<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PRECISION OPTICS CORPORATION, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
October 14, 1998
To the Shareholders:
The Board of Directors and Officers of Precision Optics Corporation, Inc.
invite you to attend the 1998 Annual Meeting of Shareholders to be held Tuesday,
November 10, 1998, at 10:00 a.m. at the Wachusett Village Inn, Village Inn Road,
Westminster, Massachusetts.
A copy of the Proxy Statement and the Company's 1998 Annual Report to
Shareholders are enclosed.
If you cannot be present at the meeting, please mark, date, and sign the
enclosed proxy and return it as soon as possible in the enclosed envelope.
Very truly yours,
RICHARD E. FORKEY
President
<PAGE> 3
PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 10, 1998
The 1998 Annual Meeting of Shareholders of Precision Optics Corporation,
Inc. (the "Company") will be held on Tuesday, November 10, 1998, at 10:00 a.m.
at the Wachusett Village Inn, Village Inn Road, Westminster, Massachusetts, for
the following purposes:
1. To elect two directors to hold office for a three-year term and until
their successors shall be elected and shall have been qualified;
2. To transact any and all other business that may properly come before
the meeting or any adjournment thereof.
All shareholders of record at the close of business on Wednesday, September
30, 1998, are entitled to notice of and to vote at the meeting.
Shareholders are requested to sign and date the enclosed proxy and return
it in the enclosed envelope. The envelope requires no postage if mailed in the
United States.
By Order of the Board of Directors,
JACK P. DREIMILLER
Clerk
October 14, 1998
<PAGE> 4
PRECISION OPTICS CORPORATION, INC.
PROXY STATEMENT
---------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement and form of proxy are furnished in connection with the
solicitation of proxies by the Board of Directors of Precision Optics
Corporation, Inc., a Massachusetts corporation (the "Company"), for the 1998
annual meeting of shareholders of the Company to be held November 10, 1998, at
10:00 a.m. and any adjournments thereof, for the purposes set forth in the
notice of meeting. The Company was incorporated in 1982, and its principal
executive offices are at 22 East Broadway, Gardner, Massachusetts 01440
(telephone 978-630-1800). This Proxy Statement and form of proxy are first being
distributed to shareholders on or about October 14, 1998.
VOTING RIGHTS AND OUTSTANDING SHARES
As of September 30, 1998, the Company had outstanding 6,677,595 shares of
Common Stock, $0.01 par value (the "Common Stock"). Each share of Common Stock
entitles the holder of record thereof at the close of business on September 30,
1998 to one vote in person or by proxy on the matters to be voted upon at the
meeting.
The Company will bear all the costs of the solicitation of proxies. The
Board of Directors may arrange with brokerage houses and other custodians,
nominees, and fiduciaries to forward solicitation materials to the beneficial
owners of the stock held of record by such persons, and the Company may
reimburse them for the reasonable out-of-pocket expenses incurred in so doing.
In addition to the solicitation of proxies by use of the mails, the Company may
use the services of some of its directors, officers and regular employees (who
will receive no compensation therefor in addition to their regular salaries) to
solicit proxies personally or by mail or telephone.
Consistent with Massachusetts law and under the Company's by-laws, the vote
of a majority of the shares entitled to be cast on a particular matter, present
in person or represented by proxy, constitutes a quorum as to such matter. Votes
cast by proxy or in person at the Annual Meeting will be counted by persons
appointed by the Company to act as election inspectors for the meeting.
If the enclosed form of proxy is properly signed and returned and not
revoked, the shares represented thereby will be voted at the Annual Meeting. If
the shareholder specifies in the proxy how the shares are to be voted, they will
be voted as specified. If the shareholder does not specify how the shares are to
be voted, such shares will be voted to elect the nominees for director. Shares
represented by proxies that indicate an abstention or a "broker non-vote" (that
is, shares represented at the Meeting held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have the discretionary
voting power on a particular matter) will be counted as shares that are present
and entitled to vote on the matter for purposes of determining the presence of a
quorum. Shares indicating an abstention will be treated as votes against the
proposal; shares indicating a broker non-vote, however, will not constitute
votes cast at the meeting and thus will have no effect on the outcome. The
election of directors described below requires a plurality of votes cast. Should
the person so named as nominee be unable or unwilling to serve as director, the
persons named in the form of proxy for the annual meeting may, in their
discretion, vote for such other person or may vote to fix the number of
directors at such number less than six, as the Board of Directors may recommend.
