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                                                                   EXHIBIT 10.20

                         PNC BANK, NATIONAL ASSOCIATION
                               1600 Market Street
                             Philadelphia, PA 19103









November 16, 2001


Escalon Medical Corp.
Escalon Vascular Access, Inc.
Escalon Pharmaceutical, Inc.
Sonomed, Inc.
Escalon Digital Vision, Inc.
351 East Conestoga Road
Wayne, PA  19087
Attn:  Richard J. DePiano, CEO and Chairman

RE:    $2,000,000 COMMITTED LINE OF CREDIT; $7,900,000 TERM LOAN

Gentlemen:

         PNC Bank, National Association (the "Bank"), Escalon Medical Corp.
("Escalon Medical" or the "Borrower"), Escalon Vascular Access, Inc., Escalon
Pharmaceutical, Inc., Sonomed, Inc. and Escalon Digital Vision, Inc.
(collectively, the "Guarantors; together with the Borrower, the "Obligors") are
parties to a letter agreement dated January 14, 2000 (as heretofore amended,
supplemented or otherwise modified, the "Existing Letter Agreement") pursuant to
which the Bank extended to the Borrower a reducing committed revolving line of
credit in the amount of $5,000,000 (the "Existing Line of Credit") and a term
loan in the amount of $7,000,000 (the "Existing Term Loan"). This letter (as
amended, supplemented or otherwise modified from time to time, this "Letter
Agreement"), and the credit facilities established hereby, shall amend and
restate the Existing Letter Agreement and the credit facilities established
thereby. As a result, on and after the date hereof, this Letter Agreement, the
Amended and Restated Notes and the Amended and Restated Security Agreements (as
each such term is defined below) shall supercede the Existing Letter Agreement
and the Notes and Security Agreements executed in connection with the Existing
Letter Agreement


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Escalon Medical Corp.
November 16, 2001
Page 2

         Each Guaranty and Suretyship Agreement heretofore executed by a
Guarantor in favor of the Bank (as amended, supplemented or otherwise modified
from time to time, the "Guaranty and Suretyship Agreements") shall remain in
full force and effect and is hereby reaffirmed.

         Notwithstanding the preceding paragraphs, it is not the intention of
any of the parties hereto that the restructuring of the existing indebtedness
under the Existing Letter Agreement constitute a payment or discharge of such
indebtedness. Accordingly, Borrower's obligation to pay (and the Guarantors'
guaranty of) the indebtedness evidenced by this Letter Agreement and the Amended
and Restated Notes shall be accepted by the Bank in the renewal and extension of
(but not in substitution and exchange for or in payment of) the indebtedness
under the Existing Letter Agreement and the credit facilities established
thereby.

         1. Line of Credit and Use of Proceeds. The first credit facility
covered by this Letter Agreement is a committed revolving line of credit under
which Borrower may request and the Bank, subject to the terms and conditions of
this Letter Agreement, will make advances to Borrower from time to time until
the Expiration Date, in an amount in the aggregate at any time outstanding not
to exceed the Applicable Credit Limit (the "Line of Credit"). The "Expiration
Date" means June 30, 2004 or such later date as may be designated by the Bank by
written notice to Borrower. "Applicable Credit Limit" means $2,000,000. Advances
under the Line of Credit shall be used for working capital and other general
corporate purposes. On the date hereof, and without the necessity of any further
action by any party, $2,000,000 of the Existing Principal Amount shall be deemed
to be advances outstanding under the Line of Credit. The "Existing Principal
Amount" means the principal amount outstanding on the date hereof under the
Existing Line of Credit and the Existing Term Loan.

         2. Repayment of Line of Credit. Subject to the terms and conditions of
this Letter Agreement, Borrower may borrow, repay and reborrow under the Line of
Credit until the Expiration Date, on which date the outstanding principal
balance and any accrued but unpaid interest shall be due and payable.

         3. Term Loan. The second credit facility covered by this Letter
Agreement is a $7,900,000 term loan for Borrower ("Term Loan"). On the date
hereof, and without the necessity of any further action by any party, $7,900,000
of the Existing Principal Amount shall be converted into an advance under the
Term Loan. The Term Loan shall be repaid in accordance with the terms of the
applicable Amended and Restated Note. No advances may be made under the Term
Loan after the date hereof and any principal payments on the Term Loan may not
be reborrowed.


