SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 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 Section 240.14a-11(c) or Section 240.14a-12
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
PRECISION OPTICS CORPORATION, INC.
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(Name of Registrant as Specified In Its Charter)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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|X| No fee required.
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|_| 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
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(4) Date Filed:
PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
October 15, 2002
To the Shareholders:
The Board of Directors and Officers of Precision Optics Corporation, Inc.
invite you to attend the 2002 Annual Meeting of Stockholders to be held Tuesday,
November 12, 2002, at 10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman
Way, Leominster, Massachusetts.
At the Meeting you are being asked to elect one Class III director to serve
for a three-year term and to approve an amendment to the Company's Articles of
Organization, to be filed at the discretion of the Board of Directors, to effect
a reverse stock split at a ratio in a range between and including one-for-three
and one-for-six to be determined by the Board.
A copy of the Proxy Statement and the Company's 2002 Annual Report to
Stockholders are enclosed.
If you cannot be present at the meeting, please mark, date, and sign the
enclosed proxy card and return it as soon as possible in the enclosed envelope.
Very truly yours,
RICHARD E. FORKEY
PRESIDENT
PRECISION OPTICS CORPORATION, INC.
22 EAST BROADWAY
GARDNER, MASSACHUSETTS 01440
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 2002
The 2002 Annual Meeting of Stockholders of Precision Optics
Corporation, Inc. (the "Company") will be held on Tuesday, November 12, 2002, at
10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman Way, Leominster,
Massachusetts, for the following purposes:
1. To elect one Class III director to hold office for a three-year term and
until his successor shall have been duly elected and qualified.
2. To approve an amendment to the Company's Articles of Organization, to be
filed at the discretion of the Board of Directors, to effect a reverse stock
split at a ratio in a range between and including one-for-three and
one-for-six to be determined by the Board.
3. To transact any and all other business that may properly come before the
meeting or any adjournment thereof.
All stockholders of record at the close of business on Monday,
September 30, 2002, are entitled to notice of and to vote at the meeting.
Stockholders 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 15, 2002
PRECISION OPTICS CORPORATION, INC.
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ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 2002
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 2002
Annual Meeting of Stockholders of the Company to be held on November 12, 2002,
at 10:00 a.m. at the Four Points Sheraton Hotel, 99 Erdman Way, Leominster,
Massachusetts, 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 stockholders on or about October 15, 2002.
STOCKHOLDERS ENTITLED TO VOTE
As of September 30, 2002, the Company had outstanding 10,503,908 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,
2002 to one vote in person or by proxy on the matters to be voted upon at the
meeting.
VOTING PROCEDURES
Consistent with Massachusetts law and the Company's by-laws, the holders 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 stockholder specifies in the proxy how the shares are to be voted, they will
be voted as specified. If the stockholder does not specify how the shares are to
be voted, such shares will be voted in favor of the Proposal Numbers 1 and 2
described below.
Any stockholder has the right to revoke his or her proxy at any time before
it is voted by: (1) attending the meeting and voting in person, (2) by filing
with the Clerk of the Company a written instrument revoking the proxy or
(3) delivering to the Clerk another newly executed proxy bearing a later date.
REQUIRED VOTE
The election of the Class III director described in Proposal Number 1
requires a plurality of votes cast. Should the person so named below as nominee
for the Board of Directors 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 five, as the Board of Directors may
recommend. The approval of Proposal Number 2 requires the affirmative vote of a
majority of all shares outstanding.
Abstentions and broker "non-votes" are counted as present and entitled to
vote for purposes of determining a quorum. A broker non-vote occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
Under the applicable rules, brokers will have discretionary authority to vote
shares held in their name for the election of directors and the reverse stock
split even if they do not receive instructions from the beneficial owners. Thus,
there will be no broker non-votes at the meeting.
VOTING ON OTHER MATTERS
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 in accordance with their
own judgment. 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.
COSTS OF PROXY SOLICITATION
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.
PROPOSAL NUMBER 1. ELECTION OF CLASS III DIRECTOR
The Company's Board of Directors is divided into three classes that are as
nearly equal in number as possible, with staggered terms of office. Only one
class is elected each year. Each director serves a three year term and until his
or her successor has been duly elected and qualified. Dr. Angus Macleod,
currently a Class III director, has declined to stand for re-election at the
annual meeting. Dr. Macleod's decision to not stand for re-election is not the
result of any disagreement with the Company. Effective immediately following the
annual meeting, the Board of Directors has fixed the number of directors at
five. Mr. Robert Shannon, the Company's other current Class III Director, has
been nominated for re-election as a Class III director and to hold office until
the annual meeting of stockholders in 2005 and until his successor has been duly
elected and qualified. The directors in Class I (Messrs. Forkey and Benjamin)
will hold office until the annual meeting of stockholders in 2003, and the
directors in Class II (Messrs. Marxe and Pitlor) will hold office until the
annual meeting of stockholders in 2004 (and in each case, until their respective
successors have been duly elected and qualified).
