR INSURANCE IS NOT SUFFICIENT TO COVER A CLAIM, WE WOULD BE LIABLE FOR THE EXCESS. Like any manufacturer, we are and always have been exposed to liability claims resulting from the use of our products. We maintain product liability insurance to cover us in the event of liability claims, and no such claims have been asserted or threatened against us to date. However, we cannot be certain that our insurance will be sufficient to cover all possible future product liabilities. WE WOULD BE LIABLE IF OUR BUSINESS OPERATIONS HARMED THE ENVIRONMENT--FAILURE TO MAINTAIN COMPLIANCE WITH ENVIRONMENTAL LAWS COULD SEVERELY DAMAGE OUR BUSINESS. Our operations are subject to a variety of federal, state and local laws and regulations relating to the protection of the environment. From time to time, we use hazardous materials in our operations. Although we believe that we are in compliance with all applicable environmental laws and regulations, our business could be severely damaged by any failure to maintain such compliance. WHERE YOU CAN FIND ADDITIONAL INFORMATION We are subject to the reporting requirements of the Securities Exchange Act of 1934. This Act requires us to file annual and quarterly reports on our financial and business results, proxy materials and other information with the SEC. Our annual and quarterly reports, proxy statements and other information can be inspected and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition, the Commission maintains a web site (at http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers (including Precision Optics Corporation) that file electronically with the SEC. We have filed with the SEC a registration statement on Form S-3 covering the shares of Common Stock offered with this prospectus. This prospectus does not contain all information contained in the registration statement, certain parts of which are omitted in accordance with the SEC's rules and regulations. Statements made in this prospectus as to the contents of any other document (including exhibits to the registration statement) are not necessarily complete. You should review the document itself for a thorough understanding of its contents. The registration statement (including exhibits to the registration statement) may be inspected and copied at the SEC's Public Reference Room. Also, the registration statement was filed electronically with the SEC and is available on the SEC's web site (at http://www.sec.gov). -6- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our offering is completed. (i) Our annual report on Form 10-KSB for the fiscal year ended June 30, 1999, including portions of our Proxy Statement dated October 14, 1999, relating to our 1999 Annual Meeting of Stockholders (SEC File No. 001-10647). (ii) Our quarterly reports on Form 10-QSB for the fiscal quarters ended September 30, 1999 (as amended on Form 10-QSB/A) December 31, 1999 and March 31, 2000 (SEC File No. 001- 10647). (iii) Our current reports on Form 8-K dated August 16, 1999, March 20, 2000, July 28, 2000 and August 1, 2000, respectively (SEC File No. 001-10647). (iv) The description of our Common Stock contained in our registration statement on Form S-1 (SEC File No. 33-43929). We will provide, upon written or oral request, without charge, to each person, including any beneficial owner, to whom a copy of this prospectus has been delivered, a copy of any or all of the documents which have been or may be incorporated in this prospectus by reference, other than certain exhibits to such documents. Requests for such copies should be directed to: Jack P. Dreimiller, Precision Optics Corporation, Inc., 22 East Broadway, Gardner, Massachusetts 01440, (978) 630-1800. USE OF PROCEEDS We will not receive any of the proceeds of the Common Stock offered by this prospectus. SELLING STOCKHOLDERS The following table sets forth certain information regarding the ownership of our Common Stock by the selling stockholders as of April 4, 2000, including the number of shares of Common Stock offered with this prospectus.
Shares of Common Number of Shares Number of Shares Stock Beneficially of Common Stock of Common Stock Owned After Offering Beneficially Owned Offered with -------------------- Selling Stockholder Prior to Offering(1) this Prospectus(2) Number Percent - ------------------- -------------------- ------------------ ------ ------- Anthony Angelini 15,789(3) 15,789 0 ** Antilles Partners LP 59,210(4) 59,210 0 ** Apodaca Investment Offshore, Ltd. 75,000(5) 75,000 0 ** Apodaca Investment Partners, L.P. 43,421(6) 43,421 0 ** Bald Eagle Fund, Ltd. 21,473(7) 21,473 0 ** Caxton Equity Growth (BVI) Ltd. 4,421(8) 4,421 0 ** Caxton Equity Growth LLC 2,763(9) 2,763 0 ** Caxton International Limited 71,763(10) 71,763 0 ** Cohanzick Partners, L.P. 102,747(11) 78,947 23,800 **
-7-
Shares of Common Number of Shares Number of Shares Stock Beneficially of Common Stock of Common Stock Owned After Offering Beneficially Owned Offered with -------------------- Selling Stockholder Prior to Offering(1) this Prospectus(2) Number Percent - ------------------- -------------------- ------------------ ------ ------- Craig Alan Cowan, Revocable Trust Nov. 22, 1994 7,895(12) 7,895 0 ** C.S.L. Associates L.P. 23,684(13) 23,684 0 ** Endeavor Asset Management, L.P. 54,473(14) 39,473 15,000 ** First Security Van Kasper(15) 75,000(15a) 75,000 0 ** Patti S. & Milledge A. Hart 7,895(16) 7,895 0 ** K.G. Hattich & D.A. Hattich, Trustees 7,895(17) 7,895 0 ** U/D/T dtd 3/12/86 Hoover Equity Partners, L.P. 11,841(18) 11,841 0 ** Jackson Square Partners, L.P 78,947(19) 78,947 0 ** David Kaplan TTEE FOR DAVID KAPLAN LIVING TRUST dtd 9/15/87 7,895(20) 7,895 0 ** Kensington Partners L.P. 91,658(21) 91,658 0 ** Kensington Partners II L.P. 5,289(22) 5,289 0 ** Raj Mehra 789(23) 789 0 ** Mitch A. Metzman 50,184(24) 23,684 26,500 ** Alfred W. Mort and Cindy A. Mort, 7,895(25) 7,895 0 ** as Trustees of the Mort Family Trust dtd 6/18/99 Red Cart Market, Inc. 7,895(26) 7,895 0 ** SAB Capital Partners, L.P 78,947(27) 78,947 0 ** Alan Saloner 7,895(28) 7,895 0 ** Schottenfeld Associates, LP 161,639(29) 102,632 59,007 ** Timken Living Trust U/A/D 9/14/99 39,473(30) 39,473 0 ** Tirman Family Limited Partnership 11,841(31) 11,841 0 ** Westcore Small-Cap Growth Fund 96,947(32) 78,947 18,000 ** Windy Hill Investments POCI, LLC 7,895(33) 7,895 0 ** WPG Institutional Networking Fund, L.P. 2,369(34) 2,369 0 ** WPG Institutional Software Fund, L.P. 35,732(35) 35,732 0 ** WPG Networking Fund, L.P. 19,524(36) 19,524 0 ** WPG Raytheon Networking Fund, L.P. 56,267(37) 56,267 0 ** WPG Raytheon Software Fund, L.P. 27,230(38) 27,230 0 ** WPG Software Fund, L.P. 15,987(39) 15,987 0 **
** The number of shares indicated does not exceed one percent of the number of shares of our Common Stock outstanding. (1) Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to warrants held by that person that are currently exercisable or exercisable within 60 days -8- of the date of this prospectus are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of each other person. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, each selling stockholder named in the table above has sole voting and investment power with respect to the shares set forth opposite his or its name. Percentage beneficial ownership is based on 9,864,708 shares of Common Stock outstanding as of April 4, 2000. (2) All shares offered with this prospectus were issued or are issuable upon exercise of warrants issued, to the selling stockholders in a private placement on March 17, 2000. As part of the private placement transaction, we agreed to file the registration statement which includes this prospectus. (3) Includes 5,263 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (4) Includes 19,737 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (5) Includes 25,000 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (6) Includes 14,474 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (7) Includes 7,158 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (8) Includes 1,474 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (9) Includes 921 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (10) Includes 23,921 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (11) Includes 26,316 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (12) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (13) Includes 7,895 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (14) Includes 13,158 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (15) First Security Van Kasper acted as placement agent for us in connection with the March 17, 2000 private placement referred to in note (2) above. (15a) Includes 72,369 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. Of those shares, 71,053 