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Escalon Medical Corp.
November 16, 2001
Page 3



         4. Interest Rate; Fees; Payments at Closing.

                  a. Interest Rate on Line of Credit. Principal outstanding
under the Line of Credit shall bear interest at a per annum rate of interest
(computed on the basis of a year of 360 days and the actual number of days
elapsed) equal to the sum of (i) the rate of interest in effect from time to
time at the Bank as its prime rate, which rate may not be the lowest interest
rate then being charged commercial borrowers by the Bank (the "Prime Rate"),
plus (ii) one and one half of one percent (1.50%). If and when the Prime Rate
changes, the rate of interest on principal of the Line of Credit will change
automatically without notice to Borrower, effective on the date of any such
change.

                  b. Interest Rate on Term Loan. Principal outstanding under the
Term Loan shall bear interest at a per annum rate of interest (computed on the
basis of a year of 360 days and the actual number of days elapsed) equal to the
Prime Rate plus one and three quarters of one percent (1.75%). If and when the
Prime Rate changes, the rate of interest on principal of the Term Loan will
change automatically without notice to Borrower, effective on the date of any
such change.

                  c. Payment of Interest. Borrower shall pay accrued interest on
the unpaid principal balance of the Line of Credit and the Term Loan monthly in
arrears.

                  d. Legal Rate. If, at any time, any of the aforesaid rates
shall be finally determined by any court of competent jurisdiction, governmental
agency or tribunal to exceed the maximum rate of interest permitted by any
applicable laws, then, for such time as such rate would be deemed excessive,
application thereof shall be suspended, and there shall be charged in lieu
thereof the maximum rate of interest permissible under such laws.

                  e. Default Rate. Upon maturity (whether by acceleration,
demand or otherwise) and, at the option of the Bank, upon the occurrence of an
Event of Default under this Letter Agreement, the documents executed pursuant
hereto and/or any Guaranty and Suretyship Agreement, then, notwithstanding
anything to the contrary contained herein, interest on the Line of Credit and
the Term Loan shall automatically, without notice or demand, increase to a rate
per annum (the "Default Rate") which is 4.00 percentage points above the
otherwise applicable rate. Interest at the Default Rate shall continue to accrue
notwithstanding the entry of any judgment hereon or on any of the Amended and
Restated Notes, and all such judgments shall bear interest at the Default Rate
provided for herein.

                  f. Fees. Borrower shall pay Bank:

                           (i)      Concurrently with the execution hereof, a
                                    facility fee of $50,000; and

                           (ii)     On the first business day of March, June,
                                    September and December of each year,
                                    commencing with March 1, 2002, a facility
                                    fee equal to .25% multiplied by the
                                    aggregate principal


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Escalon Medical Corp.
November 16, 2001
Page 4



                                    amount outstanding under the Line of Credit
                                    and the Term Loan on January 1 of such year.
                                    In other words, commencing with the year
                                    2002 and through and including 2003, there
                                    shall be a facility fee of 1% of the
                                    aggregate principal amount outstanding under
                                    this Letter Agreement on January 1 of such
                                    year, such facility fee to be paid in equal
                                    quarterly installments on the first business
                                    day of March, June, September and December
                                    of such year, and, in the year 2004, there
                                    shall be a facility fee of 0.5% of the
                                    aggregate principal amount outstanding under
                                    this Letter Agreement on January 1 of such
                                    year, such facility fee to be paid in equal
                                    installments on the first business day of
                                    March and June of such year.

                  g. Payments at Closing. In addition to the $50,000 facility
fee referred to clause f(i) above, on the date hereof the Obligors shall pay to
the Bank the following:

                           (i)      All accrued interest under the Existing Line
                                    of Credit and the Existing Term Loan; and

                           (ii)     The accrued legal fees and expenses of
                                    counsel to the Bank incurred in connection
                                    with the Existing Letter Agreement and this
                                    Letter Agreement, such fees (exclusive of
                                    expenses) not to exceed $19,700.