2
The names, ages, principal occupations for at least the last five years, and
certain other information with regard to the directors, including the nominee
are as follows:
NAME AND YEAR FIRST ELECTED DIRECTOR AGE PRINCIPAL OCCUPATION; DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
------------------------------------ --- -------------------------------------------------------------
Richard E. Forkey (1982)*................. 62 President, Chief Executive Officer, 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)*................ 64 Clerk of the Company from June 1990 to January 1998. Mr.
Benjamin is a Trustee of the Board of Trustees of New England
Zenith Fund, a Member of the Board of Managers of New England
Variable Annuity Fund I, and a Director of Coal, Energy
Investments & Management LLC. Pending election at a
shareholder meeting to be held on October 15, 2002,
Mr. Benjamin will also be a Trustee of the Board of Trustees
of Loomis Sayles Funds. Mr. Benjamin was a partner in the law
firm of Ropes & Gray, Boston, Massachusetts, from 1969 to
1998.
Austin W. Marxe (1998)*................... 62 Mr. Marxe has been the Managing Director 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)*.................... 63 Since 1979, Mr. Pitlor has been 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 is also a director of Uroplasty, Inc., a
Minnesota-based medical products supplier.
Robert R. Shannon (1990).................. 70 Since 1969, Mr. Shannon has been a Professor at the Optical
Sciences Center of the University of Arizona and Director of
the Center from 1983 to July 1992. Mr. Shannon is also a
Member of the Board of Trustees of Aerospace Corporation.
------------------------
* Directors whose terms do not expire this year.
All of the stockholders 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 one Class III director at the 2002 Annual
Meeting. If the nominee is not available as a candidate when the election
occurs, the persons named in the proxy may, in their discretion, vote for the
election of such other person as the Board of Directors may designate or to
reduce the number of directors correspondingly. The Company has no reason to
believe that the nominee will not be available for election.
3
BOARD OF DIRECTORS
During the fiscal year ended June 30, 2002, the Company's Board of Directors
held four meetings and acted by unanimous written consent on four occasions. The
Board of Directors has a standing Audit Committee composed of Messrs. Benjamin
and Shannon. Mr. Pitlor served on the Audit Committee until September 2002 when
he resigned because he no longer met the requirements for an independent
director under the Sarbanes-Oxley Act of 2002. The Company believes
Messrs. Benjamin and Shannon meet the independence requirements under NASDAQ
rules and the Sarbanes-Oxley Act of 2002. The function of the Audit Committee is
to provide assistance to the Board of Directors in fulfilling its responsibility
to the stockholders, potential stockholders and the investment community in
respect of corporate accounting, reporting practices of the Company, and the
quality and integrity of the financial reports of the Company. The Audit
Committee held six meetings during the fiscal year ended June 30, 2002. The
Board does not have standing nominating or compensation committees. Each
director attended at least 75% of the meetings of the Board of Directors. Each
of the Audit Committee members attended at least 75% of the meetings of the
Audit Committee in the last year, with the exception of Mr. Shannon.
Information as to ownership of the Company's securities by the nominee for
director is included under the heading "Security Ownership of Certain Beneficial
Owners and Management."
DIRECTOR COMPENSATION
The Company pays each director who is not also an employee of the Company
$250 per Board or committee meeting that the director attends and reimburses the
director for travel expenses.
During the fiscal year ended June 30, 2002, the Company also issued,
pursuant to its 1997 Incentive Plan, stock options exercisable for a total of
5,000 shares of the Company's Common Stock to each of Messrs. Benjamin, Pitlor,
Marxe, Shannon and Dr. Macleod. Each of these options is immediately exercisable
at a price per share of $0.76.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
THE NOMINEE DESCRIBED IN PROPOSAL NUMBER 1.
PROPOSAL NUMBER 2. REVERSE STOCK SPLIT
SUMMARY
In September 2002, the Board approved and recommended that the stockholders
approve, a proposed amendment (the "Reverse Stock Split Amendment") to the
Company's Articles of Organization, as amended, to be filed at the discretion of
the Board to effect (or, alternatively, to abandon) a reverse split of the
Common Stock (the "Reverse Stock Split"). The form of the proposed Reverse Stock
Split Amendment is attached hereto as Appendix A. Under the terms of the Reverse
Stock Split, every three to six shares of the outstanding Common Stock of the
Company would automatically be converted into one share of Common Stock. The
exact ratio will be between and may include one-to-three and one-to-six, to be
determined by the Board in its sole discretion, based on what is in the best
interests of the Company and its stockholders. The Board believes that approval
of the Reverse Stock Split Amendment at a range of ratios rather than at a
specific ratio provides the Board with the flexibility necessary to achieve the
purposes of the Reverse Stock Split. If implemented, the Reverse Stock Split
Amendment would be effective on such date as it is filed with the Massachusetts
Secretary of State (the "Effective Date").
