Document:

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                                                                     EXHIBIT 4.4

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 16, 2004, by and among Escalon Medical Corp., a
Pennsylvania corporation (the "Company"), and the purchasers signatory hereto
(each such purchaser, a "Purchaser" and collectively, the "Purchasers").

                  This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement")

                  The Company and the Purchasers hereby agree as follows:

         1.       Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:

                  "Advice" shall have the meaning set forth in Section 6(d).

                  "Effectiveness Date" means, with respect to the Registration
         Statement required to be filed hereunder, the earlier of (a) the 75th
         calendar day following the date of the Purchase Agreement, unless the
         Commission conducts a full review of the Registration Statement, in
         which case the 120th calendar day shall apply to this clause (a) rather
         than the 75th calendar day, and (b) the fifth Trading Day following the
         date on which the Company is notified by the Commission that the
         Registration Statement will not be reviewed or is no longer subject to
         further review and comments.

                  "Effectiveness Period" shall have the meaning set forth in
         Section 2.

                  "Filing Date" means, with respect to the Registration
         Statement required to be filed hereunder, the 30th calendar day
         following the date of the Purchase Agreement.

                  "Holder" or "Holders" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
         Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
         Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Proceeding" means an action, claim, suit, investigation or
         proceeding (including, without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
         Statement (including, without limitation, a prospectus that includes
         any information previously omitted from a prospectus filed as part of
         an effective registration statement in reliance

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         upon Rule 430A promulgated under the Securities Act), as amended or
         supplemented by any prospectus supplement, with respect to the terms of
         the offering of any portion of the Registrable Securities covered by
         the Registration Statement, and all other amendments and supplements to
         the Prospectus, including post-effective amendments, and all material
         incorporated by reference or deemed to be incorporated by reference in
         such Prospectus.

                  "Registrable Securities" means all of the Shares, together
         with any shares of Common Stock issued or issuable upon any stock
         split, dividend or other distribution, recapitalization or similar
         event with respect to the foregoing, and the Warrant Shares.

                  "Registration Statement" means the registration statements
         required to be filed hereunder, including (in each case) the
         Prospectus, amendments and supplements to the registration statement or
         Prospectus, including pre- and post-effective amendments, all exhibits
         thereto, and all material incorporated by reference or deemed to be
         incorporated by reference in the registration statement.

                  "Rule 415" means Rule 415 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from time
         to time, or any similar rule or regulation hereafter adopted by the
         Commission having substantially the same purpose and effect as such
         Rule.

         2.       Registration. On or prior to the Filing Date, the Company
shall prepare and file with the Commission the Registration Statement covering
the resale of all of the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement required
hereunder shall be on Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case the
Registration shall be on another appropriate form permitting registration of the
Registrable Securities for resale by such Holders in accordance herewith and the
methods of distribution elected by the Holders herein). The Registration
Statement required hereunder shall contain (except if otherwise directed by the
Holders) substantially the "Plan of Distribution" attached hereto as Annex A.
Subject to the terms of this Agreement, the Company shall use best efforts to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event not later
than the Effectiveness Date, and shall use best efforts to keep the Registration
Statement continuously effective under the Securities Act until the date when
all Registrable Securities covered by the Registration Statement have been sold
or may be sold without registration under the Securities Act pursuant to Rule
144(k) as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company's transfer agent
and the affected Holders (the "Effectiveness Period"). None of the Company's
security holders (other than the Holders of Registrable Securities) shall have
the right to include any of the Company's securities in the Registration
Statement to be filed pursuant to this Section 2.

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         3.       Registration Procedures

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a)      Furnish to the Holders copies of all such documents
         filed (including documents incorporated or deemed incorporated by
         reference to the extent requested by such Holder), not more than five
         Trading Days after the filing of the Registration Statement or any
         related Prospectus or any amendment or supplement thereto.