may be acquired pursuant to warrants issued to First Security Van Kasper in payment of a placement agent fee. (16) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (17) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. -9- (18) Includes 3,947 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (19) Includes 26,316 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (20) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (21) Includes 30,553 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (22) Includes 1,763 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (23) Includes 263 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (24) Includes 7,895 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (25) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (26) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (27) Includes 26,316 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (28) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (29) Includes 34,211 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (30) Includes 13,158 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (31) Includes 3,947 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (32) Includes 26,316 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (33) Includes 2,632 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (34) Includes 790 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (35) Includes 11,911 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (36) Includes 6,508 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (37) Includes 18,756 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. -10- (38) Includes 9,077 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. (39) Includes 5,329 shares which may be acquired within 60 days of the date of this prospectus upon the exercise of outstanding warrants. PLAN OF DISTRIBUTION The selling stockholders have not advised us of any specific plans for the distribution of the shares of Common Stock covered by this prospectus. These shares may be sold from time to time by the selling stockholders or their successors in interest. Such sales may be made in one or more transactions on the Nasdaq SmallCap Market or otherwise, at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions. These sales may take one or more of the following forms: - a "block" trade in which a broker or dealer will attempt to sell the shares as an agent but may position and resell a portion of the block as a principal to facilitate the transaction; - purchases by a broker or dealer as a principal and resale by such broker or dealer for its own account; and - ordinary brokerage transactions and transactions in which the broker solicits purchasers. In effecting sales, brokers or dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers will receive commissions or discounts from selling stockholders (and, if they act as agent for the purchaser, from the purchaser). These commissions may, in certain situations, be negotiated and in excess of customary rates. Any participating brokers or dealers and certain of the selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with such sales. In addition, any shares covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than under this prospectus. If we are notified by a selling stockholder that a material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution, or a purchase by a broker-dealer as a principal, a supplemental prospectus will be filed listing: - the name of each selling stockholder and of the participating broker-dealers(s); - the number of shares involved; - the price at which such shares were sold; - the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; and - other facts material to the transaction. We have agreed to pay the cost of registering the shares covered by this prospectus and the costs of preparing this prospectus and the registration statement under which it is filed. These expenses are estimated to be approximately $27,885. Precision Optics Corporation and the selling stockholders have agreed to indemnify each other against certain liabilities, including liabilities arising under the Securities Act of 1933. -11- LEGAL MATTERS The validity of the shares of Common Stock being offered under the prospectus will be passed upon for Precision Optics Corporation, Inc. by Ropes & Gray, Boston, Massachusetts. EXPERTS The financial statements incorporated in this prospectus by reference to our Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 have been audited by Arthur Andersen LLP, independent auditors, as stated in their report. -12- ================================================================================ NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PRECISION OPTICS CORPORATION, THE SELLING STOCKHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY ANY SHARES OF OUR COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ================================================================================ ================================================================================ 1,255,261 Shares of Common Stock PRECISION OPTICS CORPORATION, INC. _____________, 2000 ================================================================================ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemization of the expenses incurred or expected to be incurred by Precision Optics Corporation, Inc. (the "Company") in connection with the offering described in this registration statement. No portion of such expenses are expected to be borne by selling stockholders. (Items marked with an asterisk (*) represent estimated expenses): Registration Fee................................. $ 2,885.00 Printing Cost*................................... $ 2,000.00 Legal Fees*...................................... $ 20,000.00 Accounting Fees*................................. $ 2,000.00 Miscellaneous*................................... $ 1,000.00 TOTAL*...................................... $ 27,885.00 =========== ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS The Company is organized under the laws of The Commonwealth of Massachusetts. The Massachusetts Business Corporation Law provides that indemnification of directors, officers, employees and other agents of a corporation, and persons who serve at its request as directors, officers, employees or other agents of another organization, or who serve at its request in any capacity with respect to any employee benefit plan, may be provided by the corporation to whatever extent specified in or authorized by its articles of organization, a by-law adopted by the stockholders or a vote adopted by the holders of a majority of the shares of stock entitled to vote on the election of directors, except that no indemnification may be provided for any person with respect to any matter as to which the person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation. Under Massachusetts law, a corporation can purchase and maintain insurance on behalf of any person against liability incurred as a director, officer, employee, agent or person serving at the request of the corporation as a director, officer, employee or other agent of another organization or with respect to any employee benefit plan, in his capacity as such, whether or not the corporation would have the power to itself indemnify him against such liability. The Company's articles of organization provide that its directors shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liabilities is not permitted under the Massachusetts Business Corporation Law as in effect at the time such liability is determined. The by-laws of the Company provide generally that the Company shall, to the extent legally permissible, indemnify its directors and officers against all liabilities and expenses incurred by them in connection with the defense or disposition of any action, suit or other proceeding in which he may be involved, or by which he may be threatened, by reason of his being or having been a director or officer, except with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the Company. In addition, the Company holds a directors and officers liability policy. II-1 ITEM 16. EXHIBITS The following exhibits are filed herewith:
Exhibit No. Title - ------- ----- 2.1 Securities Purchase Agreement dated as of March 13, 2000 by and among the Company and the Purchasers as defined therein (excluding exhibits). (0) 2.2 Stock Subscription Agreement dated as of August 5, 1999 by and among the Company, Special Situations Cayman Funds, L.P., Special Situations Fund III, L.P., Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (1) 2.3 Stock Subscription Agreement dated as of June 30, 1998 by and among the Company, Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (2) 4.1 Articles of Organization of the Company (3) 4.2 By-laws of the Company (4) 4.3 Specimen Common Stock Certificate (5) 4.4 Registration Rights Agreement dated as of March 17, 2000 by and among the Company and the Initial Investors as defined therein. (0) 4.5 Form of Stock Purchase Warrant dated March 17, 2000 issued to each selling stockholder. (0) 4.6.1 Warrant No. 1 dated March 17, 2000 issued to First Security Van Kasper. 