WAYNE, Pa., Feb. 28 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced that it has entered into an agreement with
IntraLase Corp. (Nasdaq: ILSE) to settle all outstanding disputes and
litigation between the parties.
    Under the settlement agreement, IntraLase will make a lump sum payment
to Escalon of $9.6 million, in exchange for which all pending litigation
between the parties will be dismissed, the parties will exchange general
releases, full ownership of all patents and intellectual property formerly
licensed to IntraLase from Escalon will be obtained by IntraLase, and all
obligations under the parties' license agreement will terminate. In
addition, the payment from IntraLase satisfies all outstanding past,
current and future royalties owed or alleged to be owed by IntraLase to
Escalon.
    "We are pleased to have settled this dispute and, through the terms of
the agreement, we've enhanced the value of our business by strengthening
our balance sheet and providing additional liquidity that solidifies our
current portfolio of businesses," said Richard J. DePiano, Chairman and CEO
of Escalon. "We believe the $9.6 million payment will enhance our ability
to strategically expand our businesses and also provide the means to
selectively pursue opportunities for synergistic growth."
    The settlement is expected to have a material effect on Escalon's third
quarter financial statements because the entire $9.6 million will be
recorded as a gain on sale in the current period. The settlement also marks
the end of any future royalty payments to be received under the License
Agreement which is expected to have a material effect on earnings in
subsequent periods. This effect will be partially offset by the elimination
of legal fees related to this matter.
    Founded in 1987, Escalon develops markets and distributes ophthalmic
diagnostic, surgical and pharmaceutical products as well as vascular access
devices. Drew, which operates as a separate business unit, provides
instrumentation and consumables for the diagnosis and monitoring of medical
disorders in the areas of diabetes, cardiovascular diseases and hematology,
as well as veterinary hematology and blood chemistry. The Company seeks to
utilize strategic partnerships to help finance its development programs and
is also seeking acquisitions to further diversify its product line to
achieve critical mass in sales and take better advantage of Escalon's
distribution capabilities. Escalon has headquarters in Wayne, Pennsylvania
and manufacturing operations in Long Island, New York, New Berlin,
Wisconsin, Dallas, Texas, Oxford, Connecticut and Barrow-in-Furness, U.K.
    Note: This press release contains statements that are considered
forward- looking under the Private Securities Litigation Reform Act of
1995, including statements about the Company's future prospects. They are
based on the Company's current expectations and are subject to a number of
uncertainties and risks, and actual results may differ materially. The
uncertainties and risks include whether the Company is able to implement
its growth and marketing strategies, improve upon the operations of the
Company's business units, including the integration of Drew's and MRP's
operations and any acquisitions it may undertake, if any, of which there
can be no assurance, implement cost reductions, generate cash and identify,
finance and enter into business relationships and acquisitions,
uncertainties and risks related to new product development,
commercialization, manufacturing and market acceptance of new products,
marketing acceptance of existing products in new markets, the continuity of
royalty revenue, litigation and non-recurring expenses, research and
development activities, including failure to demonstrate clinical efficacy,
delays by regulatory authorities, scientific and technical advances by
Escalon or third parties, introduction of competitive products, third party
reimbursement and physician training as well as general economic
conditions. Further information about these and other relevant risks and
uncertainties may be found in the Company's report on Form 10- K, and its
other filings with the Securities and Exchange Commission, all of which are
available from the Commission as well as other sources.

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