On the Effective Date, the Reverse Stock Split will result in the automatic
conversion of between and including three and six shares (as determined in the
manner described above) of issued and outstanding
4
authorized Common Stock into one share of Common Stock. Fractional shares of
Common Stock will not be issued as a result of the Reverse Stock Split, but
instead, the Company will round up each fractional share to the next whole
post-split share. Except for adjustments that may result from the treatment of
fractional shares as described above, each stockholder will hold the same
percentage of Common Stock outstanding immediately following the Reverse Stock
Split as such stockholder held immediately prior to the Reverse Stock Split. The
Reverse Stock Split Amendment will not alter the par value of the Common Stock
or the number of shares of Common Stock authorized for issuance.
If the Reverse Stock Split proposal is approved by the stockholders, the
Reverse Stock Split will be effected only upon a determination by the Board that
the Reverse Stock Split is in the best interest of the Company and its
stockholders at that time. Even if the Reverse Stock Split proposal is approved
by the stockholders of the Company, the Board may, in its sole discretion,
determine not to effect the Reverse Stock Split or to delay such action based on
the then-current trading price of the Common Stock or other factors it
determines are important.
REASONS FOR THIS PROPOSAL
The primary purpose of the Reverse Stock Split is to obtain a higher per
share trading price for the Company's Common Stock and maintain eligibility for
the listing of the Common Stock on the NASDAQ SmallCap Market. Because the
Reverse Stock Split combines the outstanding shares of Common Stock into a fewer
number of shares, a share of Common Stock outstanding after giving effect to the
Reverse Stock Split is likely to trade at a higher price per share than a share
of Common Stock outstanding before giving effect to the Reverse Stock Split.
In addition to other listing requirements, the Company's Common Stock must
maintain a minimum bid price of $1.00 per share in order to remain eligible for
continued listing on the NASDAQ SmallCap Market. Because the closing trading
price of the Company's Common Stock was below $1.00 for 30 consecutive days,
NASDAQ notified the Company of the failure to maintain the minimum bid price
requirement. In order to regain compliance, the bid price of the Company's
Common Stock must close at $1.00 per share or more for a minimum of 10
consecutive trading days. NASDAQ has advised the Company that it must regain
compliance with the minimum bid price requirement by February 10, 2003. If the
Company cannot regain compliance by that date, the NASDAQ staff has stated that
it will provide written notification that the Company's Common Stock will be
delisted.
The Company believes, but cannot assure, that a Reverse Stock Split will
increase the chances that the Company's Common Stock will trade at or above the
required $1.00 minimum bid price. Further, there can be no assurance that the
Company will continue to meet other NASDAQ listing requirements. The Reverse
Stock Split will not result in any changes to the NASDAQ listing requirements
applicable to the Company. If following the Reverse Stock Split, the trading
price of the Company's Common Stock again closes below $1.00 for 30 consecutive
days and the closing bid price of the Common Stock is not $1.00 or more for ten
consecutive trading days within the prescribed period, the Common Stock of the
Company could again be subject to de-listing.
The Company believes that maintaining the listing of its Common Stock on
NASDAQ is in the best interest of the Company and its stockholders. Inclusion in
NASDAQ increases liquidity and may potentially minimize the spread between the
"bid" and "asked" prices quoted by market makers. Further, a NASDAQ listing may
enhance the Company's access to capital and increase the Company's flexibility
in responding to anticipated capital requirements. The Company believes that
prospective investors will view an investment in the Company more favorably if
its shares qualify for listing on NASDAQ.
5
The Company also believes that the current per share price level of the
Common Stock has reduced the effective marketability of the Company's shares of
Common Stock because of the reluctance of many leading brokerage firms to
maintain active analyst coverage of low-priced stocks or to recommend low-priced
stocks to their clients. Some investors may view low-priced stock as speculative
and unattractive, although some other investors may be attracted to low-priced
stock because of the greater trading volatility sometimes associated with such
securities. Such a limited stockholder base may have the undesirable effect of
artificially limiting demand for the Common Stock, thus depressing the stock
price.
The Company believes that some brokerage houses may have policies and
practices that tend to discourage individual brokers within those firms from
dealing in low-priced stock. Those policies and practices pertain to the payment
of brokers commissions and to time-consuming procedures that function to make
the handling of low-priced stocks unattractive to brokers from an economic
standpoint. The Company also believes that, because brokerage commissions on
low-priced stock may represent a higher percentage of the stock price than
commissions on higher-priced stock, the current share price of the Common Stock
can result in individual stockholders paying transaction costs (commission,
markups or markdowns) that represent a higher percentage of their total share
value than would be the case if the share price were substantially higher.
If the Common Stock is not listed on NASDAQ and the trading price of the
Common Stock were to remain below $1.00 per share, trading in the Common Stock
would also be subject to the requirements of rules promulgated under the
Exchange Act that require additional disclosures by broker-dealers in connection
with any trades involving a stock defined as a "penny stock" (generally, a
non-NASDAQ equity security that has a market price of less than $5.00 per share,
subject to certain exceptions). In such event, the additional burdens imposed
upon broker-dealers to effect transactions in the Common Stock could further
limit the market liquidity of the Common Stock and the ability of investors to
trade the Common Stock.
