exv10w1





NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH
THIS SECURITY IS EXERCISABLE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.




COMMON STOCK PURCHASE WARRANT




To
Purchase ___ Shares of Common Stock of




Escalon Medical Corp.




          THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value received,
                     (the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the day
beginning 181 days after the date of the Purchase Agreement (the “Initial Exercise Date”)
and on or prior to the fifth anniversary of the Initial Exercise Date (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Escalon Medical Corp., a
Pennsylvania corporation (the “Company”), up to
___ shares (the “Warrant Shares”)
of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”). The
purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall
be $___, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares
for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the “Purchase Agreement”), dated                      among the
Company and the purchasers signatory thereto.




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          1. Title to Warrant.




               (a) Prior to the Termination Date and subject to compliance with applicable laws and Section 7
of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at
the office or agency of the Company by the Holder in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably satisfactory to the
Company. Notwithstanding the foregoing, the Company shall not be obligated to register or issue
any New Warrant in an amount less than 5% of the total number of shares of Common Stock into which
this Warrant is exercisable.



               (b) Notwithstanding anything to the contrary, Holder shall not transfer or assign any portion
of this Warrant if such transfer or assignment would violate federal or state securities laws.
Until the Warrant Shares have been registered under the Securities Act and registered and qualified
under the securities laws of any state in question, the Company shall cause each certificate
evidencing any Warrant Shares to bear the following legend:


NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH
THIS SECURITY IS EXERCISABLE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.




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          2. Authorization of Shares. The Company covenants that all Warrant Shares which may
be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such issue).




          3. Exercise of Warrant.





          (a) Exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by
delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto (or such other office or agency of the Company as it may designate by notice
in writing to the registered Holder at the address of such Holder appearing on the books of
the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise
is delivered to the Company, the Holder shall have surrendered this Warrant to the Company
and the Company shall have received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn on a United States bank.
Certificates for shares purchased hereunder shall be delivered to the Holder within 5
Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of
this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share
Delivery Date”). This Warrant shall be deemed to have been exercised on the later of the
date the Notice of Exercise is delivered to the Company by facsimile copy or the date the
Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been
issued, and Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date the Warrant
has been exercised by payment to the Company of the Exercise Price and all taxes required to
be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares,
have been paid. Nothing herein shall limit a Holder’s right to pursue any remedies
available to it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.




          (b) If this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares, deliver to
Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.




          (c) The Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such
issuance after exercise, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Exercise, would beneficially own in excess of 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to such issuance.
For purposes of the foregoing sentence, the number of shares of Common



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Stock beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially owned by
the Holder or any of its affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act, it being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in compliance with Section 13(d) of the
Exchange Act and Holder is solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained in this Section 3(c)
applies, the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and of which a portion of this Warrant is exercisable shall
be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall
be deemed to be such Holder’s determination of whether this Warrant is exercisable (in
relation to other securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. For
purposes of this Section 3(c), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company or the
Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding. In
any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its affiliates since the date as of which such number of outstanding shares
of Common Stock was reported.




          (d) If at any time after one year from the date of issuance of this Warrant there is no
effective Registration Statement registering the resale of the Warrant Shares by the Holder
at such time, this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:




	 	(A)	 	= the closing price of the Company’s Common Stock on the
Trading Day immediately preceding the date of such election;
	 
	 	(B)	 	= the Exercise Price of this Warrant, as adjusted; and
	 
	 	(X)	 	= the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.





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          (e) If this Warrant is exercised in whole or in part prior to the filing date of a
Registration Statement as contemplated by the Registration Rights Agreement between the
Company, the Holder and certain other investors, dated as of the date hereof (the
“Registration Rights Agreement”), any and all Warrant Shares that result from such exercise
shall be deemed to be “Registrable Securities” as that term is defined in the Registration
Rights Agreement.



          4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.




          5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event certificates
for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed
by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto.