         5. Amended and Restated Notes. The obligations of Borrower to repay the
Line of Credit and the Term Loan shall be evidenced by amended and restated
promissory notes (as amended, supplemented or otherwise modified from time to
time, collectively, the "Amended and Restated Notes") in form and content
satisfactory to the Bank.

         6. Security; Other Conditions. Borrower shall cause the following to be
executed, where appropriate, and delivered to the Bank in form and content
satisfactory to the Bank:

                  a.       Amended and restated security agreements (as amended,
                           supplemented or otherwise modified from time to time,
                           each an "Amended and Restated Security Agreement") by
                           which each Obligor grants to the Bank a perfected
                           first lien (other than Permitted Liens as defined
                           below) on such Obligor's existing and future personal
                           property, including accounts, inventory, equipment,
                           investment property, general intangibles, chattel
                           paper, documents, instruments, patents, trademarks
                           and copyrights;

                  b.       One or more pledge agreements (as amended,
                           supplemented or otherwise modified from time to time,
                           each a "Pledge Agreement") pursuant to which the Bank
                           shall be granted a first priority lien on (i) the



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Escalon Medical Corp.
November 16, 2001
Page 5


                           stock of each of the Guarantors and (ii) all stock of
                           IntraLase, Inc. ("IntraLase") owned by an Obligor;
                           and

                  c.       An acknowledgment by each Guarantor that the Guaranty
                           and Suretyship Agreement previously executed by such
                           Guarantor remains in full force and effect and covers
                           the facilities provided herein (as amended,
                           supplemented or otherwise modified from time to time,
                           the "Acknowledgments").

         7. Stock Warrants. On the date hereof, Borrower shall execute and
deliver to the Bank a Warrant Agreement in form and content satisfactory to the
Bank, entitling the Bank to purchase from Borrower 60,000 number of shares of
common stock of the Borrower on the terms provided therein (as amended,
supplemented or otherwise modified from time to time, the "Warrant Agreement").

         8. Mandatory Prepayments.

                  a.       Simultaneously with the closing of any Asset Sale by
                           an Obligor, such Obligor shall pay to the Bank
                           seventy five percent (75%) (or such other percentage
                           as the Bank and the Borrower shall agree at the time
                           of any such sale) of the net proceeds from such Asset
                           Sale; provided that, in each calendar year the
                           Obligors shall not be required (unless an Event of
                           Default shall exist) to make any prepayments pursuant
                           to this Paragraph 8(a) until the net proceeds in the
                           aggregate from Asset Sales in such year (including
                           with respect to calendar year 2001, any such net
                           proceeds received between the beginning of such year
                           and the date of this Letter Agreement) shall equal or
                           exceed $25,000, whereupon the amount of net proceeds
                           that must be paid to the Bank pursuant to this
                           Paragraph 8(a) shall equal 75% (or such other
                           percentage as the Bank and the Borrower shall agree)
                           of all net proceeds in such year in excess of
                           $25,000. As used herein, the term "Asset Sale" means
                           any sale, lease, transfer or other disposition of
                           assets (each referred to for the purposes of this
                           definition as a "disposition") by an Obligor (other
                           than a disposition by an Obligor to a different
                           Obligor), other than (i) dispositions of inventory in
                           the ordinary course of business and (ii) dispositions
                           of surplus or obsolete inventory or equipment in the
                           ordinary course of business.

                  b.       Any prepayments made to the Bank pursuant to this
                           Paragraph 8 shall, unless otherwise designated by the
                           Bank in its sole discretion, be applied first to the
                           principal of the Term Loan in the inverse order of
                           maturity, until the Term Loan is paid in full, and
                           second to the principal of the Line of Credit. The
                           Applicable Credit Limit shall be reduced by an amount
                           equal to the amount of any such payments on the Line
                           of Credit pursuant to this Paragraph 8.


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Escalon Medical Corp.
November 16, 2001
Page 6



                  c.       Nothing herein shall be or be deemed to be a consent
                           by the Bank to any Asset Sale, it being understood
                           and agreed that the consent of the Bank is still
                           required for any such Asset Sale.