In the event that the Common Stock is delisted from NASDAQ, sales of the
Common Stock would likely be conducted only in the over-the-counter bulletin
board or potentially in regional exchanges. This may have a negative impact on
the liquidity and price of the Common Stock and investors may find it more
difficult to purchase or dispose of, or to obtain accurate quotations as to the
market value of, the Common Stock.
For all of the above reasons, management believes that the Reverse Stock
Split is in the best interests of the Company and its stockholders. There can be
no assurance, however, that the Reverse Stock Split will have the desired
consequences. Specifically, there can be no assurance that, after the Reverse
Stock Split, the market price of the Common Stock will not decrease to a level
that causes the Company to again face de-listing, or that the market
capitalization of the Company after the proposed Reverse Stock Split will not be
less than the Company's market capitalization before the proposed Reverse Stock
Split.
POTENTIAL EFFECTS OF THIS PROPOSAL
Although the Company expects to file the Reverse Stock Split Amendment in
November, 2002, the actual timing of the filing will be determined by the Board
based upon its evaluation as to when such action is most advantageous to the
Company and its stockholders. Further, even if this proposal is approved by the
stockholders of the Company, the Board may elect not to file the Reverse Stock
Split Amendment at all if it believes it is in the best interests of the Company
and its stockholders not to do so.
After the Effective Date of the Reverse Stock Split, each stockholder will
own a reduced number of shares of Common Stock but will hold the same percentage
of the outstanding shares (subject to
6
adjustments for fractional interests resulting from the Reverse Stock Split) as
the stockholder held prior to the Effective Date. The number of shares of Common
Stock that may be purchased upon the exercise of outstanding options, warrants,
and other securities convertible into, or exercisable or exchangeable for,
shares of Common Stock, and the per share exercise or conversion prices thereof,
will be adjusted appropriately for the Reverse Stock Split in accordance with
their terms as of the Effective Date.
Each fractional share of Common Stock that results from the Reverse Stock
Split will be rounded up to a whole share. Because no beneficial owners will be
cashed out in the Reverse Stock Split, the Company does not believe that the
Reverse Stock Split will lead to a reduction in the number of beneficial owners.
The Reverse Stock Split may also result in some stockholders owning "odd
lots" of less than 100 shares of Common Stock received as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions in
odd lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
Based on the 10,503,908 shares Common Stock outstanding as of September 30,
2002, the approximate number of shares of Common Stock that would be outstanding
as a result of the Reverse Stock Split using the following examples of exchange
ratios are as follows (without giving effect to the rounding up of fractional
shares):
EXCHANGE RATIO SHARES OUTSTANDING
-------------- ------------------
1-for-3 3,501,303
1-for-4 2,625,977
1-for-5 2,100,782
1-for-6 1,750,651
The Reverse Stock Split will affect all stockholders equally and will not
affect any stockholder's proportionate equity interest in the Company (except
with respect to adjustments for fractional interests). None of the rights
currently accruing to holders of the Common Stock, options or warrants to
purchase Common Stock will be affected by the Reverse Stock Split. Following the
Reverse Stock Split, each share of the Common Stock resulting from the Reverse
Stock Split will entitle the holder thereof to one vote per share and will
otherwise be identical to the outstanding Common Stock immediately prior to the
Effective Date. Additionally each fractional share of the Common Stock resulting
from the Reverse Stock Split will be rounded up to a whole share of the Common
Stock.
EXCHANGE OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
The combination and reclassification of shares of Common Stock pursuant to
the Reverse Stock Split will occur automatically on the Effective Date without
any action on the part of stockholders of the Company and without regard to the
date on which certificates evidencing shares of Common Stock prior to the
Reverse Stock Split are physically surrendered for new certificates. As of the
Effective Date, between and including three and six shares of Common Stock will
be converted and reclassified into one share of post-split Common Stock.
For example, if a 1-for-5 Reverse Stock Split is implemented, a holder of
1,000 shares immediately prior to the Effective Date would hold 200 shares after
the Effective Date. Alternatively, if a 1-for-4 Reverse Stock Split is
implemented, a holder of 1,000 shares immediately prior to the Effective Date
would hold 250 shares after the Effective Date. Fractional shares of Common
Stock will not be issued as a result of the Reverse Stock Split, but instead
will be rounded up to a whole share of Common Stock.
7
As soon as practicable after the Effective Date, transmittal forms will be
mailed to each holder of record of shares of Common Stock, to be used in
forwarding such holder's stock certificates for surrender and exchange for
certificates evidencing the number of shares of Common Stock such stockholder is
entitled to receive as a consequence of the Reverse Stock Split. The transmittal
forms will be accompanied by instructions specifying other details of the
exchange. Upon receipt of such transmittal form, each stockholder should
surrender the certificates evidencing shares of Common Stock prior to the
Reverse Stock Split in accordance with the applicable instructions. Each holder
who surrenders certificates will receive new certificates evidencing the whole
number of shares of Common Stock that such stockholder holds as a result of the
Reverse Stock Split. Stockholders will not be required to pay any transfer fee
or other fee in connection with the exchange of certificates.