                  (b)      (i) Prepare and file with the Commission such
         amendments, including post-effective amendments, to the Registration
         Statement and the Prospectus used in connection therewith as may be
         necessary to keep the Registration Statement continuously effective as
         to the applicable Registrable Securities for the Effectiveness Period;
         (ii) cause the related Prospectus to be amended or supplemented by any
         required Prospectus supplement, and as so supplemented or amended to be
         filed pursuant to Rule 424; (iii) respond as promptly as reasonably
         possible to any comments received from the Commission with respect to
         the Registration Statement or any amendment thereto; and (iv) comply in
         all material respects with the provisions of the Securities Act and the
         Exchange Act with respect to the disposition of all Registrable
         Securities covered by the Registration Statement during the
         Effectiveness Period in accordance with the intended methods of
         disposition by the Holders thereof set forth in the Registration
         Statement as so amended or in such Prospectus as so supplemented.

                  (c)      Notify the Holders of Registrable Securities to be
         sold as promptly as reasonably possible and (if requested by any such
         Holder) confirm such notice in writing promptly following the day
         (i)(A) when the Registration Statement and Prospectus or any Prospectus
         supplement or post-effective amendment to the Registration Statement is
         filed; (B) when the Commission notifies the Company whether there will
         be a "review" of the Registration Statement and whenever the Commission
         comments in writing on the Registration Statement; and (C) with respect
         to the Registration Statement or any post-effective amendment, when the
         same has become effective; (ii) of any request by the Commission or any
         other Federal or state governmental authority during the Effectiveness
         Period for amendments or supplements to the Registration Statement or
         Prospectus or for additional information; (iii) of the issuance by the
         Commission or any other Federal or state governmental authority of any
         stop order suspending the effectiveness of the Registration Statement
         covering any or all of the Registrable Securities or the initiation of
         any Proceedings for that purpose; (iv) of the receipt by the Company of
         any notification with respect to the suspension of the qualification or
         exemption from qualification of any of the Registrable Securities for
         sale in any jurisdiction, or the initiation or threatening of any
         Proceeding for such purpose; and (v) of the occurrence of any event or
         passage of time that makes the financial statements included in the
         Registration Statement ineligible for inclusion therein or any
         statement made in the Registration Statement or Prospectus or any
         document incorporated or deemed to be incorporated therein by reference
         untrue in any material respect or that requires any revisions to the
         Registration Statement, Prospectus or other documents so that, in the
         case of the Registration Statement, Prospectus or other documents, as
         the case

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         may be, it will not contain any untrue statement of a material fact or
         omit to state any material fact required to be stated therein or
         necessary to make the statements therein, in light of the circumstances
         under which they were made, not misleading.

                  (d)      Use reasonable efforts to avoid the issuance of, or,
         if issued, obtain the withdrawal of (i) any order suspending the
         effectiveness of the Registration Statement, or (ii) any suspension of
         the qualification (or exemption from qualification) of any of the
         Registrable Securities for sale in any jurisdiction, at the earliest
         practicable moment.

                  (e)      Furnish to each Holder, without charge, at least one
         conformed copy of the Registration Statement and each amendment
         thereto, including financial statements and schedules, all documents
         incorporated or deemed to be incorporated therein by reference to the
         extent requested by such Person, and all exhibits to the extent
         requested by such Person (including those previously furnished or
         incorporated by reference) promptly after the filing of such documents
         with the Commission.

                  (f)      Promptly deliver to each Holder, without charge, as
         many copies of the Prospectus or Prospectuses (including each form of
         prospectus) and each amendment or supplement thereto as such Holder may
         reasonably request in connection with resales by the Holder of
         Registrable Securities. Subject to the terms of this Agreement, the
         Company hereby consents to the use of such Prospectus and each
         amendment or supplement thereto by each of the selling Holders in
         connection with the offering and sale of the Registrable Securities
         covered by such Prospectus and any amendment or supplement thereto,
         except after the giving of any notice pursuant to Section 3(c)(ii),
         (iii), (iv) and (v).