         9. Covenants. Unless the Bank provides its prior written consent to the
contrary, or until payment in full and termination of the Line of Credit and the
Term Loan:

                  a.       No Obligor will make or permit any change in the
                           nature of its business from the development,
                           marketing and distribution of medical services,
                           devices and pharmaceuticals or cause or permit any
                           change in the present management position and
                           responsibilities of Richard J. DePiano.

                  b.       Borrower will deliver to the Bank:

                           (i)      Borrower's Financial Statements for its
                                    fiscal year, within 120 days after fiscal
                                    year end, audited by a certified public
                                    accountant reasonably acceptable to the Bank
                                    (Bank hereby acknowledging that Borrower's
                                    present accounting firm is acceptable),
                                    together with a copy of Borrower's SEC Form
                                    10-K filing.

                           (ii)     Borrower's Financial Statements for each
                                    fiscal quarter, within 60 days after fiscal
                                    quarter end, together with year-to-date and
                                    comparative figures for the corresponding
                                    periods of the prior year, certified as true
                                    and correct by its chief financial officer,
                                    together with a copy of Borrower's SEC Form
                                    10-Q filing.

                           (iii)    With each delivery of Financial Statements,
                                    (A) Borrower's chief financial officer shall
                                    also deliver a certificate as to Borrower's
                                    compliance with the financial covenants set
                                    forth herein for the period then ended and
                                    whether any Event of Default (as defined in
                                    the Amended and Restated Notes) exists, and,
                                    if so, the nature thereof and the corrective
                                    measures Borrower proposes to take; and (B)
                                    Borrower will deliver to the Bank any
                                    management letters issued by the accounting
                                    firm which prepared said annual audited
                                    statements.

                           (iv)     Promptly after receipt by any Obligor, any
                                    financial statements of IntraLase as and
                                    when received by such Obligor.

                           (v)      Budgets and forecasts and such other
                                    financial information as the Bank may from
                                    time to time reasonably request.

"Financial Statements" means the balance sheet and statements of income and cash
flows for Borrower and its consolidated subsidiaries prepared in accordance with
generally accepted


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Escalon Medical Corp.
November 16, 2001
Page 7



accounting principles in effect from time to time ("GAAP") applied on a
consistent basis (subject in the case of interim statements to normal year-end
adjustments).

                  c.       Borrower and all other Obligors (herein, the "Test
                           Group") will maintain on a consolidated basis the
                           following financial covenants as of the end of each
                           fiscal quarter commencing June 30, 2001:

                           (i)      a ratio of (a) EBITDA (meaning pre-tax
                                    earnings calculated without regard to any
                                    gain or loss which is classified as
                                    "extraordinary" in accordance with GAAP plus
                                    depreciation, amortization and other
                                    non-cash charges plus interest expense minus
                                    the sum of dividends and Unfunded Capital
                                    Expenditures) to (b) Current Maturities plus
                                    interest expense plus tax expense, of not
                                    less than 1.05 to 1.00, all determined for
                                    the four fiscal quarters then ending. For
                                    these purposes (A) "Unfunded Capital
                                    Expenditures" means capital expenditures
                                    made from other than funds borrowed for the
                                    purpose of making such capital expenditures,
                                    (B) "Current Maturities" means the current
                                    principal maturities of long term debt
                                    (including capital lease obligations) as
                                    well as any prepayments thereof and (without
                                    duplication) any principal payments on
                                    account of Subordinated Debt, but
                                    specifically excluding the principal balance
                                    of the Line of Credit, and (C) "Subordinated
                                    Debt" means indebtedness of Obligors for
                                    borrowed money the repayment of which is
                                    subordinated to all of Obligors'
                                    indebtedness and liabilities to Bank
                                    pursuant to a written subordination
                                    agreement executed and delivered to and in
                                    form and substance satisfactory to Bank;

                           (ii)     net worth (assets minus liabilities per
                                    GAAP) of not less than $5,300,000;