4.6.2 Warrant No. 2 dated March 17, 2000 issued to First Security Van Kasper. 4.7 Registration Rights Agreement dated as of August 5, 1999 by and among the Company, Special Situations Cayman Funds, L.P., Special Situations Fund III, L.P., Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (1) 4.8 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Cayman Fund, L.P. (1) 4.9 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Fund III, L.P. (1) 4.10 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Private Equity Fund, L.P. (1) 4.11 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Technology Fund, L.P. (1) 4.12 Registration Rights Agreement dated as of June 30, 1998 by and among the Company, Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (2) II-2 5.1 Opinion of Ropes & Gray 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Ropes & Gray (contained in the opinion filed as Exhibit 5.1 to this Registration Statement) 24.1 Power of Attorney (included in part II of this Registration Statement under the caption "Signatures") (0)
(0) Previously filed with the SEC on April 28, 2000. (1) Incorporated herein by reference to the Company's 1999 Annual Report on Form 10- KSB (No. 001-10647). (2) Incorporated herein by reference to the Company's 1998 Annual Report on Form 10- KSB (No. 001-10647). (3) Incorporated herein by reference to the Company's Registration Statement on Form S-8 POS (No. 333-89989). (4) Incorporated herein by reference to the Company's 1991 Annual Report on Form 10- KSB (No. 001-10647). (5) Incorporated herein by reference to the Company's Registration Statement on Form S- 18 (No. 33-36710-B). ITEM 17. UNDERTAKINGS (a) The Company hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) to include any prospectus required by section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus included within this registration statement any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in this registration statement. II-3 (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof; (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and (4) that, insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. [Remainder of this page intentionally left blank] II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Gardner, Massachusetts, on the 8th day of August, 2000. PRECISION OPTICS CORPORATION, INC. /s/ Richard E. Forkey ____________________________________ By: Richard E. Forkey Chairman, Chief Executive Officer and President Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated.
Signature Capacity Date - --------- -------- ---- /s/ Richard E. Forkey __________________________________ Chairman of the August 8, 2000 Richard E. Forkey Board of Directors, Chief Executive Officer and President (principal executive officer) /s/ Jack P. Dreimiller __________________________________ Senior Vice President, August 8, 2000 Jack P. Dreimiller Finance, Chief Financial Officer and Clerk (principal financial and accounting officer) * __________________________________ Director August 8, 2000 Edward A. Benjamin * __________________________________ Director August 8, 2000 H. Angus Macleod * __________________________________ Director August 8, 2000 Austin W. Marxe * __________________________________ Director August 8, 2000 Joel R. Pitlor * __________________________________ Director August 8, 2000 Robert R. Shannon *By: /s/ Jack P. Dreimiller _____________________________ Jack P. Dreimiller Attorney-in-Fact
EXHIBIT INDEX
Exhibit No. Title - ------- ----- 2.1 Securities Purchase Agreement dated as of March 13, 2000 by and among the Company and the Purchasers as defined therein (excluding exhibits). (0) 2.2 Stock Subscription Agreement dated as of August 5, 1999 by and among the Company, Special Situations Cayman Funds, L.P., Special Situations Fund III, L.P., Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (1) 2.3 Stock Subscription Agreement dated as of June 30, 1998 by and among the Company, Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (2) 4.1 Articles of Organization of the Company (3) 4.2 By-laws of the Company (4) 4.3 Specimen Common Stock Certificate (5) 4.4 Registration Rights Agreement dated as of March 17, 2000 by and among the Company and the Initial Investors as defined therein. (0) 4.5 Form of Stock Purchase Warrant dated March 17, 2000 issued to each selling stockholder. (0) 4.6.1 Warrant No. 1 dated March 17, 2000 issued to First Security Van Kasper. 4.6.2 Warrant No. 2 dated March 17, 2000 issued to First Security Van Kasper. 4.7 Registration Rights Agreement dated as of August 5, 1999 by and among the Company, Special Situations Cayman Funds, L.P., Special Situations Fund III, L.P., Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (1) 4.8 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Cayman Fund, L.P. (1) 4.9 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Fund III, L.P. (1) 4.10 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Private Equity Fund, L.P. (1) 4.11 Common Stock Purchase Warrant dated August 5, 1999 issued to Special Situations Technology Fund, L.P. (1) 4.12 Registration Rights Agreement dated as of June 30, 1998 by and among the Company, Special Situations Private Equity Fund, L.P. and Special Situations Technology Fund, L.P. (2) 5.1 Opinion of Ropes & Gray 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Ropes & Gray (contained in the opinion filed as Exhibit 5.1 to this Registration Statement) 24.1 Power of Attorney (included in part II of this Registration Statement under the caption "Signatures") (0)
(0) Previously filed with the SEC on April 28, 2000. (1) Incorporated herein by reference to the Company's 1999 Annual Report on Form 10-KSB (No. 001-10647). (2) Incorporated herein by reference to the Company's 1998 Annual Report on Form 10-KSB (No. 001-10647). (3) Incorporated herein by reference to the Company's Registration Statement on Form S-8 POS (No. 333-89989). (4) Incorporated herein by reference to the Company's 1991 Annual Report on Form 10-KSB (No. 001-10647). (5) Incorporated herein by reference to the Company's Registration Statement on Form S-18 (No. 33- 36710-B). EX-4.6-1 2 ex-4_61.txt EXHIBIT 4.6.1 Exhibit 4.6.1 THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. March 17, 2000 WARRANT TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF PRECISION OPTICS CORPORATION, INC. VOID AFTER 5:00 P.M., NEW YORK TIME, ON MARCH 17, 2005, OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE IMMEDIATELY PRECEDING BUSINESS DAY No. 1 THIS CERTIFIES that, for good and valuable consideration, FIRST SECURITY VAN KASPER ("FSVK"), or registered assigns (the "Warrantholder"), is entitled to subscribe for and purchase from Precision Optics Corporation Inc., a Massachusetts corporation (the "Company"), at a price of $19.00 per share (such price, as from time to time to be adjusted as hereinafter provided, being hereinafter called the "Warrant Price"), at any time and from time to time prior to the Expiration Date (as defined below), up to 47,368 fully paid, nonassessable shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"), subject, however, to the provisions and upon the terms and conditions hereinafter set forth, including without limitation the provisions of Section 2 hereof. "Expiration Date" shall mean 5:00 P.M., New York time, on March 17, 2005, which is five years from the date hereof, or if not a Business Day, as defined herein, at 5:00 P.M., New York time, on the immediately preceding business day. "Business Day" shall mean a day other than a Saturday, Sunday or other day on which banks in the State of California are authorized by law to remain closed. SECTION 1. EXERCISE OF WARRANT (a) CASH EXERCISE This Warrant may be exercised, at any time and from time to time prior to the Expiration Date, by the Warrantholder, in whole or in part (but not as to a fractional share of Common Stock and in no event for less than 500 shares (unless less than an aggregate of 500 shares are then purchasable under all outstanding Warrants held by a Warrantholder)), by the completion of the subscription form attached hereto and by the surrender of this Warrant (properly endorsed) at the Company's offices at 22 East Broadway, Gardner, Massachusetts (or at such other location in the United States as the Company may designate by notice in writing to the Warrantholder