                  (g)      Prior to any resale of Registrable Securities by a
         Holder, use its reasonable efforts to register or qualify or cooperate
         with the selling Holders in connection with the registration or
         qualification (or exemption from the registration or qualification) of
         such Registrable Securities for the resale by the Holder under the
         securities or Blue Sky laws of such jurisdictions within the United
         States as any Holder reasonably requests in writing, to keep the
         registration or qualification (or exemption therefrom) effective during
         the Effectiveness Period and to do any and all other acts or things
         reasonably necessary to enable the disposition in such jurisdictions of
         the Registrable Securities covered by the Registration Statement;
         provided, that the Company shall not be required to qualify generally
         to do business in any jurisdiction where it is not then so qualified,
         subject the Company to any material tax in any such jurisdiction where
         it is not then so subject or file a general consent to service of
         process in any such jurisdiction.

                  (h)      If requested by the Holders, cooperate with the
         Holders to facilitate the timely preparation and delivery of
         certificates representing Registrable Securities to be delivered to a
         transferee pursuant to the Registration Statement, which certificates
         shall be free, to the extent permitted by the Purchase Agreement, of
         all restrictive legends, and to enable such Registrable Securities to
         be in such denominations and registered in such names as any such
         Holders may request.

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                  (i)      Upon the occurrence of any event contemplated by
         Section 3(c)(v), as promptly and in any event within 30 days of such
         event, prepare a supplement or amendment, including a post-effective
         amendment, to the Registration Statement or a supplement to the related
         Prospectus or any document incorporated or deemed to be incorporated
         therein by reference, and file any other required document so that, as
         thereafter delivered, neither the Registration Statement nor such
         Prospectus will contain an untrue statement of a material fact or omit
         to state a material fact required to be stated therein or necessary to
         make the statements therein, in light of the circumstances under which
         they were made, not misleading. If the Company notifies the Holders in
         accordance with clauses (ii) through (v) of Section 3(c) above to
         suspend the use of any Prospectus until the requisite changes to such
         Prospectus have been made, then the Holders shall suspend use of such
         Prospectus. The Company will use reasonable efforts to ensure that the
         use of the Prospectus may be resumed as promptly as is practicable.

                  (j)      Comply with all applicable rules and regulations of
         the Commission.

                  (k)      The Company may require each selling Holder to
         furnish to the Company a certified statement as to the number of shares
         of Common Stock beneficially owned by such Holder and, if required by
         the Commission, the person thereof that has voting and dispositive
         control over the Shares.

         4.       Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Principal Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and the Holders, (v) Securities Act liability insurance,
if the Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall
the Company be responsible for any broker or similar commissions or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders.

         5.       Indemnification

                  (a)      Indemnification by the Company. The Company shall,
         notwithstanding any termination of this Agreement, indemnify and hold
         harmless each Holder, the

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         officers, directors, agents and employees of each of them, each Person
         who controls any such Holder (within the meaning of Section 15 of the
         Securities Act or Section 20 of the Exchange Act) and the officers,
         directors, agents and employees of each such controlling Person, to the
         fullest extent permitted by applicable law, from and against any and
         all losses, claims, damages, liabilities, costs (including, without
         limitation, reasonable attorneys' fees) and expenses (collectively,
         "Losses"), as incurred, arising out of or relating to any untrue or
         alleged untrue statement of a material fact contained in the
         Registration Statement, any Prospectus or any form of prospectus or in
         any amendment or supplement thereto or in any preliminary prospectus,
         or arising out of or relating to any omission or alleged omission of a
         material fact required to be stated therein or necessary to make the
         statements therein (in the case of any Prospectus or form of prospectus
         or supplement thereto, in light of the circumstances under which they
         were made) not misleading, except to the extent, but only to the
         extent, that (i) such untrue statements or omissions are based solely
         upon information regarding such Holder furnished in writing to the
         Company by such Holder expressly for use therein, or to the extent that
         such information relates to such Holder or such Holder's proposed
         method of distribution of Registrable Securities and was reviewed and
         expressly approved in writing by such Holder expressly for use in the
         Registration Statement, such Prospectus or such form of Prospectus or
         in any amendment or supplement thereto (it being understood that the
         Holder has approved Annex A hereto for this purpose) or (ii) in the
         case of an occurrence of an event of the type specified in Section
         3(c)(ii)-(v), the use by such Holder of an outdated or defective
         Prospectus after the Company has notified such Holder in writing that
         the Prospectus is outdated or defective and prior to the receipt by
         such Holder of the Advice contemplated in Section 6(d). The Company
         shall notify the Holders promptly of the institution, threat or
         assertion of any Proceeding of which the Company is aware in connection
         with the transactions contemplated by this Agreement.