                           (iii)    a ratio of Total Senior Indebtedness to
                                    EBITDA of not more than 5.00 to 1.00 for the
                                    period June 30, 2001 through and including
                                    June 30, 2002 and 4.00 to 1.00 thereafter,
                                    all determined for the four fiscal quarters
                                    then ending. For these purposes, "Total
                                    Senior Indebtedness" means all indebtedness
                                    for borrowed money (including capitalized
                                    lease obligations), including guaranties
                                    thereof and including the face amount of
                                    letters of credit issued for the account of
                                    or guaranteed by an Obligor;

                  d.       No Obligor will create, assume, incur or suffer to
                           exist any mortgage, pledge, encumbrance, security
                           interest, lien or charge of any kind upon any of its
                           property, now owned or hereafter acquired, or acquire
                           or agree to acquire any kind of property under
                           conditional sales or other title


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Escalon Medical Corp.
November 16, 2001
Page 8


                           retention agreements, provided, however, that the
                           foregoing restrictions shall not include the
                           following (herein, "Permitted Liens"):

                           (i)      liens for taxes, assessments or governmental
                                    charges or levies which shall not at the
                                    time be due and payable or can thereafter be
                                    paid without penalty or are being contested
                                    in good faith by appropriate proceedings
                                    diligently conducted and with respect to
                                    which it has created adequate reserves;

                           (ii)     pledges or deposits to secure obligations
                                    under workers' compensation laws or similar
                                    legislation;

                           (iii)    liens or security interests in favor of the
                                    Bank;

                           (iv)     liens in respect of property or assets of
                                    Obligors which are incurred by law, which
                                    were incurred in the ordinary course of
                                    business and do not secure indebtedness for
                                    borrowed money, such as carriers',
                                    warehousemen's, materialmen's, mechanics and
                                    similar liens and which do materially
                                    detract from the value of the Obligors'
                                    assets or property or materially impair the
                                    use thereof in the Obligors' operation of
                                    its business; and

                           (v)      Purchase money security interests (including
                                    capital leases) in equipment granted to the
                                    vendor or financier thereof, provided that
                                    the indebtedness secured thereby shall not
                                    exceed $100,000 in the aggregate at any time
                                    outstanding.

                  e.       No Obligor will create, incur, guarantee, endorse
                           (except endorsements in the course of collection),
                           assume or suffer to exist any indebtedness, except
                           (i) indebtedness to the Bank, (ii) open account trade
                           debt incurred in the ordinary course of business and
                           not past due, (iii) Subordinated Debt, (iv) purchase
                           money debt for the acquisition of equipment,
                           including capitalized lease obligations, limited to
                           the purchase price thereof and not in excess of
                           $100,000 in principal amount at any time outstanding
                           in the aggregate and (v) indebtedness to Radiance
                           Medical Systems, Inc. incurred prior to the date
                           hereof in an aggregate principal amount not exceeding
                           $1,367,558 pursuant to those two certain notes each
                           dated February 28, 2001 in the amounts of $64,884 and
                           $717,558, respectively.

                  f.       No Obligor will liquidate, merge or consolidate with
                           any person, firm, corporation or other entity, or
                           sell, lease, transfer or otherwise dispose of all or
                           any part of its property or assets, whether now owned
                           or hereafter acquired, other than sale of inventory
                           in the ordinary course of business and disposition of
                           equipment for obsolescence.


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Escalon Medical Corp.
November 16, 2001
Page 9


                  g.       No Obligor will make acquisitions of all or
                           substantially all of the property or assets or stock
                           of any person, firm, corporation or other entity;

                  h.       No Obligor will make or have outstanding any loans or
                           advances to or otherwise extend credit to or make any
                           investment in any person, firm or corporation, except
                           for trade credit in the ordinary course of business
                           and except for (i) loans, advances or investments in
                           another Obligor, (ii) investments in Escalon Medical
                           Imaging, LLC in an aggregate amount not to exceed
                           $650,000, (iii) loans and advances to employees and
                           consultants in the ordinary course of business in
                           amount not to exceed $15,000 to any one such employee
                           or consultant, (iv) the loan made by the Borrower to
                           Sohrab Darougar, M.D. on or about May 27, 1997 in the
                           principal amount of $150,000, which loan is due in
                           2005 and (v) other loans, advances or investments in
                           an amount not to exceed $50,000 for any one such
                           loan, advance or investment and $100,000 for all such
                           other loans, advances and investments in the
                           aggregate. It is understood and agreed that an
                           Obligor's capitalization of costs and expenses
                           relating to intellectual property owned by such
                           Obligor shall not be deemed to be an "investment" by
                           such Obligor for purposes of this clause (h);