The Company estimates that its aggregate expenses relating to the Reverse
Stock Split will not be material.
STOCKHOLDERS SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES FOR EXCHANGE UNTIL
THEY RECEIVE A TRANSMITTAL FORM FROM THE COMPANY.
As of the Effective Date, each certificate representing shares of Common
Stock outstanding prior to the Effective Date will be deemed canceled and, for
all corporate purposes, will be deemed only to evidence the right to receive the
number of shares of Common Stock into which the shares of Common Stock evidenced
by such certificate have been converted as a result of the Reverse Stock Split.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion generally describes certain United States federal
income tax consequences of the proposed Reverse Stock Split to stockholders of
the Company. This discussion is limited to United States persons who hold their
Common Stock as capital stock. The following does not address any foreign,
state, local tax or alternative minimum income, or other federal tax
consequences of the proposed Reverse Stock Split. The actual consequences for
each stockholder will be governed by the specific facts and circumstances
pertaining to such stockholder's acquisition and ownership of the Common Stock.
Thus, the Company makes no representations concerning the tax consequences for
any of its stockholders and recommends that each stockholder consult with such
stockholder's own tax advisor concerning the tax consequences of the Reverse
Stock Split, including federal, state and local, or other income tax.
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the proposed Reverse Stock Split. However, the Company believes
that, because the Reverse Stock Split is not part of a plan to periodically
increase a stockholder's proportionate interest in the assets or earnings and
profits of the Company, the proposed Reverse Stock Split will have the following
income tax effects:
1. A stockholder will not recognize taxable gain or loss as a result of the
Reverse Stock Split.
2. In the aggregate, a stockholder's basis in post-split common stock will
equal such stockholder's basis in the shares of pre-split Common Stock exchanged
therefor, and such stockholder's holding period for post-split Common Stock will
include the holding period for pre-split common stock exchanged therefor.
3. The proposed Reverse Stock Split will constitute a reorganization within
the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, and the Company will not recognize any gain or loss as a result of the
Reverse Stock Split.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL 2.
8
EXECUTIVE OFFICERS
The Company's executive officers as of June 30, 2002 were as follows:
NAME AND YEAR FIRST ELECTED DIRECTOR AGE PRINCIPAL OCCUPATION; DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
------------------------------------ -------- -------------------------------------------------------------
Richard E. Forkey.................. 62 President, Chief Executive Officer, Treasurer
Jack P. Dreimiller................. 54 Senior Vice President, Finance, Chief Financial Officer and
Clerk
Mr. Forkey has been the President, Chief Executive Officer, 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.
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, 2002 and the executive officers during the fiscal year ended
June 30, 2002 whose total annual salary and bonuses for the fiscal year ended
June 30, 2002 exceeded $100,000 for all services rendered in all capacities to
the Company and its subsidiaries (the "Named Executive Officers").
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------- ----------------------------
AWARDS PAYOUTS
---------- ---------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION OTHER ANNUAL OPTIONS ALL OTHER
AT FISCAL YEAR END YEAR SALARY($) BONUS($) COMPENSATION($) (NUMBER) COMPENSATION($)
--------------------------- -------- --------- -------- --------------- ---------- ---------------
Richard E. Forkey................... 2002 195,000 -0- 12,250(1) -0- 6,692(2)
President, Chief Executive Officer 2001 195,000 -0- 11,750(1) -0- 6,692(2)
2000 174,232 -0- 10,312(1) -0- 6,692(2)
Jack P. Dreimiller.................. 2002 162,499 -0- 3,187(3) 4,000 2,025(4)
Senior Vice President Finance, 2001 150,710 -0- 2,705(3) -0- 2,025(4)
Chief Financial Officer and Clerk 2000 141,252 -0- 2,708(3) 10,000 2,025(4)
------------------------
(1) Includes $9,250, $9,250, and $7,812 for car expense for 2002, 2001 and 2000,
respectively.
(2) Represents premiums for a life insurance policy and a disability insurance
policy.
(3) Represents Company's matching contribution to Profit Sharing Plan.
(4) Represents premiums for a life insurance policy.
9
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, 2002 to its Named Executive
Officers.
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN
NAME GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION DATE
---- -------------------- ------------------ -------------- ---------------
Richard E. Forkey............... n/a n/a n/a n/a
Jack P. Dreimiller.............. 4,000(1) 2.57% $.70 02/01/12
------------------------
(1) Options are exercisable as follows: one-fourth as of February 1, 2002, the
grant date, and one-fourth on each of the first, second and third
anniversaries of the grant date.