          6. Closing of Books. The Company will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.




          7. Transfer, Division and Combination.





          (a) Subject to compliance with any applicable securities laws and the conditions set
forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.




          (b) This Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued, signed



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by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to
any transfer which may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.




          (c) The Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrant or Warrants under this Section 7.




          (d) The Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.




          (e) If, at the time of the surrender of this Warrant in connection with any transfer of
this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable state securities or
blue sky laws, the Company may require, as a condition of allowing such transfer (i) that
the Holder or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel (which opinion shall be in form, substance and scope customary
for opinions of counsel in comparable transactions) to the effect that such transfer may be
made without registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that the
transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7),
or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined
in Rule 144A(a) under the Securities Act.



          8. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.
Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of
a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the later of the date of
such surrender or payment.




          9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the
case of the Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver
a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.




          10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or
a legal holiday, then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.




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          11. Adjustments of Exercise Price and Number of Warrant Shares; Stock Splits, etc.
The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the happening of any of the following.
In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of
the Company which it would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares
or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares
purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of
Warrant Shares or other securities of the Company that are purchasable pursuant hereto immediately
after such adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to the record date, if any, for such
event.




          12. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.
In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or
merge with or into another corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of the Company), or sell,
transfer or otherwise dispose of all or substantially all of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation (“Other Property”), are to be received by
or distributed to the holders of Common Stock of the Company, then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of assets, the successor or
acquiring corporation (if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this Warrant to be performed
and observed by the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined in good faith by resolution of the Board
of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments
provided for in this Section 12. For purposes of this Section 12, “common stock of the successor
or acquiring corporation” shall include stock of such corporation of any class




7









 







which is not preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or exchangeable for
any such stock, either immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.




          13. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of
securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice
shall state the number of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or
property) after such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.




          14. Notice of Corporate Action. If at any time:





          (a) the Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to subscribe for
or purchase any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or




          (b) there shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or merger of the
Company with, or any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation or,




          (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;


then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’
prior written notice of the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up,
and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written
notice of the date when the same shall take place. Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange
their Warrant Shares for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if
addressed to


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Holder at the last address of Holder appearing on the books of the Company and delivered in
accordance with Section 16(d).




          15. Authorized Shares. The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of the Principal
Market upon which the Common Stock may be listed.




          Except and to the extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and
(c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.




          Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.




          16. Miscellaneous.





          (a) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.




          (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions upon resale
imposed by state and federal securities laws.




          (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all



9









 







rights hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.




          (d) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.




          (e) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.




          (f) Remedies. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.




          (g) Successors and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder or holder of
Warrant Shares.




          (h) Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.




          (i) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.




          (j) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.



********************




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          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.




Dated:




	 	 	 	 	 
	 	ESCALON MEDICAL CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




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NOTICE OF EXERCISE




To: Escalon Medical Corp.




          (1) The undersigned hereby elects to purchase                      Warrant Shares of the Company pursuant
to the terms of the attached Warrant No.                      (only if exercised in full), and tenders herewith
payment of the exercise price in full, together with all applicable transfer taxes, if any.




          (2) Payment shall take the form of (check applicable box):




               [ ] in lawful money of the United States; or



               [ ] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 3(d), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 3(d).



          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:




           






The Warrant Shares shall be delivered to the following:




                


 


 





               (4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D under the Securities Act of 1933, as amended.



	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 

	 	Dated:	 	 	 	 
	 

	 	 	 	 

	 	 






 









 




ASSIGNMENT FORM


(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)




          FOR VALUE RECEIVED, the foregoing Warrant No.                      and all rights evidenced thereby are
hereby assigned to




	 	 	 	 	 
	 	 	whose address is
	
 

	 	 	 	 
	 
	 	 	.	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 




               Dated:                                         ,
                    




	 	 	 	 	 	 	 
	 

	 	Holder’s Signature:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Holder’s Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 
	Signature Guaranteed:
	 	 	 	 
	 

	 	 

	 	 





NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.