                  (b)      Indemnification by Holders. Each Holder shall,
         severally and not jointly, indemnify and hold harmless the Company, its
         directors, officers, agents and employees, each Person who controls the
         Company (within the meaning of Section 15 of the Securities Act and
         Section 20 of the Exchange Act), and the directors, officers, agents or
         employees of such controlling Persons, to the fullest extent permitted
         by applicable law, from and against all Losses, as incurred, to the
         extent arising out of or based solely upon: (x) such Holder's failure
         to comply with the prospectus delivery requirements of the Securities
         Act or (y) any untrue or alleged untrue statement of a material fact
         contained in any Registration Statement, any Prospectus, or any form of
         prospectus, or in any amendment or supplement thereto or in any
         preliminary prospectus, or arising out of or relating to any omission
         or alleged omission of a material fact required to be stated therein or
         necessary to make the statements therein not misleading (i) to the
         extent, but only to the extent, that such untrue statement or omission
         is contained in any information so furnished in writing by such Holder
         to the Company specifically for inclusion in the Registration Statement
         or such Prospectus or (ii) to the extent that (1) such untrue
         statements or omissions are based solely upon information regarding
         such Holder furnished in writing to the Company by such Holder
         expressly for use therein, or to the extent that such information
         relates to such Holder or such Holder's proposed method of distribution
         of Registrable Securities and was reviewed and expressly approved in
         writing by such Holder expressly for use in the Registration Statement
         (it being understood that

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         the Holder has approved Annex A hereto for this purpose), such
         Prospectus or such form of Prospectus or in any amendment or supplement
         thereto or (2) in the case of an occurrence of an event of the type
         specified in Section 3(c)(ii)-(v), the use by such Holder of an
         outdated or defective Prospectus after the Company has notified such
         Holder in writing that the Prospectus is outdated or defective and
         prior to the receipt by such Holder of the Advice contemplated in
         Section 6(d). In no event shall the liability of any selling Holder
         hereunder be greater in amount than the dollar amount of the net
         proceeds received by such Holder upon the sale of the Registrable
         Securities giving rise to such indemnification obligation.

                  (c)      Conduct of Indemnification Proceedings. If any
         Proceeding shall be brought or asserted against any Person entitled to
         indemnity hereunder (an "Indemnified Party"), such Indemnified Party
         shall promptly notify the Person from whom indemnity is sought (the
         "Indemnifying Party") in writing, and the Indemnifying Party shall have
         the right to assume the defense thereof, including the employment of
         counsel reasonably satisfactory to the Indemnified Party and the
         payment of all fees and expenses incurred in connection with defense
         thereof; provided, that the failure of any Indemnified Party to give
         such notice shall not relieve the Indemnifying Party of its obligations
         or liabilities pursuant to this Agreement, except (and only) to the
         extent that it shall be finally determined by a court of competent
         jurisdiction (which determination is not subject to appeal or further
         review) that such failure shall have prejudiced the Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
         counsel in any such Proceeding and to participate in the defense
         thereof, but the fees and expenses of such counsel shall be at the
         expense of such Indemnified Party or Parties unless: (1) the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the Indemnifying Party shall have failed promptly to assume the
         defense of such Proceeding and to employ counsel reasonably
         satisfactory to such Indemnified Party in any such Proceeding; or (3)
         the named parties to any such Proceeding (including any impleaded
         parties) include both such Indemnified Party and the Indemnifying
         Party, and such Indemnified Party shall reasonably believe, based upon
         the opinion of counsel, that a material conflict of interest is likely
         to exist if the same counsel were to represent such Indemnified Party
         and the Indemnifying Party (in which case, if such Indemnified Party
         notifies the Indemnifying Party in writing that it elects to employ
         separate counsel at the expense of the Indemnifying Party, the
         Indemnifying Party shall not have the right to assume the defense
         thereof and the reasonable fees and expenses of one separate counsel
         shall be at the expense of the Indemnifying Party). The Indemnifying
         Party shall not be liable for any settlement of any such Proceeding
         effected without its written consent, which consent shall not be
         unreasonably withheld. No Indemnifying Party shall, without the prior
         written consent of the Indemnified Party, effect any settlement of any
         pending Proceeding in respect of which any Indemnified Party is a
         party, unless such settlement includes an unconditional release of such
         Indemnified Party from all liability on claims that are the subject
         matter of such Proceeding.