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, 2002, (ii) the aggregate dollar value realized
upon such exercise, (iii) the total number of unexercised options, if any, held
at June 30, 2002 and (iv) the value of unexercised in-the-money options, if any,
held at June 30, 2002. 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. 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, 2002, which was $0.43 per share. With respect to unexercised,
in-the-money options, the underlying options have not been exercised, and actual
gains, if any, on exercise will depend on the value of the Company's Common
Stock on the date of exercise.
FISCAL-YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL-YEAR END AT FISCAL YEAR-END ($)
--------------------------- ---------------------------
SHARES ACQUIRED ON VALUE EXERCISABLE UNEXERCISABLE
NAME EXERCISE (NUMBER) REALIZED($) (NUMBER) (NUMBER) EXERCISABLE UNEXERCISABLE
---- ------------------ ----------- ----------- ------------- ----------- -------------
Richard E. Forkey.......... -0- -0- -0- -0- -0- -0-
Jack P. Dreimiller......... -0- -0- 98,500 5,500 -0- -0-
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, 2002.
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 in
payments to such Named Executive Officer upon or following his resignation,
retirement, or other termination of employment with the Company and its
10
subsidiaries, or as a result of 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
To the Company's knowledge, based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company during the fiscal year ended
June 30, 2002 and Forms 5 and amendments thereto furnished to the Company with
respect to such fiscal year, no person required to file reports under
Section 16(a) of the Securities Exchange Act of 1934 failed to file such reports
on a timely basis during or with respect to such fiscal year.
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 currently not to exceed
$2,000 a month. These consulting services consist primarily of advice regarding
marketing, strategic planning and other general business issues. Either party
may terminate this arrangement at will. The Company paid J.R. Pitlor for
consulting services aggregate fees of $24,000 for fiscal year 2001 and $24,000
for fiscal year 2002.
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 lease expired on
December 31, 1999. The Company is currently a tenant-at-will paying rent of
$9,000 per month.
The Company has paid software and consulting fees of $20,000 for fiscal year
2001 and $19,000 for fiscal year 2002 to Thin Film Center, Inc., a company
wholly owned by Dr. Macleod, a Director of the Company, together with his wife.
The Company has paid legal fees to Ropes & Gray, a law firm of which
Mr. Benjamin, a Director of the Company, is a retired partner, of approximately
$320,000 for fiscal year 2001, and $117,000 for fiscal year 2002.
11
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, 2002, the record date
for the 2002 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 Named Executive
Officers who beneficially own 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 persons listed in the table.
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT(2)
------------------- ----------------------- ----------
David M. Greenhouse ........................................ 851,600(3) 8.11%
c/o Special Situations Fund III, L.P.
153 East 53rd Street
New York, NY 10022
DIRECTORS AND OFFICERS
Edward A. Benjamin* ........................................ 62,000(4) **
c/o Ropes & Gray
One International Place
Boston, MA 02110
Richard E. Forkey* ......................................... 1,772,267 16.87%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
H. Angus Macleod* .......................................... 45,000(5) **
c/o Thin Film Center, Inc.
2745 East Via Rotonda
Tucson, AZ 85716
Austin W. Marxe* ........................................... 871,600(6) 8.28%
c/o Special Situations Funds
153 East 53rd Street
New York, NY 10022
Joel R. Pitlor* ............................................ 96,250(7) **
19 Chalk Street
Cambridge, MA 02139
12
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT(2)
------------------- ----------------------- ----------
Robert R. Shannon* ......................................... 65,000(4) **
7040 E. Taos Place
Tucson, AZ 85715
Jack P. Dreimiller ......................................... 126,000(8) 1.19%
c/o Precision Optics Corporation, Inc.
22 East Broadway
Gardner, MA 01440
All officers and directors as a group, including those named
above (7 persons)......................................... 3,038,117(9) 28.11%
------------------------
* 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 upon exercise or conversion of
options, warrants, conversion privileges or other rights exercisable within
sixty days, sole voting 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) 210,800 shares owned of record by Special Situations Private
Equity Fund, L.P. ("SSPEF"); (ii) 374,300 shares owned of record by Special
Situations Fund III, L.P. ("SSF III"); (iii) 149,000 shares owned of record
by Special Situations Technology Fund, L.P. ("SSTF"); and (iv) 117,500
shares owned of record by Special Situations Cayman Fund, L.P. ("SSCF").
SSPEF, SSF III, SSTF and SSCF are affiliated investment funds. David
Greenhouse and Austin Marxe, a director of the Company, are principals of
the investment funds and their respective investment advisers, M.G.
Advisers, L.L.C., SST Advisers, L.L.C. AWM Investment Company, Inc.
(4) Includes 60,000 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(5) Represents shares which may be acquired within sixty days upon the exercise
of outstanding stock options.
(6) Includes (i) 851,600 shares owned by certain affiliated investment funds of
which Mr. Marxe is a principal (see footnote (3) above) and (ii) 20,000
shares which may be acquired within sixty days upon exercise of outstanding
stock options awarded to Mr. Marxe personally in his capacity as a Director
of the Company.