at the address of the Warrantholder appearing on the books of the Company), and by payment to the Company of the Warrant Price, in cash or by certified or official bank check, for each share being purchased. (b) NET EXERCISE Notwithstanding anything to the contrary contained in Section 1(a), the Warrantholder may elect to exercise this Warrant and receive shares on a "net exercise" basis in an amount equal to the value of this Warrant by delivery of the subscription form attached hereto and surrender of this Warrant at the principal office of the Company, in which event the Company shall issue to Holder a number of shares computed using the following formula: X = (P)(Y)(A-B) ----------- A Where: X = the number of shares of Common Stock to be issued to Holder. P = the portion of the Warrant being exercised. Y = the number of shares of Common Stock issuable upon exercise of this Warrant. A = the Current Market Price (as determined pursuant to Section 1(d)) of one share of Common Stock. B = Warrant Price. (c) PROCEDURE FOR EXERCISE In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the total number of whole shares of Common Stock so purchased, registered in the name of the Warrantholder, shall be delivered to the Warrantholder within a reasonable time, not exceeding five Business Days, after the rights represented by this Warrant shall have been so exercised; and, unless this Warrant has expired, a new Warrant representing the number of shares (except a remaining fractional share), if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Warrantholder within such time. With respect to any such exercise, the Warrantholder shall for all purposes be deemed to have become the holder of record of the number of shares of Common Stock evidenced by such certificate or certificates from the date on which this Warrant was surrendered and if exercise is pursuant to Section 1(a), payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date on which the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. No fractional shares shall be issued upon exercise of this Warrant and no payment or adjustment shall be made upon any exercise on account of any cash dividends on the Common Stock issued upon such exercise. If any fractional interest in a share of Common Stock would, except for the provisions of this Section 1, be delivered upon any such exercise, the Company, in lieu of delivering the fractional share thereof, shall pay to the Warrantholder an amount in cash equal to the Current Market Price of such fractional interest, as determined below. (d) CURRENT MARKET PRICE For any computation hereunder, the "Current Market Price" per share of Common Stock on any date shall be deemed to be the average of the daily Market Price per share for the 10 consecutive Trading Days prior to the date in question. "Market Price" is defined as the closing bid prices of such security on the principal United States securities exchange or trading market on which such security is listed or traded as reported by the Research Service of Nasdaq Trading and Market Services (or a comparable reporting service of national reputation), or if the foregoing does not apply, the last reported sale price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Nasdaq, or, if no sale price is reported for such security by Nasdaq, the average of the bid and asked prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If Market Price cannot be established as described above, Market Price shall be the fair market value of the Common Stock as determined in good faith by the Board of Directors. The term "Trading Day" shall mean a day on which Nasdaq or the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business. SECTION 2. ADJUSTMENTS Prior to the Expiration Date, the Warrant Price and the number of shares issuable upon the exercise of this Warrant, shall be subject to adjustment from time to time as provided in this Section 2. In the event that any 2 adjustment of the Warrant Price as required herein results in a fraction of a cent, such Warrant Price shall be rounded up or down to the nearest cent; provided that, in no event shall the Warrant Price per share be reduced below $.01. (a) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at any time prior to the Expiration Date, subdivides (by any stock split, stock dividend, reclassification or otherwise) its shares of Common Stock into a greater number of shares, then, after the date of record for effecting such subdivision, the Warrant Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company, at any time prior to the Expiration Date, combines (by reverse stock split, reclassification or otherwise) its shares of Common Stock into a smaller number of shares, then, after the date of record for effecting such combination, the Warrant Price in effect immediately prior to such combination will be proportionately increased. (b) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Warrant Price pursuant to the provisions of this Section 2, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased or decreased to equal the quotient obtained by dividing (i) the product of (A) the Warrant Price in effect immediately prior to such adjustment, multiplied by (B) the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment, by (ii) the adjusted Warrant Price. (c) CONSOLIDATION, MERGER OR SALE. In case of any capital reorganization or any reclassification of the shares of Common Stock of the Company, or in the case of any consolidation with or merger of the Company into or with another corporation or the sale of all or substantially all of its assets to another corporation effected in such a manner that the holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as part of such reorganization, reclassification, consolidation, merger or sale, as the case may be, lawful provision shall be made so that the holder of the Warrant shall have the right thereafter to receive, upon the exercise hereof, the kind and amount of shares of stock or other securities or property which the holder would have been entitled to receive if, immediately before such reorganization, reclassification, consolidation or merger, the holder had held the number of shares of Common Stock which were then purchasable upon the exercise of the Warrant had the Warrant been exercised. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the holder of the Warrant, to the end that the provisions set forth herein (including provisions with respect to adjustments of the exercise price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant. (d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which requires any adjustment of the Warrant Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease in the number of shares issuable upon exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the Chief Financial Officer of the Company. (e) MINIMUM ADJUSTMENT OF THE EXERCISE PRICE. No adjustment of the Warrant Price shall be made in an amount of less than .1% of the Warrant Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than .1% of such Warrant Price. (f) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same fraction of the Warrant Price of a share of Common Stock on the date of such exercise. (g) OTHER NOTICES. In case at any time: (i) the Company shall declare any dividend upon the Common Stock payable in shares of 3 stock of any class or make any other distribution (other than dividends or distributions payable in cash out of retained earnings consistent with the Company's past practices with respect to declaring dividends and making distributions) to the holders of the Common Stock; (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all of its assets to, another corporation or entity; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; (v) then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date or estimated date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least fifteen (15) days prior to the record date or the date on which the Company's books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing, the Company may publicly disclose the substance of any notice delivered hereunder prior to delivery of such notice to the holder of this Warrant. (h) NO ADJUSTMENT FOR DIVIDENDS Except as provided in Section 2(a) of this Agreement, no adjustment in respect of any cash dividends shall be made during the term of this Warrant or upon the exercise of this Warrant. (i) FORM OF WARRANT AFTER ADJUSTMENTS The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number or kind of the shares purchasable pursuant to this Warrant, and Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant, as initially issued; PROVIDED, HOWEVER, that the Company may, at any time in its sole discretion (which