                  i.       Each Obligor will maintain complete and accurate
                           books and records and will permit access by Bank
                           during business hours to such books and records and
                           will permit Bank to inspect its properties and
                           operations. Bank may at any time and from time to
                           time on reasonable notice (or, if an Event of Default
                           has occurred and is continuing, without prior notice)
                           to Obligors, audit and conduct examinations of
                           Obligors' books and records and accounts receivable
                           and make abstracts and copies thereof, and, if an
                           Event of Default has occurred, Borrower shall
                           reimburse Bank for Bank's costs and expenses for each
                           such audit;

                  j.       No Obligor will, directly or indirectly, pay any cash
                           dividends on account of or repurchase any of its
                           capital stock, except that a Guarantor may pay cash
                           dividends to another Guarantor or the Borrower;

                  k.       Obligors will not make capital expenditures in excess
                           of $250,000 per fiscal year in the aggregate; and

                  l.       No Obligor will form any subsidiary without the prior
                           written consent of Bank. If such consent is granted,
                           the Borrower will cause any such new subsidiary to,
                           at the cost of the Borrower, (i) execute and deliver
                           to the Bank a Guaranty and Suretyship Agreement in a
                           form similar to that previously executed by the
                           Guarantors, (ii) execute a Security Agreement
                           (including intellectual property riders) similar to
                           those executed on the date hereof by the Guarantors
                           and (iii) cause to be delivered to the Bank an
                           opinion from a law firm reasonably acceptable to the
                           Bank, such


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Escalon Medical Corp.
November 16, 2001
Page 10


                           opinion to be in form and substance reasonably
                           acceptable to the Bank and to be substantially
                           similar to the opinion delivered on the date hereof
                           by counsel to the Borrower. In addition, the stock of
                           any such new subsidiary shall be pledged to the Bank
                           pursuant to documentation reasonably acceptable to
                           the Bank and the certificates representing such stock
                           shall be delivered to the Bank with appropriate stock
                           powers.

         10. Representations and Warranties. On the date hereof, to induce the
Bank to restructure the indebtedness under the Existing Letter Agreement on the
terms hereof, and on the date of any advance to Borrower under the Line of
Credit is made, each Obligor represents and warrants to Bank that, except as
otherwise set forth on Schedule I hereto:

                  a.       Borrower's latest financial statements provided to
                           the Bank are complete and accurate in all material
                           respects and fairly present the financial condition,
                           and the results of the Borrower's operations for the
                           period specified therein. The Borrower's financial
                           statements have been prepared in a manner
                           consistently applied from period to period subject in
                           the case of interim statements to normal year-end
                           adjustments. Since the date of the latest financial
                           statements provided to the Bank, no Obligor has
                           suffered any damage, destruction or loss which has
                           materially adversely affected its business, assets,
                           operations, financial condition or results of
                           operations.

                  b.       There are no actions, suits, proceedings or
                           governmental investigations pending or, to the
                           knowledge of Borrower, threatened against any Obligor
                           which could result in a material adverse change in
                           its business, assets, operations, financial condition
                           or results of operations and there is no basis known
                           to Borrower or to Richard J. DePiano for any such
                           action, suit, proceedings or investigation.

                  c.       To the knowledge of the Obligors, each Obligor has
                           filed all returns and reports that are required to be
                           filed by it in connection with any United States
                           federal, state or local tax, duty or charge levied,
                           assessed or imposed upon any Obligor or its property,
                           including unemployment, social security and similar
                           taxes and all of such taxes have been either paid or
                           adequate reserve or other provision has been made
                           therefor.

                  d.       Each Obligor is duly organized, validly existing and
                           in good standing under the laws of the state of its
                           incorporation or organization and has the power and
                           authority to own and operate its assets and to
                           conduct its business as now or proposed to be carried
                           on, and, to the knowledge of the Obligors, is duly
                           qualified, licensed and in good standing to do
                           business where its ownership of property or the
                           nature of its business requires such qualification or
                           licensing.