(7) Includes 16,250 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(8) Includes 101,000 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
(9) Includes 305,250 shares which may be acquired within sixty days upon the
exercise of outstanding stock options.
13
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the Company's Common Stock
that may be issued upon the exercise of options, warrants and rights under all
of our existing equity compensation plans as of June 30, 2002, including, but
not limited to, the 1989 Stock Option Plan and the 1997 Incentive Plan:
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE COMPENSATION PLANS
BE ISSUED UPON EXERCISE EXERCISE PRICE OF (EXCLUDING SECURITIES
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REFLECTED IN FIRST
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN)
----------------------- -------------------- ---------------------
Equity compensation plans approved by
shareholders....................... 688,400 $2.33 614,750(1)
Equity compensation plans not
approved by shareholders........... 55,000(2)(3)(4) $1.35 n/a
------- ----- -------
Total.............................. 743,400 $2.26 614,750
------------------------
(1) Includes 614,750 shares of Common Stock available for future grants under
the Company's 1997 Incentive Plan. No shares are available for future grants
under the Company's 1989 Stock Option Plan.
(2) Includes 15,000 shares of Common Stock issuable upon exercise of outstanding
options granted to Mr. Benjamin in connection with his service on the Board
of Directors. These options may be exercised at a price of $1.375 per share
and expire on December 15, 2004.
(3) Includes 15,000 shares of Common Stock issuable upon exercise of outstanding
options granted to Mr. Shannon issued in connection with his service on the
Board of Directors. These options may be exercised at a price of $1.375 per
share and expire on December 15, 2004.
(4) Includes 25,000 shares of Common Stock issuable upon exercise of outstanding
options granted to Werner Thiel in connection with his service as a
consultant to the Company. Options exercisable for 20,000 shares may be
exercised at a price of $1.296875 and expire on July 13, 2005. Options
exercisable for 5,000 share may be exercised at a price of $1.375 and expire
on December 14, 2004.
INDEPENDENT PUBLIC ACCOUNTANTS
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has been selected to serve as independent auditors of the Company
for the fiscal year ending June 30, 2003, and also served as the principal
accountants of the Company for the fiscal year ended June 30, 2002. A
representative of KPMG LLP is expected to be present at the annual meeting to
respond to appropriate questions and will have the opportunity to make a
statement if such representative so desires.
CHANGE IN INDEPENDENT PUBLIC ACCOUNTANTS
As previously disclosed on a current report on Form 8-K filed with the
Securities and Exchange Commission on July 2, 2002 (the "Form 8-K"), the Company
dismissed Arthur Andersen LLP ("Arthur
14
Andersen") as its independent accountants on July 1, 2002. The Company's Audit
Committee and Board of Directors approved this action.
The reports of Arthur Andersen on the Company's financial statements for the
two fiscal years ended June 30, 2001 and June 30, 2000, contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's two fiscal years ended June 30, 2001 and June 30, 2000,
and through July 1, 2002, there were no disagreements, resolved or unresolved,
with Arthur Andersen on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen, would
have caused Arthur Andersen to make reference thereto in connection with its
reports on the financial statements.
During the Company's two fiscal years ended June 30, 2001 and June 30, 2000,
and through July 1, 2002, Arthur Andersen has not advised the Company as to any
of the matters described in Item 304(a)(1)(iv)(B) of Regulation S-B promulgated
under the Securities Act of 1933, as amended.
The Company has been unable, after reasonable efforts, to have Arthur
Andersen review and respond to the above disclosure; however, Arthur Andersen
provided a letter dated July 2, 2002 stating that it was in agreement with the
disclosure included in paragraphs 2, 3 and 4 of the Form 8-K, which disclosure
is the same as the above disclosure.
On July 16, 2002, the Company engaged KPMG LLP as its new independent
accountant. The Company's Audit Committee and Board of Directors approved this
action. The decision to engage KPMG LLP followed the Company's evaluation of
proposals from several accounting firms.
During the Company's two fiscal years ended June 30, 2001 and June 30, 2000,
and through July 16, 2002, neither the Company nor any person on the Company's
behalf consulted with KPMG LLP regarding: (i) the application of accounting
principles to a specific completed or contemplated transaction, or the type of
audit opinion that might be rendered on the Company's financial statements, or
(ii) any matter that was the subject of a disagreement or event described in
Item 304(a)(1)(iv) of Regulation S-B.
AUDIT FEES
The aggregate fees billed or estimated to be billed for professional
services rendered by the Company's independent auditors for the audit of the
Company's annual financial statements for the fiscal year ended June 30, 2002
and for the reviews of the financial statements included in the Company's
quarterly reports on Form 10-QSB for that fiscal year were approximately
$79,100.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company's independent auditors did not perform any financial information
systems design or implementation work for the Company during the fiscal year
ended June 30, 2002.
ALL OTHER FEES
The aggregate fees billed for all other professional services rendered by
the Company's independent auditors for the fiscal year ended June 30, 2002 were
approximately $20,000.