Any shareholder has the right to revoke his or her proxy at any time before it
is voted by attending the meeting and voting in person or by filing with the
Clerk of the Company a written instrument revoking the proxy or another newly
executed proxy bearing a later date.
<PAGE> 5
At the date hereof, the Company's management has no knowledge of any
business other than that described in the notice for the annual meeting which
will be presented for consideration at such meeting. If any other business
should come before such meeting, the persons appointed by the enclosed form of
proxy may, in their discretion, vote all such proxies, as the Board of Directors
may recommend. The persons appointed by the enclosed form of proxy also may, in
their discretion, vote all proxies with respect to matters incident to the
conduct of the meeting.
ITEM 1. ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes that are
equal in number, with staggered terms of office. Only one class is elected each
year, and each director serves a three year term and until his or her successor
has been duly elected and qualified. The Board of Directors has fixed the number
of directors at six. At the annual meeting it is intended that the Company's
Class II Directors (Messrs. Marxe and Pitlor) be elected to hold office until
the annual meeting of shareholders in 2001 and until their respective successors
have been duly elected and qualified. The nominees are currently directors of
the Company. The directors in Class I (Messrs Forkey and Benjamin) will hold
office until the annual meeting of shareholders in 2000, and the directors in
Class III (Dr. Macleod and Mr. Shannon) will hold office until the annual
meeting of shareholders in 1999 (and in each case, until their respective
successors have been duly elected and qualified). The names, ages, principal
occupations for at least the last five years, and certain other information with
regard to the directors, including the nominees, are as follows:
<TABLE>
<CAPTION>
NAME AND YEAR
FIRST ELECTED DIRECTOR AGE PRINCIPAL OCCUPATION; DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
---------------------- --- -------------------------------------------------------------
<S> <C> <C>
Richard E. Forkey (1982)*......... 58 President, Treasurer and a director of the Company since
founding the Company in 1982; Clerk of the Company from May
1983 to June 1990.
Edward A. Benjamin (1990)*........ 60 Clerk of the Company from June 1990 to January 1998. Mr.
Benjamin has been a partner in the law firm of Ropes & Gray,
Boston, Massachusetts, since 1969.
H. Angus Macleod (1997)*.......... 65 Dr. Macleod has been President of the Thin Film Center, Inc.
of Tucson, Arizona, since 1992, a firm which provides
software consulting and courses for design and analysis of
thin film optical coating and filters. Dr. Macleod was a
professor at the University of Arizona between 1979 and 1995.
Austin W. Marxe (1998)............ 58 Mr. Marxe has been the Managing General Partner of Special
Situations Fund III, L.P., a registered investment company
based in New York City, and several other affiliated and
predecessor investment funds, since 1990.
Joel R. Pitlor (1990)............. 59 Since 1979, president of J.R. Pitlor, a management consulting
firm that provides strategic business planning, which Mr.
Pitlor founded. Mr. Pitlor has provided business planning
consultation to the Company since 1983. Mr. Pitlor has been a
director of Uroplasty, Inc., a Minnesota-based medical
products supplier, since 1992.
Robert R. Shannon (1990)*......... 66 Since 1969, professor at the Optical Sciences Center of the
University of Arizona and Director of the Center from 1983 to
July 1992.
</TABLE>
- ---------------
* Directors whose terms do not expire this year.
2
<PAGE> 6
All of the shareholders holding shares of the Company's Common Stock are
entitled to cast one vote in person or by proxy for each share standing in their
names and are entitled to elect two Class II directors at the 1998 annual
meeting. If the nominees are not available as candidates when the election
occurs, the persons named in the proxy may, within their discretion, vote for
the election of such other persons as the Board of Directors may designate or to
reduce the number of directors correspondingly. The Company has no reason to
believe that the nominees will not be available for election.
