8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 1, 2005

Escalon Medical Corp.
__________________________________________
(Exact name of registrant as specified in its charter)

Pennsylvania	000-20127	330272839
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
575 East Swedesford Road, Suite 100, Wayne, Pennsylvania		19087
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 610-688-6830

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.02. Termination of a Material Definitive Agreement.

By letter dated March 31, 2005,and transmitted on April 1, 2005, registrant sent Intralase Corp. ("Intralase") notice of termination of the Amended and Restated License Agreement (the "License Agreement") between registrant and Intralase. The material circumstances surrounding the termination are set forth in the March 31, 2005 letter, which is attached hereto as Exhibit 99.1, and arise in the context of the litigation between registrant and Intralase concerning the License Agreement described in registrant’s report on Form 10-Q for the period ending December 31, 2004, in Note 11 to the financial statements, under the heading "Legal Proceedings: Intralase," which description is incorporated herein by reference.

On April 5, 2005, Intralase filed an Ex Parte Application for Enforcement of the Court's October 29, 2004 Order, a Temporary Restraining Order, and Contempt Sanctions Against Escalon (the "Intralase Application") in the pending proceedings before the United States District Court for t he Central District of California (the "Court"), in which it contests the effectiveness of the termination. Registrant opposed this application and believes that it is without merit.

On April 7, 2005, the Court entered a Revised Further Order on Parties Stipulation (the "April 7, 2005 Order") setting a hearing date of April 25, 2005 with regard to one issue raised in the Intralase Application, and ordering that registrant "shall not implement, or take action to carry into effect, its purported termination" of the License Agreement pending the Court's ruling. A copy of the April 7, 2005 Order is attached hereto as Exhibit 99.2.

The material terms of the License Agreement are described in registrant’s report on Form 10-Q for the period ending December 31, 2004, in Note 10 to the financial statements, under the heading "Intralase: Licensing of Laser Technology," which description is incorporated herein by reference. The License Agreement does not provide for early termination penalties with regard to the termination.

Registrant was one of the original stockholders of Intralase, and continues to benefically own 252,535 shares of Intralase common stock.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Escalon Medical Corp.
April 7, 2005	By:	Richard J. DePiano
		Name: Richard J. DePiano
		Title: Chairman & CEO

Exhibit Index

Exhibit No.	Description
99.1	March 31, 2005 letter
99.2	April 7, 2005 Order

EX-99.1

Richard J. DePiano
CEO & Chairman

Direct Dial (610) 254-8904

E-Mail: rdepiano@escalonmed.com

March 31, 2005

VIA FAX AND CERTIFIED MAIL,
RETURN RECEIPT REQUESTED

Mr. Robert J. Palmisano
IntraLase Corporation
3 Morgan
Irvine, CA 92618

Re: Amended and Restated License Agreement (“Agreement”)

Dear Mr. Palmisano:

On March 8, 2005, we received Jan Weir’s letter via Federal Express enclosing IntraLase Corp.’s (“IntraLase”) Check No. 28001 in the amount of $242,699.00, representing the amount IntraLase claims is due Escalon pursuant to the Court’s March 1, 2005 Order. By way of its March 1, 2005 Order, the Court, for all intents and purposes, found IntraLase in breach of the Agreement. Escalon, as our counsel has previously advised IntraLase, accepted IntraLase’s check as partial payment for the royalties due to date under the Agreement as interpreted by the Court.

Notwithstanding the above, under the terms of the Stipulation and Order Regarding November 1, 2004 Hearing on Preliminary Injunction (“Stipulation”), IntraLase failed to timely remedy its breach of the Agreement as alleged in Escalon’s June 10, 2004 letter. Pursuant to the Stipulation, IntraLase had three business days from the parties’ notice of the Court’s March 1, 2005 Order to remedy the breach as alleged by Escalon before the period for cure under paragraph 14.3 of the Agreement would expire. Escalon had notice of the Court’s Order on March 1, 2005. Consequently, pursuant to the terms of the Stipulation, IntraLase had until March 4, 2005 to remedy its breach of the Agreement. IntraLase failed to do so.

Paragraph 3 of the Stipulation expressly authorizes Escalon to terminate the Agreement anytime after the fourth day after the parties receive notice of the Court’s ruling on the

Mr. Robert Palmisano
March 31, 2005
Page 2

merits finding IntraLase in breach of the Agreement. Clearly, Escalon has had notice of the Court’s March 1, 2005 Order for more than four days. Because IntraLase failed to remedy the breach prior to expiration of the cure period set forth in the Stipulation, the Agreement has terminated.

Cordially,

ESCALON MEDICAL CORP.:

By:	/s/
	Richard J. DePiano, Sr.
cc:	James A. Lightman, Esquire William J. Link, Ph.D.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES – GENERAL

Case No.SA CV 04-724 GLT (JTLx)	Date: April 7, 2005
Title: Intralse Corp. v. Escalon Medical Corp.
PRESENT:
HON. GARY L. TAYLOR, JUDGE /S/
Lisa Bredahl	None Present
Deputy Clerk	Court Reporter

ATTORNEY(S) PRESENT FOR PLAINTIFFS(S): ATTORNEY(S) PRESENT FOR DEFENDANTS(S)

None Present None Present

PROCEEDINGS:Re: REVISED Further Order on Parties’ Stipulation

[In Chambers]

The Court’s earlier Order is revised as follows:

By its Order on October 29, 2004, this Court ordered into effect the parties’ stipulation. Intralase now contends Escalon has given purported notice of termination of the parties’ License Agreement in violation of that stipulation and Order.

On April 25, 2005, at 10:00a.m. the Court will conduct a hearing on whether there has been a violation of the Court’s Order concerning the issue of the timeliness of Intralse’s breach remedy. Escalon may file any additional opposition to Intralse’s position by April 12, 2005. Intralase may file any reply by April 15, 2005. Service on opposing attorneys shall be by fax, e-mail, or personal service.

The Court will schedule a later hearing on the amount of any required remedy, if necessary.

Pending the Court’s ruling on this matter, the Court herby ORDERS that Escalon shall not implement, or take action to carry into effect, its purported termination of the parties’ License Agreement, ONCONDITION that Intralase file with the Court by April 11, 2005, its corporate surety undertaking in the amount of $286,000 to underwrite the payment of damages or entitlements that might be awarded to Escalon in this action.

INITAILS OF DEPUTY CLERK