                  Subject to the terms of this Agreement, all reasonable fees
         and expenses of the Indemnified Party (including reasonable fees and
         expenses to the extent incurred in connection with investigating or
         preparing to defend such Proceeding in a manner not

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         inconsistent with this Section) shall be paid to the Indemnified Party,
         as incurred, within ten Trading Days of written notice thereof to the
         Indemnifying Party; provided, that the Indemnified Party shall promptly
         reimburse the Indemnifying Party for that portion of such fees and
         expenses applicable to such actions for which such Indemnified Party is
         not entitled to indemnification hereunder.

                  (d)      Contribution. If a claim for indemnification under
         Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason
         of public policy or otherwise), then each Indemnifying Party, in lieu
         of indemnifying such Indemnified Party, shall contribute to the amount
         paid or payable by such Indemnified Party as a result of such Losses,
         in such proportion as is appropriate to reflect the relative fault of
         the Indemnifying Party and Indemnified Party in connection with the
         actions, statements or omissions that resulted in such Losses as well
         as any other relevant equitable considerations. The relative fault of
         such Indemnifying Party and Indemnified Party shall be determined by
         reference to, among other things, whether any action in question,
         including any untrue or alleged untrue statement of a material fact or
         omission or alleged omission of a material fact, has been taken or made
         by, or relates to information supplied by, such Indemnifying Party or
         Indemnified Party, and the parties' relative intent, knowledge, access
         to information and opportunity to correct or prevent such action,
         statement or omission. The amount paid or payable by a party as a
         result of any Losses shall be deemed to include, subject to the
         limitations set forth in this Agreement, any reasonable attorneys' or
         other reasonable fees or expenses incurred by such party in connection
         with any Proceeding to the extent such party would have been
         indemnified for such fees or expenses if the indemnification provided
         for in this Section was available to such party in accordance with its
         terms.

                  The parties hereto agree that it would not be just and
         equitable if contribution pursuant to this Section 5(d) were determined
         by pro rata allocation or by any other method of allocation that does
         not take into account the equitable considerations referred to in the
         immediately preceding paragraph. Notwithstanding the provisions of this
         Section 5(d), no Holder shall be required to contribute, in the
         aggregate, any amount in excess of the amount by which the proceeds
         actually received by such Holder from the sale of the Registrable
         Securities subject to the Proceeding exceeds the amount of any damages
         that such Holder has otherwise been required to pay by reason of such
         untrue or alleged untrue statement or omission or alleged omission,
         except in the case of fraud by such Holder.

                  The indemnity and contribution agreements contained in this
         Section are in addition to any liability that the Indemnifying Parties
         may have to the Indemnified Parties.

         6.       Miscellaneous

                  (a)      Remedies. In the event of a breach by the Company or
         by a Holder, of any of its respective obligations under this Agreement,
         each Holder or the Company, as the case may be, in addition to being
         entitled to exercise all rights granted by law and under this
         Agreement, including recovery of damages, will be entitled to specific
         performance of its rights under this Agreement. The Company and each
         Holder agree

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         that monetary damages would not provide adequate compensation for any
         losses incurred by reason of a breach by it of any of the provisions of
         this Agreement and hereby further agrees that, in the event of any
         action for specific performance in respect of such breach, it shall
         waive the defense that a remedy at law would be adequate.