shall be conclusive), make any change in the form of Warrant certificate that it may deem appropriate and that does not affect the substance thereof. Any Warrant certificate thereafter issued, whether upon registration of transfer of, or in exchange or substitution for, an outstanding Warrant certificate may be in the form so changed. (j) TREATMENT OF WARRANTHOLDER Prior to due presentment for registration of transfer of this Warrant, the Company may deem and treat the Warrantholder as the absolute owner of this Warrant (notwithstanding any notation of ownership or other writing hereon) for all purposes and shall not be affected by any notice to the contrary. (k) STOCK TO BE RESERVED The Company will at all times reserve and keep available out of its authorized Common Stock, solely for 4 the purpose of issuance upon the exercise of this Warrant as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. The Company covenants that all shares of Common Stock which shall be so issued, upon full payment of the Warrant Price therefore or as otherwise set forth herein, shall be duly and validly issued and fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof, and, without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such action as may be required to ensure that the par value per share, if any, of the Common Stock is at all times equal to or less than the effective Warrant Price. The Company will take all such action as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or regulation, or of any requirement of any national securities exchange or automated quotation system upon which the Common Stock of the Company may be listed. The Company will not take any action that results in any adjustment under this Section 2, if the total number of shares of Common Stock issued and issuable after such action upon exercise of this Warrant would exceed the total number of shares of Common Stock then authorized by the Company's Certificate of Incorporation. The Company has not granted and will not grant any right of first refusal with respect to shares issuable upon exercise of this Warrant, and there are no preemptive rights associated with such shares. (l) ISSUE TAX The issuance of certificates for shares of Common Stock upon exercise of any Warrant shall be made without a charge to the Warrantholder for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Warrantholder. (m) CLOSING OF BOOKS The Company will at no time close its transfer books against the transfer of the shares of Common Stock issued or issuable upon the exercise of this Warrant in any manner that interferes with the timely exercise of this Warrant. (n) DEFINITION OF COMMON STOCK As used herein the term "Common Stock" shall mean and include the Common Stock, par value $0.01, of the Company as authorized on the date hereof, or shares of any class or classes resulting from any recapitalization or reclassification thereof which are not limited to any fixed sum or percentage and are not subject to redemption by the Company and in case at any time there shall be more than one such resulting class, the shares of each class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassification bears to the total number of shares of all such classes resulting from all such reclassification. SECTION 3. REGISTRATION RIGHTS FSVK (and certain assignees thereof) are entitled to the benefit of such registration rights in respect of the shares issuable upon exercise of this Warrant as are set forth in that certain Registration Rights Agreement dated as of March 17, 2000 among the Company, FSVK and the holders of the Company's Common Stock named therein (as such agreement may be amended in accordance with its terms). SECTION 4. NO STOCKHOLDERS RIGHTS OR LIABILITIES This Warrant shall not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Warrantholder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Warrantholder shall give rise to any liability of such Warrantholder for the Warrant Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. SECTION 5. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT 5 In case the certificate or certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the Warrantholder, issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of such Warrant and an agreement of indemnity, if requested. SECTION 6. NOTICES All notices, requests and other communications required or permitted to be given or delivered hereunder shall be in writing, and shall be delivered, or shall be sent by certified or registered mail or overnight courier, postage prepaid, or by facsimile, and if to the Warrantholder , at First Security Van Kasper, 600 California Street, Suite 1700, San Francisco, CA 94108, Attention: Ronald F. Richards, facsimile number (415) 675-2458, or to such address or facsimile number as shall have been furnished to the Company by notice from such Warrantholder and if to the Company, at 22 East Broadway, Gardner, MA 01440; Attention: Chief Financial Officer, facsimile number (978) 630-1487, or at such other address or facsimile number as shall have been furnished to the Warrantholder by notice from the Company, with a copy to Ropes & Gray, One International Place, Boston, MA 02110, Attention: Patrick O'Brien, facsimile number (617) 951-7050. SECTION 7. RESTRICTIONS ON TRANSFER (a) If, at the time of the surrender of this Warrant in connection with any exercise, transfer, or exchange of this Warrant, this Warrant (or, in the case of any exercise, the shares issuable hereunder), shall not be registered under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such exercise, transfer, or exchange, (i) that the holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such exercise, transfer, or exchange may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and sub-stance reasonably acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act. (b) Notwithstanding anything in the Warrant to the contrary, this Warrant shall not be exercisable to the extent (but only to the extent) that (a) the number of shares of Common Stock beneficially owned by the holder of this Warrant and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of this Warrant or the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein) and (b) the number of shares of Common Stock issuable upon exercise of this Warrant (or portion thereof) with respect to which the determination described herein is being made, would result in beneficial ownership by such holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. To the extent the above limitation applies, the determination of whether and to what extent this Warrant shall be exercisable with respect to other securities owned by such holder shall be in the sole discretion of the holder and submission of this Warrant for full or partial exercise shall be deemed to be the holder's determination of whether and the extent to which this Warrant is exercisable, in each case subject to such aggregate percentage limitation. No prior inability to exercise this Warrant pursuant to this Section shall have any effect on the applicability of the provisions of this Section with respect to any subsequent determination of exercisability. For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided in clause (a) hereof. The restrictions contained in this Section 8(g) may not be amended without the written consent of the Company and the holder of this Warrant. 6 SECTION 8. AMENDMENTS AND WAIVERS This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. SECTION 9. SEVERABILITY If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provisions shall be excluded from this Warrant, and the balance of this Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. SECTION 10. GOVERNING LAW THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. SECTION 12. HEADINGS The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. SECTION 13. COUNTERPARTS This Warrant may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. [Remainder of page intentionally left blank.] 