<PAGE>   1

                                                                    Exhibit 10.2

                    INDEMNIFICATION AND ADVANCEMENT AGREEMENT


         INDEMNIFICATION AND ADVANCEMENT AGREEMENT dated as of March ___, 2000
between Escalon Medical Corp., a Delaware corporation (the "Company"), and the
undersigned [DIRECTOR AND/OR OFFICER] of the Company ("Indemnitee").

                                    RECITALS

         The Company has determined that in order for the Company to attract and
retain highly qualified personnel to serve as directors and officers of the
Company, it is in the best interest of the Company to indemnify its directors
and officers against claims and other actions arising out of their service to
and actions on behalf of the Company and its affiliates to the fullest extent
permitted by the Delaware General Corporation Law (the "DGCL"). Indemnitee is a
[DIRECTOR AND/OR OFFICER] of the Company that the Company has determined should
be granted such indemnification.

         NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:

         1. DEFINITIONS. For purposes of this Agreement:

                  (a) "Affiliate" shall mean any person or entity controlling,
controlled by or under common control with the Company.

                  (b) "Disinterested Director" shall mean a director of the
Company who is not or was not a party to a Proceeding in respect of which
indemnification is being sought by Indemnitee.

                  (c) "Expenses" shall mean all reasonable attorneys' fees and
costs, retainers, court costs, transcripts, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or expenses
customarily incurred in connection with asserting or defending a claim.

                  (d) "Independent Counsel" shall mean any counsel that neither
is presently nor in the past five years has been retained to represent: (i) the
Company or Indemnitee in any matter material to either such party or (ii) any
other party to a Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any firm or person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's right to indemnification under this Agreement.

                  (e) "Judgments" shall mean all awards, penalties, fines,
settlements and all other related liabilities.
<PAGE>   2
                  (f) "Proceeding" shall mean any pending, completed or
threatened action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding whether civil,
criminal, administrative or investigative; provided, however, that the term
"Proceeding" shall include an action instituted by or on behalf of Indemnitee
(other than an action to enforce Indemnitee's rights under this Agreement) only
if such action has been authorized by a majority of the Disinterested Directors.

         2. INDEMNIFICATION. The Company shall indemnify and hold harmless
Indemnitee from and against any Judgments and Expenses that Indemnitee may
sustain, suffer or incur that result from, arise out of or relate to Indemnitee
serving or having had served as an officer or director of the Company or an
Affiliate or otherwise acting for or on behalf of the Company or an Affiliate
(collectively referred to as an "Officer or Director of the Company") to the
fullest extent permitted by the laws of the State of Delaware in effect on the
date hereof, or as such laws may from time to time hereafter be amended to
increase the scope of such permitted indemnification, including, but not limited
to, the following rights of indemnification:

                  (a) If Indemnitee was or is made a party or is threatened to
be made a party to any Proceeding, other than an action by or in the right of
the Company, by reason of (i) the fact that Indemnitee is or was an Officer or
Director of the Company or any other entity that Indemnitee is or was serving at
the request of the Company or (ii) any act or omission by Indemnitee in any such
capacity, the Company shall indemnify Indemnitee from and against all Judgments
and Expenses incurred by Indemnitee or on Indemnitee's behalf in connection with
any such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal proceeding, had no reasonable cause
to believe his conduct was unlawful; or

                  (b) If Indemnitee was or is made a party or is threatened to
be made a party to any Proceeding brought by or in the right of the Company to
procure a judgment in its favor by reason of (i) the fact that Indemnitee is or
was an Officer or Director of the Company or any other entity that Indemnitee is
or was serving at the request of the Company or (ii) any act or omission by
Indemnitee in any such capacity, the Company shall indemnify Indemnitee from and
against all Expenses incurred by Indemnitee or on Indemnitee's behalf in
connection with any such Proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, that no indemnification shall be
made in respect of any claim, issue or matter as to which the DGCL expressly
prohibits such indemnification by reason of an adjudication of liability of
Indemnitee to the Company, unless and to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
shall determine equitable under the circumstances.

Notwithstanding the foregoing, the Company shall indemnify Indemnitee in
connection with any Proceeding instituted by or on behalf of Indemnitee (other
than an action to enforce Indemnitee's rights under this Agreement) only if such
Proceeding is authorized by a majority of the Disinterested Directors.

                                      -2-
<PAGE>   3
         3. INDEMNIFICATION OF PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.
Notwithstanding any other provision of this Agreement to the contrary, to the
extent that Indemnitee has been wholly successful on the merits or otherwise
involved in any Proceeding on any claim, issue or matter, the Company shall
indemnify Indemnitee from and against all Expenses incurred by Indemnitee or on
Indemnitee's behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee to the maximum extent permitted by the
DGCL from and against all Expenses incurred by Indemnitee regarding each
successfully resolved claim, issue or matter. For purposes of this Section 3,
the termination of any such claim, issue or matter by dismissal with or without
prejudice shall be deemed to be a successful result as to such claim, issue or
matter.

         4. ADVANCEMENT OF EXPENSES. All Expenses incurred by or on behalf of
Indemnitee shall be paid by the Company in advance of the final disposition of
such Proceeding upon receipt by the Company of a statement from Indemnitee
requesting such advance. Such statement shall reasonably evidence such Expenses
incurred by Indemnitee in connection therewith and shall be accompanied by a
written undertaking in form and substance satisfactory to the Company by
Indemnitee to repay such amount if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified therefor pursuant to the terms of
this Agreement. Solely for purposes of advancing Expenses under this Section 4,
attorneys' fees and costs shall be deemed reasonable and shall be advanced by
the Company if Indemnitee has submitted with Indemnitee's statement requesting
advancement an affidavit stating (i) that Indemnitee has reviewed the relevant
legal statements, bills, invoices (if the fees and costs have already been
incurred) or retainers or advancement requests (if such fees and costs have not
yet been incurred) and (ii) that the fees and costs in question are necessary
and reasonable to the best of Indemnitee's knowledge and belief; provided,
however, that the Company shall retain its right to contest the reasonableness
of all Expenses advanced after the final disposition of the Proceeding for which
advancement was sought.