BOARD OF DIRECTORS
During the fiscal year ended June 30, 1998, the Company's Board of
Directors held six meetings and acted by written consent on three occasions. The
Audit Committee of the Board of Directors, composed of Messrs. Benjamin, Pitlor
and Shannon held one meeting during the fiscal year ended June 30, 1998.
Information as to ownership of the Company's securities by the nominees for
director is included under the heading "Security Ownership of Certain Beneficial
Owners and Management."
EXECUTIVE OFFICERS
The Company's executive officers as of June 30, 1998 were as follows:
NAME AGE POSITION
---- --- --------
Richard E. Forkey........... 58 President, Treasurer
Jack P. Dreimiller.......... 50 Senior Vice President, Finance, Chief
Financial Officer and Clerk
Kumar M. Khajurivala........ 48 Vice President, Operations
Mr. Forkey has been the President, the Treasurer, and a director of the
Company since he founded the Company in 1982. He was the Clerk of the Company
from May 1983 to June 1990.
Mr. Dreimiller has been Senior Vice President, Finance and Chief Financial
Officer since April 1992 and Clerk since January 1998.
Mr. Khajurivala has been Vice President, Operations since January 1997.
From March 1986 to January 1997, he was Senior Thin Film Physicist of the
Company.
3
<PAGE> 7
COMPENSATION AND OTHER MATERIAL TRANSACTIONS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation for the last three
completed fiscal years awarded to, earned by, or paid to the Company's Chief
Executive Officer at June 30, 1998 and the most highly paid executive officers
who served as executive officers at June 30, 1998 whose total annual salary and
bonuses for the fiscal year ended June 30, 1998 exceeded $100,000 for all
services rendered in all capacities to the Company and its subsidiaries (the
"Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION OTHER ANNUAL OPTIONS
AT FISCAL YEAR END YEAR SALARY ($) BONUS ($) COMPENSATION ($) (NUMBER)
--------------------------- ---- ---------- --------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Richard E. Forkey................. 1998 153,213 -0- 19,744(1) -0-
President, Chief Executive Officer 1997 138,412 -0- 20,383(1) -0-
1996 119,600 -0- 23,832(1) -0-
Jack P. Dreimiller................ 1998 121,040 -0- 4,096(2) 25,000
Senior Vice President 1997 116,020 2,000 2,097(2) 25,000
Finance, Chief Financial Officer 1996 109,986 -0- 4,794(2) -0-
and Clerk
Kumar M. Khajurivala.............. 1998 118,031 -0- 4,217(2) 100,000
Vice President 1997 107,760 2,500 2,091(2) 40,000
Operations 1996 98,484 15,000 4,907(2) 50,000
</TABLE>
- ---------------
(1) Includes $0, $1,131 and $5,145 for Company contribution to Profit Sharing
Plan in 1998, 1997 and 1996, respectively, and $11,052, $11,059 and $10,595
for car expense and $6,692, $6,692 and $6,888 for premiums for a life
insurance policy and a disability insurance policy for 1998, 1997, and 1996,
respectively.
(2) Represents Company contribution to Profit Sharing Plan in 1996 and 1997. In
1998 for Mr. Dreimiller and Mr. Khajurivala, respectively, includes $2,071
and $2,052 for Company contribution to Profit Sharing Plan, and $2,025 and
$2,165 for life insurance.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the individual grants of stock options made
by the Company during the fiscal year ended June 30, 1998 to its Named Executive
Officers.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO
UNDERLAYING OPTIONS EMPLOYEES IN EXPIRATION
NAME GRANTED FISCAL YEAR EXERCISE PRICE DATE
---- -------------------- ------------------ -------------- ----------
<S> <C> <C> <C> <C>
Richard E. Forkey..................... -0- n/a n/a n/a
Jack P. Dreimiller.................... 25,000(1) 7.91% $ 3.844 12/15/07
Kumar M. Khajurivala.................. 100,000(2) 31.65% $ 3.844 12/15/07
</TABLE>
- ---------------
(1) Options are exercisable as follows: one-fourth immediately and one-fourth on
each of the first, second and third anniversaries of grant.