                  (b)      No Piggyback on Registrations. Except as set forth on
         Schedule 6(b) attached hereto and any securities issued to investors in
         private placement transactions effected by the Company after the date
         of the Purchase Agreement and prior to the actual filing date of the
         Registration Statement, neither the Company nor any of its security
         holders (other than the Holders in such capacity pursuant hereto) may
         include securities of the Company in a Registration Statement other
         than the Registrable Securities. No Person has any right to cause the
         Company to effect the registration under the Securities Act of any
         securities of the Company. The Company shall not file any other
         registration statement until after the Effective Date.

                  (c)      Compliance. Each Holder covenants and agrees that it
         will comply with the prospectus delivery requirements of the Securities
         Act as applicable to it in connection with sales of Registrable
         Securities pursuant to the Registration Statement.

                  (d)      Discontinued Disposition. Each Holder agrees by its
         acquisition of such Registrable Securities that, upon receipt of a
         notice from the Company of the occurrence of any event of the kind
         described in Section 3(c), such Holder will forthwith discontinue
         disposition of such Registrable Securities under the Registration
         Statement until such Holder's receipt of the copies of the supplemented
         Prospectus and/or amended Registration Statement or until it is advised
         in writing (the "Advice") by the Company that the use of the applicable
         Prospectus may be resumed, and, in either case, has received copies of
         any additional or supplemental filings that are incorporated or deemed
         to be incorporated by reference in such Prospectus or Registration
         Statement. The Company will use commercially reasonable efforts to
         ensure that the use of the Prospectus may be resumed as promptly as it
         practicable.

                  (e)      Piggy-Back Registrations. If at any time during the
         Effectiveness Period there is not an effective Registration Statement
         covering all of the Registrable Securities and the Company shall
         determine to prepare and file with the Commission a registration
         statement relating to an offering for its own account or the account of
         others under the Securities Act of any of its equity securities, other
         than on Form S-4 or Form S-8 (each as promulgated under the Securities
         Act) or their then equivalents relating to equity securities to be
         issued solely in connection with any acquisition of any entity or
         business or equity securities issuable in connection with the stock
         option or other employee benefit plans, then the Company shall send to
         each Holder a written notice of such determination and, if within
         fifteen days after the date of such notice, any such Holder shall so
         request in writing, the Company shall include in such registration
         statement all or any part of such Registrable Securities such Holder
         requests to be registered, subject to customary underwriter cutbacks
         applicable to all holders of registration rights.

                  (f)      Amendments and Waivers. The provisions of this
         Agreement, including the provisions of this sentence, may not be
         amended, modified or supplemented, and

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         waivers or consents to departures from the provisions hereof may not be
         given, unless the same shall be in writing and signed by the Company
         and each Holder of the then outstanding Registrable Securities;
         provided, however, that any Holder may waive or consent to departures
         from the provisions of this Agreement as long as such waiver or consent
         does not adversely affect or impair the rights of the other Holders
         under this Agreement.

                  (g)      Notices. Any and all notices or other communications
         or deliveries required or permitted to be provided hereunder shall be
         made in accordance with the provisions of the Purchase Agreement.

                  (h)      Successors and Assigns. This Agreement shall inure to
         the benefit of and be binding upon the successors and permitted assigns
         of each of the parties and shall inure to the benefit of each Holder.
         Each Holder may assign their respective rights hereunder in the manner
         and to the Persons as permitted under the Purchase Agreement.

                  (i)      Execution and Counterparts. This Agreement may be
         executed in any number of counterparts, each of which when so executed
         shall be deemed to be an original and, all of which taken together
         shall constitute one and the same Agreement. In the event that any
         signature is delivered by facsimile transmission, such signature shall
         create a valid binding obligation of the party executing (or on whose
         behalf such signature is executed) the same with the same force and
         effect as if such facsimile signature were the original thereof.