         5. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

                  (a) When seeking indemnification pursuant to Sections 2 or 3
hereof, Indemnitee shall submit a written request for indemnification to the
Company. Such request shall include documentation or information that is
reasonably necessary for the Company to make a determination of Indemnitee's
entitlement to indemnification hereunder and that is reasonably available to
Indemnitee. Determination of Indemnitee's entitlement to indemnification shall
be made not later than 30 days after receipt by the Company of Indemnitee's
written request for indemnification.

                  (b) The entitlement of Indemnitee to indemnification under
this Agreement shall be determined by a majority of the Disinterested Directors,
or, at the discretion of such directors, such determination shall be made by
Independent Counsel.

                  (c) In the event that determination of entitlement is to be
made by Independent Counsel, such Independent Counsel shall be selected by the
Board of Directors of the Company and approved by Indemnitee. Upon the failure
of the Board of Directors to select such Independent Counsel or upon the failure
of Indemnitee to approve the Board's selection, such Independent

                                      -3-
<PAGE>   4
Counsel shall be selected by the Chancellor of the State of Delaware or such
other person as the Chancellor shall designate to make such selection.

         6. EFFECT OF CERTAIN PROCEEDINGS.

                  (a) If the person or persons empowered to make a determination
with respect to entitlement to indemnification shall have failed to make the
requested determination within 30 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent (i) misrepresentation by Indemnitee of a material fact
in the request for indemnification or (ii) a final judicial determination that
all or any part of such indemnification is expressly prohibited by the DGCL. The
termination of any Proceeding by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
adversely affect the rights of Indemnitee to indemnification hereunder except as
may be specifically provided herein, or create a presumption that Indemnitee did
not act in good faith and in a manner that Indemnitee reasonably believed to be
in or not opposed to the best interests of the Company or create a presumption
that (with respect to any criminal action or proceeding) Indemnitee had
reasonable cause to believe that Indemnitee's conduct was unlawful.

                  (b) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is
based on the records or books of account of the Company or an Affiliate,
including financial statements, or on information supplied to Indemnitee by the
officers of the Company or an Affiliate in the course of their duties, or on the
advice of legal counsel for the Company or an Affiliate or on information or
records given or reports made to the Company or an Affiliate by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Company or an Affiliate. The provisions of this Section
6(b) shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Indemnitee may be deemed to have met the applicable
standard of conduct set forth in this Agreement.

                  (c) The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Company or an Affiliate shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.

         7. DURATION OF AGREEMENT. This Agreement shall apply to any claim
asserted and any expenses incurred in connection with any claim asserted on or
after the date of this Agreement and shall continue until and terminate upon the
later of (a) 10 years after Indemnitee has ceased to occupy any of the positions
or have any of the relationships described in Section 2 of this Agreement or (b)
the final termination of all pending or threatened Proceedings of the kind
described herein with respect to Indemnitee. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and Indemnitee's spouse, assigns, heirs, devisee, executors,
administrators or other legal representatives.

                                      -4-
<PAGE>   5
         8. SEVERABILITY. Should any part, term or condition hereof be declared
illegal or unenforceable or in conflict with any other law, the validity of the
remaining portions or provisions of this Agreement shall not be affected
thereby, and the illegal or unenforceable portions of the Agreement shall be and
hereby are redrafted to conform with applicable law, while leaving the remaining
portions of this Agreement intact.

         9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

         10. HEADINGS. Section headings are for convenience only and do not
control or affect meaning or interpretation of any terms or provisions of this
Agreement.

         11. MODIFICATION AND WAIVER. This Agreement may not be amended or
otherwise modified except by a writing duly executed by each party. A waiver by
any party of any breach or violation of this Agreement shall not be deemed or
construed as a waiver of any subsequent breach or violation thereof. No
amendment, alteration, rescission or replacement of this Agreement or any
provision hereof shall be effective as to Indemnitee with respect to any action
taken or omitted by such Indemnitee in Indemnitee's position with the Company or
an Affiliate or any other entity that Indemnitee is or was serving at the
request of the Company prior to such amendment, alteration, rescission or
replacement.

         12. NO DUPLICATIVE PAYMENT. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.

         13. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when mailed by
certified mail, return receipt requested, or delivered by a national overnight
delivery service addressed to the intended recipient as follows:

         If to the Company:

                  Escalon Medical Corp.
                  351 East Conestoga Road
                  Wayne, PA 19087
                  Attention:   Richard J. DePiano
                               Chairman and Chief Executive Officer

         If to Indemnitee, to his address set forth on the signature page to
this Agreement.

         Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
party sought to be charged with its contents.

                                      -5-
<PAGE>   6
         14. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws of
the State of Delaware, without reference to its conflicts of law principles.

         15. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties and supersedes all proposals, commitments,
writings, negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement.

                                      -6-
<PAGE>   7
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.


                                      ESCALON MEDICAL CORP.


                                      By:
                                         --------------------------------------

                                      Title:
                                            -----------------------------------




                                         --------------------------------------
                                      Signature of Indemnitee



                                         --------------------------------------
                                      Name of Indemnitee
                                      (please print or type)


                                      Address of Indemnitee:

                                         --------------------------------------

                                         --------------------------------------

                                         --------------------------------------





                                      -7-