(2) Options are exercisable as follows: one-fifth immediately and one-fifth on
each of the first, second, third and fourth anniversaries of grant.
4
<PAGE> 8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes for each of the named executive officers (i)
the total number of shares received upon exercise of stock options during the
fiscal year ended June 30, 1998, (ii) the aggregate dollar value realized upon
such exercise, (iii) the total number of unexercised options, if any, held at
June 30, 1998 and (iv) the value of unexercised in-the-money options, if any,
held at June 30, 1998. In-the-money options are options where the fair market
value of the underlying securities exceeds the exercise or base price of the
option. The aggregate value realized upon exercise of a stock option is the
difference between the aggregate exercise price of the option and the fair
market value of the underlying stock on the date of exercise, which was $3.0625
per share. The value of unexercised, in-the-money options at fiscal year-end is
the difference between the exercise price of the option and the fair market
value of the underlying stock on June 30, 1998, which was $2.00 per share. The
underlying options have not been exercised, and actual gains, if any, on
exercise will depend on the value of the Company's Common Stock on the date of
exercise.
<TABLE>
<CAPTION>
FISCAL-YEAR-END OPTION VALUES
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT FISCAL-YEAR END IN-THE-MONEY OPTIONS
--------------------------- AT FISCAL YEAR-END ($)
SHARES ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE ---------------------------
NAME EXERCISE (NUMBER) REALIZED($) (NUMBER) (NUMBER) EXERCISABLE UNEXERCISABLE
---- ------------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Forkey...... -0- -0- -0- -0- -0- -0-
Jack P. Dreimiller..... -0- -0- 68,750 56,250 31,250 15,625
Kumar M. Khajurivala... 22,500 $37,969 75,000 122,500 21,875 14,063
</TABLE>
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The Company made no awards under a long term incentive plan in the fiscal
year ended June 30, 1998.
DIRECTOR COMPENSATION
The Company pays each director who is not also an employee of the Company
$250.00 per meeting which the director attends and reimburses the director for
travel expenses.
In addition, during the fiscal year ended June 30, 1998, the Company issued
pursuant to its 1997 Incentive Plan stock options exercisable for a total of
25,000 shares of the Company's Common Stock to each of Messrs. Benjamin, Pitlor
and Shannon and Dr. Macleod. Each of these options is exercisable at a price per
share of $3.844 as follows: one-fourth on the date of grant and one-fourth on
each of the first, second and third anniversaries of the date of grant.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has no employment contracts in place with any named executive
officers. The Company also has no compensatory plan or arrangement with respect
to any named executive officer where such plan or arrangement will result from
the resignation, retirement, or any other termination of such executive
officer's employment with the Company and its subsidiaries or from a change in
control of the Company or a change in the named executive officers'
responsibilities following a change-in-control.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended June 30, 1998, one form filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934 on behalf of Kumar M.
Khajurivala did not report one transaction on a timely basis.
5
<PAGE> 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an arrangement with J.R. Pitlor ("J.R. Pitlor"), a company
wholly owned by Mr. Pitlor, a director of the Company, under which Mr. Pitlor
provides consulting services to the Company for a fee not to exceed $5,000 a
month. Either party may terminate this arrangement at will. The Company paid
J.R. Pitlor for consulting services aggregate fees of approximately $180,000
from July 1, 1995 to June 30, 1998.
The Company leases its facility in Gardner, Massachusetts from Equity
Assets, Inc. ("Equity"), a company wholly owned by Mr. Forkey, the President and
Treasurer and a director of the Company, under a Lease Agreement dated January
2, 1989, at an annual base rent of $108,000. The Company pays Equity in monthly
installments of $9,000. The lease expires December 31, 1999.
The Company has paid legal fees to Ropes & Gray, a law firm of which Mr.