15
AUDIT COMMITTEE REPORT
The Audit Committee is composed of Messrs. Benjamin, and Shannon, each of
whom is "independent" as defined in Rule 4200(a)(15) of the National Association
of Securities Dealers' listing standards. The Board of Directors has adopted a
written charter for the Audit Committee.
The Audit Committee has submitted the following report:
The Audit Committee has reviewed and discussed with management the audited
financial statements for the fiscal year ended June 30, 2002, and has discussed
with the Company's independent auditors the matters required to be discussed by
Statements on Auditing Standard No. 61 (SAS 61). SAS 61 requires independent
auditors to communicate to the Audit Committee various matters, including, if
applicable: (1) methods used to account for certain unusual transactions;
(2) the effect of certain accounting policies in controversial or emerging areas
for which there is a lack of authoritative guidance or consensus; (3) the
process used by management in formulating certain accounting estimates and the
basis for the auditor's conclusions regarding the reasonableness of those
estimates and (4) disagreements with management over the application of
accounting principles and certain other matters. The Audit Committee has
received the written disclosures and the letter from the Company's independent
accountants required by Independence Standards Board Standard No. 1 (requiring
auditors to make written disclosures to, and to discuss with, the Audit
Committee, various matters relating to the auditor's independence), has
discussed with the accountants their independence and has considered whether the
provision of non-audit services by the accountants is compatible with
maintaining that independence. Based on the foregoing and further review and
discussion, the Audit Committee has recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2002 for filing with the
Securities and Exchange Commission.
Edward A. Benjamin
Robert R. Shannon
SHAREHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the 2003 Proxy Statement
and form of proxy relating to that meeting provided they are received by the
Clerk of the Company no later than June 17, 2003 and are otherwise in compliance
with applicable Securities and Exchange Commission regulations.
If a Stockholder who wishes to present a proposal at the Company's 2003
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 31, 2003, then the proxies that the Board of Directors solicits for the
2003 Annual Meeting will include discretionary authority to vote on the
Stockholder's proposal, if such proposal is properly brought before the meeting.
16
APPENDIX A
FORM OF REVERSE STOCK SPLIT AMENDMENT
That, the Corporation's Articles of Organization, as amended, be further
amended by inserting the following in Article III:
"Upon the filing of these Articles of Amendment with the Massachusetts
Secretary of the Commonwealth (the "Effective Time"), each [INSERT APPROPRIATE
SPLIT NUMBER, AS DETERMINED IN ACCORDANCE WITH THE PROPOSAL, WHICH SHALL NOT BE
MORE THAN 6 AND NOT LESS THAN 3,] issued and outstanding shares of authorized
Common Stock of the Corporation, $.01 par value per share shall be reclassified
and combined into one (1) share of Common Stock. There shall be no fractional
shares issued. Each resulting fractional share shall be rounded up to a whole
share. The total number of authorized shares of Common Stock immediately after
the Effective Time shall continue to be 20,000,000."
A-1
PRECISION OPTICS CORPORATION
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
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 Stockholders on
November 12, 2002.
Thank you in advance for your prompt consideration of these matters.
Very truly yours,
Precision Optics Corporation, Inc.
DETACH HERE ZPOPC1
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
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PRECISION OPTICS CORPORATION, INC.
-------------------------------------------------------------------------------
1. Election of one Class III Director. The nominee for the Board of Directors to
serve for a three-year term as Class III Director:
NOMINEE: (01) Robert R. Shannon
FOR WITHHELD FROM
NOMINEE [___] NOMINEE [___]
2. Proposal to approve an amendment to the Articles of Organization, to be filed
at the discretion of the Board, to effect a reverse stock split as more fully
described in the Proxy Statement.
FOR [___] AGAINST [___] ABSTAIN [___]
Mark box at right if an address change or comment has / /
been noted on the reverse side of this card.
Please sign this proxy exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney, administrator, trustee or guardian,
please give full title as such.
Signature: _________________________________________ Date: ____________________
Signature: _________________________________________ Date: ____________________
DETACH HERE ZPOPC2
PRECISION OPTICS CORPORATION, INC.
COMMON STOCK PROXY
The undersigned, revoking any previous instructions, hereby acknowledges
receipt of the Notice and Proxy Statement dated October 15, 2002. In
connection with the Annual Meeting mentioned below, the undersigned hereby
appoint(s) Richard E. Forkey and Jack P. Dreimiller 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 Stockholders of Precision Optics
Corporation, Inc. to be held on November 12, 2002, at 10:00 A.M. at the Four
Points Sheraton Hotel, 99 Erdman Way, Leominster, Massachusetts, and at any
adjournments or postponements 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. IF NO DIRECTION IS GIVEN, THE SHARES
WILL BE VOTED FOR THE ELECTION OF THE CLASS III DIRECTOR NOMINEE DESCRIBED IN
PROPOSAL NUMBER 1 AND FOR PROPOSAL NUMBER 2.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
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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.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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