7 IN WITNESS WHEREOF, the Company and FSVK have executed this Warrant on and as of the day and year first above written. PRECISION OPTICS CORPORATION, INC., A MASSACHUSETTS CORPORATION By: /s/ JACK P. DREIMILLER ------------------------------------- Jack P. Dreimiller, Senior Vice President, Finance Attest: /s/ RICHARD E. FORKEY - ------------------------------ Richard E. Forkey, President FIRST SECURITY VAN KASPER By: /s/ RONALD F. RICHARDS ------------------------------------- Ronald F. Richards, Managing Director 8 SUBSCRIPTION FORM (To be executed upon exercise of this Warrant) _______________________: The undersigned hereby irrevocably elects to exercise the right of purchaser represented by the within Warrant for, and to purchase thereunder, ______________ shares of Common Stock, as provided for therein, and either tenders herewith payment of the purchase price in full in the form of cash or a certified or official bank check in the amount of $_____________ or, if the undersigned elects pursuant to Section 1(b) of the within Warrant to convert such Warrant into Common Stock a net issuance basis, the undersigned exercises the within Warrant by exchange under the terms of Section 1(b). Please issue a certificate or certificates for such Common Stock in the name of, and pay any cash for any fractional share to: Name:______________________________ Address:___________________________ Social Security No:_______________________ If said number of shares shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher number of shares. Name_______________________________ Signature__________________________ Note: The above signature must correspond exactly with the name on the first page of this Warrant or with the name of the assignee appearing in the assignment form below. 9 ASSIGNMENT (To be executed only upon assignment of Warrant) For value received, _______________________________ hereby sells, assigns and transfers unto _______________________ the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ attorney, to transfer said Warrant on the books of the within-named Company with respect to the number of Warrants set forth below, with full power of substitution in the premises: Name(s) of Assignee(s)/Address No. of Warrants ------------------- --------------- And if said number of Warrants shall not be all the Warrants represented by the Warrant, a new Warrant is to be issued in the name of said undersigned for the balance remaining of the Warrants registered by said Warrant. Name_________________________ Dated: __________________ Signature____________________ Note: The above signature must correspond exactly with the name on the face of this Warrant 10 EX-4.6-2 3 ex-4_62.txt EXHIBIT 4.6.2 Exhibit 4.6.2 THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. March 17, 2000 WARRANT TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF PRECISION OPTICS CORPORATION, INC. VOID AFTER 5:00 P.M., NEW YORK TIME, ON MARCH 17, 2005, OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE IMMEDIATELY PRECEDING BUSINESS DAY No. 2 THIS CERTIFIES that, for good and valuable consideration, FIRST SECURITY VAN KASPER ("FSVK"), or registered assigns (the "Warrantholder"), is entitled to subscribe for and purchase from Precision Optics Corporation Inc., a Massachusetts corporation (the "Company"), at a price of $27.60 per share (such price, as from time to time to be adjusted as hereinafter provided, being hereinafter called the "Warrant Price"), at any time and from time to time prior to the Expiration Date (as defined below), up to 23,685 fully paid, nonassessable shares of Common Stock, par value $0.01 per share, of the Company ("Common Stock"), subject, however, to the provisions and upon the terms and conditions hereinafter set forth, including without limitation the provisions of Section 2 hereof. "Expiration Date" shall mean 5:00 P.M., New York time, on March 17, 2005, which is five years from the date hereof, or if not a Business Day, as defined herein, at 5:00 P.M., New York time, on the immediately preceding business day. "Business Day" shall mean a day other than a Saturday, Sunday or other day on which banks in the State of California are authorized by law to remain closed. SECTION 1. EXERCISE OF WARRANT (a) CASH EXERCISE This Warrant may be exercised, at any time and from time to time prior to the Expiration Date, by the Warrantholder, in whole or in part (but not as to a fractional share of Common Stock and in no event for less than 500 shares (unless less than an aggregate of 500 shares are then purchasable under all outstanding Warrants held by a Warrantholder)), by the completion of the subscription form attached hereto and by the surrender of this Warrant (properly endorsed) at the Company's offices at 22 East Broadway, Gardner, Massachusetts (or at such other location in the United States as the Company may designate by notice in writing to the Warrantholder at the address of the Warrantholder appearing on the books of the Company), and by payment to the Company of the Warrant Price, in cash or by certified or official bank check, for each share being purchased. (b) NET EXERCISE Notwithstanding anything to the contrary contained in Section 1(a), the Warrantholder may elect to exercise this Warrant and receive shares on a "net exercise" basis in an amount equal to the value of this Warrant by delivery of the subscription form attached hereto and surrender of this Warrant at the principal office of the Company, in which event the Company shall issue to Holder a number of shares computed using the following formula: X = (P)(Y)(A-B) ----------- A Where: X = the number of shares of Common Stock to be issued to Holder. P = the portion of the Warrant being exercised. Y = the number of shares of Common Stock issuable upon exercise of this Warrant. A = the Current Market Price (as determined pursuant to Section 1(d)) of one share of Common Stock. B = Warrant Price. (c) PROCEDURE FOR EXERCISE In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the total number of whole shares of Common Stock so purchased, registered in the name of the Warrantholder, shall be delivered to the Warrantholder within a reasonable time, not exceeding five Business Days, after the rights represented by this Warrant shall have been so exercised; and, unless this Warrant has expired, a new Warrant representing the number of shares (except a remaining fractional share), if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Warrantholder within such time. With respect to any such exercise, the Warrantholder shall for all purposes be deemed to have become the holder of record of the number of shares of Common Stock evidenced by such certificate or certificates from the date on which this Warrant was surrendered and if exercise is pursuant to Section 1(a), payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date on which the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open. No fractional shares shall be issued upon exercise of this Warrant and no payment or adjustment shall be made upon any exercise on account of any cash dividends on the Common Stock issued upon such exercise. If any fractional interest in a share of Common Stock would, except for the provisions of this Section 1, be delivered upon any such exercise, the Company, in lieu of delivering the fractional share thereof, shall pay to the Warrantholder an amount in cash equal to the Current Market Price of such fractional interest, as determined below. (d) CURRENT MARKET PRICE For any computation hereunder, the "Current Market Price" per share of Common Stock on any date shall be deemed to be the average of the daily Market Price per share for the 10 consecutive Trading Days prior to the date in question. "Market Price" is defined as the closing bid prices of such security on the principal United States securities exchange or trading market on which such security is listed or traded as reported by the Research Service of Nasdaq Trading and Market Services (or a comparable reporting service of national reputation), or if the foregoing does not apply, the last reported sale price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Nasdaq, or, if no sale price is reported for such security by Nasdaq, the average of the bid and asked prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If Market Price cannot be established as described above, Market Price shall be the fair market value of the Common Stock as determined in good faith by the Board of Directors. The term "Trading Day" shall mean a day on which Nasdaq or the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business. SECTION 2. ADJUSTMENTS Prior to the Expiration Date, the Warrant Price and the number of shares issuable upon the exercise of this 2 Warrant, shall be subject to adjustment from time to time as provided in this Section 2. In the event that any adjustment of the Warrant Price as required herein results in a fraction of a cent, such Warrant Price shall be rounded up or down to the nearest cent; provided that, in no event shall the Warrant Price per share be reduced below $.01. (a) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at any time prior to the Expiration Date, subdivides (by any stock split, stock dividend, reclassification or otherwise) its shares of Common Stock into a greater number of shares, then, after the date of record for effecting such subdivision, the Warrant Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company, at any time prior to the Expiration