Benjamin, a director of the Company, is a partner, of approximately $29,510 for
fiscal year 1996, $35,255 for fiscal year 1997, and $111,696 for fiscal year
1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the Company's Common
Stock owned as of the close of business on September 30, 1998, the record date
for the 1998 Annual Meeting, by the following persons: (i) each person who is
known by the Company to own beneficially more than 5% of the Company's Common
Stock, (ii) each of the Company's directors and nominees for director who
beneficially owns the Company's or its subsidiaries' Common Stock, other than
directors' qualifying shares, (iii) each of the Company's most highly paid
executive officers whose cash compensation exceeds $100,000 who beneficially
owns the Company's or its subsidiaries' Common Stock, and (iv) all executive
officers and directors, as a group, who beneficially own the Company's or its
subsidiaries' Common Stock. The information on beneficial ownership in the table
and footnotes thereto is based upon data furnished to the Company by, or on
behalf of, the person listed in the table.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT(2)
------------------- ------------ ----------
<S> <C> <C>
FIVE PERCENT HOLDERS
David M. Greenhouse......................................... 1,156,700(3) 16.12%
c/o Special Situations Fund III, L.P.
153 East 53rd Street
New York, NY 10022
Special Situations Private Equity Fund, L.P................. 750,000(4) 10.45%
c/o Special Situations Fund III, L.P.
153 East 53rd Street
New York, NY 10022
DIRECTORS AND OFFICERS
Edward A. Benjamin*......................................... 26,250(5) **
c/o Ropes & Gray
One International Place
Boston, MA 02110
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT(2)
------------------- ------------ ----------
<S> <C> <C>
Richard E. Forkey*.......................................... 1,786,017 26.75%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
H. Angus Macleod*........................................... 6,250(6) **
c/o Thin Film Center, Inc.
2745 East Via Rotonda
Tucson, AZ 85716
Austin W. Marxe*............................................ 1,156,700(7) 16.12%
c/o Special Situations Fund III, L.P.
153 East 53rd Street
New York, NY 10022
Joel R. Pitlor*............................................. 123,267(8) 1.84%
c/o J.R. Pitlor
19 Chalk Street
Cambridge, MA 02139
Robert R. Shannon*.......................................... 42,750(6) **
7040 E. Taos Place
Tucson, AZ 85715
Jack P. Dreimiller.......................................... 68,750(6) 1.02%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
Kumar M. Khajurivala........................................ 127,500(9) 1.89%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
All officers and directors as a group, including
those named above (8 persons)............................. 3,337,484(10) 45.05%
</TABLE>
- ---------------
* Director
** The percentage of shares beneficially owned by such person does not exceed
one percent of the Company's Common Stock.
(1) Represents shares with respect to which each beneficial owner listed has or
will have, upon acquisition of such shares, sole voting power and
investment power.
(2) Percentages are calculated on the basis of the amount of outstanding Common
Stock plus, for each person or group, any securities that such person or
group has the right to acquire within sixty days pursuant to options,
warrants, conversion privileges, or other rights.
(3) Represents (i) 375,000 shares, and 375,000 shares which may be acquired
within 60 days upon the exercise of outstanding warrants, owned by Special
Situations Private Equity Fund, L.P. ("SSPEF") directly (ii) 125,000
shares, and 125,000 shares which may be acquired within 60 days upon the
exercise
7
<PAGE> 11
of outstanding warrants, owned by Special Situations Technology Fund, L.P.
("SSTF") directly and (iii) 156,700 shares owned by Special Situations Fund
III, L.P. ("SSF III") directly. The shares described in (i) and (ii) above
were issued in a single transaction as follows. On June 30, 1998, the
Company issued in a private placement (i) 375,000 shares of its Common
Stock, and warrants exercisable for an additional 375,000 shares of its
Common Stock, to SSPEF and (ii) 125,000 shares of its Common Stock, and
warrants exercisable for an additional 125,000 shares of its Common Stock,
to SSTF. The shares described in (iii) above were purchased by SSF III
independently from third parties. SSPEF, SSTF and SSF III are affiliated
entities managed through investment advisors principally owned by Austin W.