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Escalon Medical Corp.
November 16, 2001
Page 11


                  e.       Each Obligor has full power and authority to enter
                           into the transactions provided for in this Letter
                           Agreement and has been duly authorized to do so by
                           all necessary and appropriate action and when
                           executed and delivered by the Obligors, this Letter
                           Agreement and the other loan documents executed and
                           delivered pursuant hereto will constitute, and the
                           Guaranty and Suretyship Agreements previously
                           executed by the Guarantors constitute, the legal,
                           valid and binding obligations of each Obligor party
                           thereto, enforceable in accordance with their terms.

                  f.       There does not exist any default or violation by any
                           Obligor of or under any of the terms, conditions or
                           obligations of (i) its organizational documents; (ii)
                           any indenture, mortgage, deed of trust, franchise,
                           permit, contract, agreement, or other instrument to
                           which it is a party or by which it is bound; or (iii)
                           any law, regulation, ruling, order, injunction,
                           decree, condition or other requirement applicable to
                           or imposed upon any Obligor by any law or by any
                           governmental authority, court or agency.

                  g.       Borrower has no direct or indirect subsidiaries other
                           than the Guarantors and is not a subsidiary of any
                           other entity. Each Guarantor is a direct wholly-owned
                           subsidiary of the Borrower.

                  h.       On November 7, 2001, (i) Escalon Medical Corp. merged
                           into Escalon Pennsylvania, Inc. which was a
                           wholly-owned subsidiary of Escalon Medical Corp. and
                           (ii) Escalon Pennsylvania, Inc. changed its name to
                           Escalon Medical Corp.

         11. Depository. Obligors will establish and maintain at the Bank the
Obligors' primary depository accounts.

         12. Additional Provisions. Borrower and the other Obligors agree
simultaneously herewith to sign and deliver to the Bank the Amended and Restated
Notes, the Amended and Restated Security Agreements, the Pledge Agreements, the
Acknowledgements, the Disclosures for Confession of Judgment, the Warrant
Agreement and such other instruments and documents as the Bank may reasonably
request, such as certified resolutions, incumbency certificates or other
evidence of authority. The Bank will not be obligated to make any advance under
the Line of Credit if any Event of Default (as defined in any Amended and
Restated Note) or event which with the passage of time, provision of notice or
both would constitute an Event of Default under an Amended and Restated Note
shall have occurred.

This Letter Agreement is governed by the laws of the Commonwealth of
Pennsylvania. No modification or waiver of any of the terms of this Letter
Agreement will be valid and binding unless agreed to in writing by the Bank.
When executed and delivered by the parties hereto, this Letter Agreement and the
other documents executed in connection herewith will constitute the entire
agreement between the Bank and Obligors concerning the Line of Credit and the
Term Loan and shall replace all prior understandings, statements, negotiations
and written materials


<PAGE>
Escalon Medical Corp.
November 16, 2001
Page 12


relating to the Line of Credit and the Term Loan; provided that, the Guaranty
and Suretyship Agreements shall remain in full force and effect in accordance
with their terms as modified by the second paragraph of this Letter Agreement.

To accept these terms, please sign this Letter Agreement as set forth below.
Very truly yours,

PNC BANK, NATIONAL ASSOCIATION

By:  Frank P. Devine
    -------------------------------



<PAGE>
Escalon Medical Corp.
November 16, 2001
Page 13

ACCEPTANCE

With the intent to be legally bound hereby, the above terms and conditions are
hereby agreed to and accepted this 16th day of November, 2001.



ESCALON MEDICAL CORP.

By:  Richard J. DePiano
    -----------------------------
Title: CEO
       --------------------------


ESCALON VASCULAR ACCESS, INC.

By:  Richard J. DePiano
    -----------------------------
Title:  CEO
       --------------------------


ESCALON PHARMACEUTICAL, INC.

By:  Richard J. DePiano
    -----------------------------
Title:  CEO
       --------------------------




SONOMED, INC.

By:  Richard J. DePiano
    -----------------------------
Title: CEO
       --------------------------


ESCALON DIGITAL VISION, INC.

By:  Richard J. DePiano
    -----------------------------
Title:  CEO
       --------------------------