Date, combines (by reverse stock split, reclassification or otherwise) its shares of Common Stock into a smaller number of shares, then, after the date of record for effecting such combination, the Warrant Price in effect immediately prior to such combination will be proportionately increased. (b) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the Warrant Price pursuant to the provisions of this Section 2, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased or decreased to equal the quotient obtained by dividing (i) the product of (A) the Warrant Price in effect immediately prior to such adjustment, multiplied by (B) the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment, by (ii) the adjusted Warrant Price. (c) CONSOLIDATION, MERGER OR SALE. In case of any capital reorganization or any reclassification of the shares of Common Stock of the Company, or in the case of any consolidation with or merger of the Company into or with another corporation or the sale of all or substantially all of its assets to another corporation effected in such a manner that the holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as part of such reorganization, reclassification, consolidation, merger or sale, as the case may be, lawful provision shall be made so that the holder of the Warrant shall have the right thereafter to receive, upon the exercise hereof, the kind and amount of shares of stock or other securities or property which the holder would have been entitled to receive if, immediately before such reorganization, reclassification, consolidation or merger, the holder had held the number of shares of Common Stock which were then purchasable upon the exercise of the Warrant had the Warrant been exercised. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the holder of the Warrant, to the end that the provisions set forth herein (including provisions with respect to adjustments of the exercise price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant. (d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which requires any adjustment of the Warrant Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease in the number of shares issuable upon exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the Chief Financial Officer of the Company. (e) MINIMUM ADJUSTMENT OF THE EXERCISE PRICE. No adjustment of the Warrant Price shall be made in an amount of less than .1% of the Warrant Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than .1% of such Warrant Price. (f) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any fractional share which would otherwise be issuable in an amount equal to the same fraction of the Warrant Price of a share of Common Stock on the date of such exercise. (g) OTHER NOTICES. In case at any time: 3 (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution (other than dividends or distributions payable in cash out of retained earnings consistent with the Company's past practices with respect to declaring dividends and making distributions) to the holders of the Common Stock; (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all of its assets to, another corporation or entity; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Company; (v) then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date or estimated date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least fifteen (15) days prior to the record date or the date on which the Company's books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing, the Company may publicly disclose the substance of any notice delivered hereunder prior to delivery of such notice to the holder of this Warrant. (h) NO ADJUSTMENT FOR DIVIDENDS Except as provided in Section 2(a) of this Agreement, no adjustment in respect of any cash dividends shall be made during the term of this Warrant or upon the exercise of this Warrant. (i) FORM OF WARRANT AFTER ADJUSTMENTS The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number or kind of the shares purchasable pursuant to this Warrant, and Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant, as initially issued; PROVIDED, HOWEVER, that the Company may, at any time in its sole discretion (which shall be conclusive), make any change in the form of Warrant certificate that it may deem appropriate and that does not affect the substance thereof. Any Warrant certificate thereafter issued, whether upon registration of transfer of, or in exchange or substitution for, an outstanding Warrant certificate may be in the form so changed. (j) TREATMENT OF WARRANTHOLDER Prior to due presentment for registration of transfer of this Warrant, the Company may deem and treat the Warrantholder as the absolute owner of this Warrant (notwithstanding any notation of ownership or other writing hereon) for all purposes and shall not be affected by any notice to the contrary. 4 (k) STOCK TO BE RESERVED The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the exercise of this Warrant as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. The Company covenants that all shares of Common Stock which shall be so issued, upon full payment of the Warrant Price therefore or as otherwise set forth herein, shall be duly and validly issued and fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof, and, without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such action as may be required to ensure that the par value per share, if any, of the Common Stock is at all times equal to or less than the effective Warrant Price. The Company will take all such action as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable law or regulation, or of any requirement of any national securities exchange or automated quotation system upon which the Common Stock of the Company may be listed. The Company will not take any action that results in any adjustment under this Section 2, if the total number of shares of Common Stock issued and issuable after such action upon exercise of this Warrant would exceed the total number of shares of Common Stock then authorized by the Company's Certificate of Incorporation. The Company has not granted and will not grant any right of first refusal with respect to shares issuable upon exercise of this Warrant, and there are no preemptive rights associated with such shares. (l) ISSUE TAX The issuance of certificates for shares of Common Stock upon exercise of any Warrant shall be made without a charge to the Warrantholder for any issuance tax in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Warrantholder. (m) CLOSING OF BOOKS The Company will at no time close its transfer books against the transfer of the shares of Common Stock issued or issuable upon the exercise of this Warrant in any manner that interferes with the timely exercise of this Warrant. (n) DEFINITION OF COMMON STOCK As used herein the term "Common Stock" shall mean and include the Common Stock, par value $0.01, of the Company as authorized on the date hereof, or shares of any class or classes resulting from any recapitalization or reclassification thereof which are not limited to any fixed sum or percentage and are not subject to redemption by the Company and in case at any time there shall be more than one such resulting class, the shares of each class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassification bears to the total number of shares of all such classes resulting from all such reclassification. SECTION 3. REGISTRATION RIGHTS FSVK (and certain assignees thereof) are entitled to the benefit of such registration rights in respect of the shares issuable upon exercise of this Warrant as are set forth in that certain Registration Rights Agreement dated as of March 17, 2000 among the Company, FSVK and the holders of the Company's Common Stock named therein (as such agreement may be amended in accordance with its terms). SECTION 4. NO STOCKHOLDERS RIGHTS OR LIABILITIES This Warrant shall not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Warrantholder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Warrantholder shall give rise to 5 any liability of such Warrantholder for the Warrant Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. SECTION 5. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT In case the certificate or certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the Warrantholder, issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of such Warrant and an agreement of indemnity, if requested. SECTION 6. NOTICES All notices, requests and other communications required or permitted to be given or delivered hereunder shall be in writing, and shall be delivered, or shall be sent by certified or registered mail or overnight courier, postage prepaid, or by facsimile, and if to the Warrantholder , at First Security Van Kasper, 600 California Street, Suite 1700, San Francisco, CA 94108, Attention: Ronald F. Richards, facsimile number (415) 675-2458, or to such address or facsimile number as shall have been furnished to the Company by notice from such Warrantholder and if to the Company, at 22 East Broadway, Gardner, MA 01440; Attention: Chief Financial Officer, facsimile number (978) 630-1487, or at such other address or facsimile number as shall have been furnished to the Warrantholder by notice from the Company, with a copy to Ropes & Gray, One International Place, Boston, MA 02110, Attention: Patrick O'Brien, facsimile number (617) 951-7050. SECTION 7. RESTRICTIONS ON TRANSFER (a) If, at the time of the surrender of this Warrant in connection with any exercise, transfer, or exchange of this Warrant, this Warrant (or, in the case of any exercise, the shares issuable hereunder), shall not be registered under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such exercise, transfer, or exchange, (i) that the holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such exercise, transfer, or exchange may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and sub-stance reasonably acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act. (b) Notwithstanding anything in the Warrant to the contrary, this Warrant shall not be exercisable to the extent (but only to the extent) that (a) the number of shares of Common Stock beneficially owned by the holder of this Warrant and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of this Warrant or the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein) and (b) the number of shares of Common Stock issuable upon exercise of this Warrant (or portion thereof) with respect to which the determination described herein is being made, would result in beneficial ownership by such holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. To the extent the above limitation applies, the determination of whether and to what extent this Warrant shall be exercisable with respect to other securities owned by such holder shall be in the sole discretion of the holder and submission of this Warrant for full or partial exercise shall be deemed to be the holder's determination of whether and the extent to which this Warrant is exercisable, in each case subject to such aggregate percentage limitation. No prior inability to exercise this Warrant pursuant to this Section shall have any effect on the applicability of the provisions of this Section with respect to any subsequent determination of exercisability. For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided in clause (a) hereof. The 6 restrictions contained in this Section 8(g) may not be amended without the written consent of the Company and the holder of this Warrant. SECTION 8. AMENDMENTS AND WAIVERS This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. SECTION 9. SEVERABILITY If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provisions shall be excluded from this Warrant, and the balance of this Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. SECTION 10. GOVERNING LAW THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. SECTION 12. HEADINGS The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. SECTION 13. COUNTERPARTS This Warrant may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. [Remainder of page intentionally left blank.] 7 IN WITNESS WHEREOF, the Company and FSVK have executed this Warrant on and as of the day and year first above written. PRECISION OPTICS CORPORATION, INC., A MASSACHUSETTS CORPORATION By: /s/ JACK P. DREIMILLER ------------------------------------- Jack P. Dreimiller, Senior Vice President, Finance Attest: /s/ RICHARD E. FORKEY - ----------------------------- Richard E. Forkey, President FIRST SECURITY VAN KASPER By: /s/ RONALD F. RICHARDS ------------------------------------- Ronald F. Richards, Managing Director 8 SUBSCRIPTION FORM (To be executed upon exercise of this Warrant) ____________________: The undersigned hereby irrevocably elects to exercise the right of purchaser represented by the within Warrant for, and to purchase thereunder, ______________ shares of Common Stock, as provided for therein, and either tenders herewith payment of the purchase price in full in the form of cash or a certified or official bank check in the amount of $_____________ or, if the undersigned elects pursuant to Section 1(b) of the within Warrant to convert such Warrant into Common Stock a net issuance basis, the undersigned exercises the within Warrant by exchange under the terms of Section 1(b). Please issue a certificate or certificates for such Common Stock in the name of, and pay any cash for any fractional share to: Name:______________________________ Address:___________________________ Social Security No:_______________________ If said number of shares shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder rounded up to the next higher number of shares. Name_______________________________ Signature____________________________ Note: The above signature must correspond exactly with the name on the first page of this Warrant or with the name of the assignee appearing in the assignment form below. 9 ASSIGNMENT (To be executed only upon assignment of Warrant) For value received, _______________________________ hereby sells, assigns and transfers unto _______________________ the within Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________________ attorney, to transfer said Warrant on the books of the within-named Company with respect to the number of Warrants set forth below, with full power of substitution in the premises: Name(s) of Assignee(s)/Address No. of Warrants ------------------- --------------- And if said number of Warrants shall not be all the Warrants represented by the Warrant, a new Warrant is to be issued in the name of said undersigned for the balance remaining of the Warrants registered by said Warrant. Name_______________________ Dated: __________________ Signature____________________ Note: The above signature must correspond exactly with the name on the face of this Warrant 10 EX-5.1 4 ex-5_1.txt EXHIBIT 5.1 Exhibit 5.1 ROPES & GRAY ONE INTERNATIONAL PLACE BOSTON, MASSACHUSETTS 02110-2624 (617) 951-7000 FAX: (617) 951-7050 August 8, 2000 Precision Optics Corporation, Inc. 22 East Broadway Gardner, MA 01440 Re: Registration Statement (No. 333-35884) on Form S-3 Ladies and Gentlemen: This opinion is being furnished to you in connection with a registration statement on Form S-3 (the "Registration Statement") filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended by Amendment No.1 thereto, for the registration of 1,255,261 shares (the "Shares") of Common Stock, $.01 par value, of Precision Optics Corporation, Inc., a Massachusetts corporation (the "Company"). We have acted as counsel for the Company in connection with the preparation of the Registration Statement, the issuance and sale of certain of the Shares and the issuance of warrants (the "Warrants") exercisable for the balance of the Shares. For purposes of this opinion, we have examined and relied upon such documents, records, certificates and other instruments as we have deemed necessary. We express no opinion as to the applicability of, compliance with or effect of federal law or the law of any jurisdiction other than The Commonwealth of Massachusetts. Based on the foregoing, we are of the opinion that the Shares that have been issued and sold as of the date of this letter are duly authorized, validly issued, fully paid and nonassessable, and that the Shares that are issuable upon exercise of the Warrants have been duly authorized and, if and when any such Shares are issued and the Company has received the exercise price therefor in accordance with the terms of the applicable Warrant, such Shares will be validly issued, fully paid and nonassessable. Precision Optics Corporation, Inc. -2- August 8, 2000 We hereby consent to your filing this opinion as an exhibit to the Registration Statement and to the use of our name therein and in the related prospectus under the caption "Legal Matters." It is understood that this opinion is to be used only in connection with the offer and sale of the Shares while the Registration Statement is in effect. Very truly yours, /s/ Ropes & Gray Ropes & Gray EX-23.1 5 ex-23_1.txt EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated July 27, 1999 (except with respect to matters discussed in Note 9, as to which the date is August 5, 1999) included in Precision Optics Corporation Inc.'s Form 10-KSB for the year ended June 30, 1999 and to all references to our firm included in this registration statement. /s/ Arthur Andersen LLP Boston, Massachusetts August 2, 2000 -----END PRIVACY-ENHANCED MESSAGE-----