Marxe and David M. Greenhouse, each of whom possesses voting and
dispositive power over shares beneficially owned by such entities.
(4) Includes 375,000 shares which may be acquired within 60 days upon the
exercise of outstanding warrants. See footnote (3) above.
(5) Includes 21,250 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(6) Represents shares which may be acquired within sixty days upon the exercise
of outstanding stock options.
(7) Includes 500,000 shares which may be acquired within 60 days upon the
exercise of outstanding warrants. See footnote (3) above.
(8) Includes 13,750 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(9) Includes 77,500 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(10) Includes 730,250 shares which may be acquired within sixty days upon the
exercise of outstanding stock options and warrants.
INDEPENDENT PUBLIC ACCOUNTANTS
The directors have appointed Arthur Andersen LLP to examine the Company's
financial statements for fiscal year 1999. The Company expects that a
representative of Arthur Andersen LLP will be present at the annual meeting and
available to respond to appropriate questions and will have the opportunity to
make a statement if he or she desires to do so.
8
<PAGE> 12
SHAREHOLDER PROPOSALS
Shareholders may present proposals for inclusion in the 1999 Proxy
Statement and form of proxy relating to that meeting provided they are received
by the Clerk of the Company no later than June 16, 1999 and are otherwise in
compliance with applicable Securities and Exchange Commission regulations.
Under recent changes to the Federal proxy rules, if a Shareholder who
wishes to present a proposal at the Company's 1999 Annual Meeting that will not
be included in the Company's proxy statement for such Annual Meeting fails to
notify the Company of his or her desire to do so by August 30, 1999, then the
proxies that the Board of Directors solicits for the 1999 Annual Meeting will
include discretionary authority to vote on the Shareholder's proposal, if such
proposal is properly brought before the meeting.
9
<PAGE> 13
PRECISION OPTICS CORPORATION, INC.
COMMON STOCK PROXY
The undersigned, revoking any previous instructions, hereby acknowledges
receipt of the Notice and Proxy Statement dated October 14, 1998. In connection
with the Annual Meeting mentioned below, the undersigned hereby appoint(s)
Richard E. Forkey and Jack P. Droimiller as attorneys of the undersigned, each
with power to act alone and with full power of substitution, to act and to vote
all shares of stock which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Precision Optics Corporation, Inc. to be held on
November 10, 1998, at 10:00 A.M. at the Wachusett Village Inn, Village Inn
Road, Westminster, Massachusetts, and at any adjournment thereof, upon the
matters set forth in the proxy statement for such Annual Meeting. The foregoing
attorneys are authorized to vote, in their discretion, upon such other business
as may properly come before the meeting or any adjournments or postponements
thereof.
This proxy is solicited by the Board of Directors. When this proxy is properly
executed, the shares represented hereby will be voted as specified by the
Shareholder(s) on the reverse side hereof or, where no direction is given, will
be voted FOR the election of the Class II director nominees.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
<PAGE> 14
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------ 1. To elect Class II Directors. The nominees for the
PRECISION OPTICS CORPORATION, INC. Board of Directors to serve for a three-year term For All With- For All
- ------------------------------------ as Class II Directors. Nominees hold Except
Austin W. Marxe [ ] [ ] [ ]
Joel R. Pitlor
Mark box at right if an address or [ ] NOTE: If you do not wish your shares voted "For" a particular nominee, mark
comment has been noted on the the "For All Except" box and strike a line through the name of the nominee.
reverse side of this card. Your shares will be voted for the remaining nominee.
</TABLE>
------------------------
Please be sure to sign and date this Proxy. Date
- ------------------------------------------------------------------------
- --Shareholder sign here------------------------Co-owner sign here-------
DETACH CARD DETACH CARD
PRECISION OPTICS CORPORATION, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
The Proposals which are discussed in detail in the enclosed proxy materials
require your immediate attention and approval.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders on
November 10, 1998.
Thank you in advance for your prompt consideration of these matters.
Very truly yours,
Precision Optics Corporation, Inc.