                  (j)      Governing Law. All questions concerning the
         construction, validity, enforcement and interpretation of this
         Agreement shall be determined with the provisions of the Purchase
         Agreement.

                  (k)      Cumulative Remedies. The remedies provided herein are
         cumulative and not exclusive of any remedies provided by law.

                  (l)      Severability. If any term, provision, covenant or
         restriction of this Agreement is held by a court of competent
         jurisdiction to be invalid, illegal, void or unenforceable, the
         remainder of the terms, provisions, covenants and restrictions set
         forth herein shall remain in full force and effect and shall in no way
         be affected, impaired or invalidated, and the parties hereto shall use
         their commercially reasonable efforts to find and employ an alternative
         means to achieve the same or substantially the same result as that
         contemplated by such term, provision, covenant or restriction. It is
         hereby stipulated and declared to be the intention of the parties that
         they would have executed the remaining terms, provisions, covenants and
         restrictions without including any of such that may be hereafter
         declared invalid, illegal, void or unenforceable.

                  (m)      Headings. The headings in this Agreement are for
         convenience of reference only and shall not limit or otherwise affect
         the meaning hereof.

                  (n)      Independent Nature of Purchasers' Obligations and
         Rights. The obligations of each Holder hereunder are several and not
         joint with the obligations of any other Holder hereunder, and no Holder
         shall be responsible in any way for the

                                      -10-
<PAGE>

         performance of the obligations of any other Holder hereunder. Nothing
         contained herein or in any other agreement or document delivered at any
         closing, and no action taken by any Holder pursuant hereto or thereto,
         shall be deemed to constitute the Holders as a partnership, an
         association, a joint venture or any other kind of entity, or create a
         presumption that the Holders are in any way acting in concert with
         respect to such obligations or the transactions contemplated by this
         Agreement. Each Holder shall be entitled to protect and enforce its
         rights, including without limitation the rights arising out of this
         Agreement, and it shall not be necessary for any other Holder to be
         joined as an additional party in any proceeding for such purpose.

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

                                      -11-
<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                        ESCALON MEDICAL CORP.

                                        By:___/s/Richard J. DePiano___________
                                           Name: Richard J. DePiano
                                           Title: Chairman & CEO

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Polar Capital LP
Signature of Authorized Signatory of Investing entity: /s/ D. S. Callan
Name of Authorized Signatory: David S. Callan
Title of Authorized Signatory: President

                           [SIGNATURE PAGES CONTINUE]

                                      -13-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: BayStar Capital II, L.P.
Signature of Authorized Signatory of Investing entity: /s/ Steve Derby
Name of Authorized Signatory: Steve Derby
Title of Authorized Signatory: Managing Member

                                      -14-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: SDS Capital Group SPC, Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Steve Derby
Name of Authorized Signatory: Steve Derby
Title of Authorized Signatory: Managing Member

                           [SIGNATURE PAGES CONTINUE]

                                      -15-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: The Citizen's Alliance for Better Neighborhoods
Signature of Authorized Signatory of Investing entity: /s/ Ruth Arnao
Name of Authorized Signatory: Ruth Arnao
Title of Authorized Signatory: Executive Director

                                      -16-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Frorer Partners, L. P.
Signature of Authorized Signatory of Investing entity: /s/ Peter Frorer
Name of Authorized Signatory: Peter Frorer
Title of Authorized Signatory: General Partner

                           [SIGNATURE PAGES CONTINUE]

                                      -17-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Transvest LTD
Signature of Authorized Signatory of Investing entity: /s/ Jeffrey Bonner
Name of Authorized Signatory: Jeffrey Bonner
Title of Authorized Signatory: General Partner

                           [SIGNATURE PAGES CONTINUE]

                                      -18-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: W. Anthony Hitschler
Signature of Authorized Signatory of Investing entity: /s/ W. Anthony Hitschler
Name of Authorized Signatory: W. Anthony Hitschler
Title of Authorized Signatory:

                           [SIGNATURE PAGES CONTINUE]

                                      -19-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Colonial Fund LLC
Signature of Authorized Signatory of Investing entity: /s/ Cary G. Brody
Name of Authorized Signatory: Cary G. Brody
Title of Authorized Signatory: President

                                      -20-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: MFN LLC
Signature of Authorized Signatory of Investing entity: /s/ Louis Ottimo
Name of Authorized Signatory: Louis Ottimo
Title of Authorized Signatory: Member

                           [SIGNATURE PAGES CONTINUE]

                                      -21-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Castle Creek Technology Partners LLC
Signature of Authorized Signatory of Investing entity: /s/ Thomas A. Frei
Name of Authorized Signatory: Thomas A. Frei
Title of Authorized Signatory: Managing Director of the Investment Manager

                                      -22-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: Treeline Investment Partners, L.P.
                                  By: Treeline Management LLC
Signature of Authorized Signatory of Investing entity: /s/ Joseph Gil
Name of Authorized Signatory: Joseph Gil
Title of Authorized Signatory: Managing Member

                           [SIGNATURE PAGES CONTINUE]

                                      -23-
<PAGE>

                    [PURCHASER'S SIGNATURE PAGE TO ESMC RRA]

Name of Investing Entity: SF Capital Partners Ltd.
Signature of Authorized Signatory of Investing entity: Brian H. Davidson
Name of Authorized Signatory: Brian H. Davidson
Title of Authorized Signatory: Authorized Signatory

                                      -24-
<PAGE>

                                     ANNEX A

                              Plan of Distribution

         The Selling Stockholders (the "Selling Stockholders") of the common
stock ("Common Stock") of Escalon Medical Corp. (the "Company") and any of their
pledgees, assignees and successors-in-interest may, from time to time, sell any
or all of their shares of Common Stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The Selling Stockholders may use any one
or more of the following methods when selling shares:

          -    ordinary brokerage transactions and transactions in which the
               broker-dealer solicits purchasers;

          -    block trades in which the broker-dealer will attempt to sell the
               shares as agent but may position and resell a portion of the
               block as principal to facilitate the transaction;

          -    purchases by a broker-dealer as principal and resale by the
               broker-dealer for its account;

          -    an exchange distribution in accordance with the rules of the
               applicable exchange;

          -    privately negotiated transactions;

          -    settlement of short sales entered into after the date of this
               prospectus;

          -    broker-dealers may agree with the Selling Stockholders to sell a
               specified number of such shares at a stipulated price per share;

          -    a combination of any such methods of sale;

          -    through the writing or settlement of options or other hedging
               transactions, whether through an options exchange or otherwise;
               or

          -    any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each Selling Stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.

                                      -25-
<PAGE>

         In connection with the sale of our common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.

         The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.

         Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.

         We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

         Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to our common stock for a period
of two business days prior to the commencement

                                      -26-
<PAGE>

of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of our common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.

                                      -27-
<PAGE>

                              Schedule 6(b)

                                  None

Schedule to the RRA<PAGE>

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 $15.60, 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 MARCH ____, 2004 AMONG THE COMPANY AND THE PURCHASERS
SIGNATORY THERETO.

                                       1
<PAGE>

                  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.

                                       2
<PAGE>

                  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

                                       3
<PAGE>

         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.

                                       4
<PAGE>

                           (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

                                       5
<PAGE>

         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.

                                       6
<PAGE>

                  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
<PAGE>

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

                                       8
<PAGE>

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
<PAGE>

         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.

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

                                       10
<PAGE>

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

Dated:  March 16, 2004

                                        ESCALON MEDICAL CORP.

                                        By: /s/ Richard J. DePiano
                                            ----------------------------
                                            Name: Richard J. DePiano
                                            Title: Chairman & CEO

                                       11
<PAGE>
                               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.

                                          [PURCHASER]

                                          By: ____________________________
                                          Name:
                                          Title:

                                          Dated: _________________________

<PAGE>

                                 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.

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