Ep Medsystems Inc – ‘10QSB’ for 9/30/02 – EX-10

On:  Thursday, 11/14/02, at 9:46am ET   ·   For:  9/30/02   ·   Accession #:  1177456-2-114   ·   File #:  0-28260

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Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    28    116K 
 2: EX-10       Exhibit 10.1                                          24    105K 
 3: EX-10       Exhibit 10.2                                          13     55K 
 4: EX-99       Exhibit 99.1                                           1      5K 

EX-10   —   Exhibit 10.1

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                                                                    EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of the 5th day
of September, 2002 by and between EP MEDSYSTEMS,  INC., a New Jersey corporation
(the  "Company"),  and BOSTON  SCIENTIFIC  CORPORATION,  a Delaware  corporation
("BSC").                                                                        

     WHEREAS, in connection with that License,  Development and Supply Agreement
dated  as of  the  date  hereof  between  the  Company  and  BSC  (the  "License
Agreement"),  the Company  desires to issue and sell to BSC,  and BSC desires to
purchase from the Company,  a number of shares (the  "Shares") of authorized but
unissued  shares  of  common  stock,  no par value  per  share,  of the  Company
("Company  Common  Stock"),  to be determined  in accordance  with the terms and
conditions hereof,  for a maximum aggregate  purchase price of $3,000,000,  upon
the terms and subject to the conditions set forth in this Agreement.            

     NOW THEREFORE, in consideration of the mutual agreements,  representations,
warranties and covenants herein contained, the parties hereto agree as follows: 

     1. DEFINITIONS.  As used in this Agreement,  the following terms shall have
the following respective meanings:                                              

"510(k) Submission" shall have the meaning set forth in the License Agreement.  

"Abandonment Fee" shall have the meaning set forth in Section 2.3.              

"Abandonment Fee Shares" shall have the meaning set forth in Section 2.3.       

"Affiliate"  means,  with respect to any person or entity,  any person or entity
that, directly or indirectly,  through one or more intermediaries,  controls, is
controlled by, or is under common control with, such person or entity.          

"BSC Deliverables" shall have the meaning set forth in the License Agreement.   

"Closing" shall mean the Initial Closing,  the First  Installment  Closing,  the
Second  Installment  Closing,  the  Third  Installment  Closing,  or the  Fourth
Installment Closing, as the case may be.                                        

"Closing Date" means, with respect to each Closing, the date of such Closing.   

"Closing Location" shall have the meaning set forth in Section 2.2(a).          

"Company  Licensed  Intellectual  Property"  means all (i) material  licenses of
Intellectual  Property  to the Company or any  Company  Subsidiary  by any third
party, and (ii) material licenses of Intellectual Property by the Company or any
Company Subsidiary to any third party.                                          

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"Company Owned Intellectual  Property" means all material  Intellectual Property
owned by the Company or any Company Subsidiary.                                 

"Company  Share Price" means the lesser of (x) $5.00 or (y) the average  closing
sale price  (rounded to the third decimal  place) of the Company Common Stock on
the Nasdaq Stock Market for the 10 trading days up to and including the day that
is the  second  trading  day  immediately  prior to: (i) the  execution  of this
Agreement,  in the  case of the  Initial  Closing  Shares;  (ii) the date of the
relevant Closing,  in the case of each of the First Installment  Shares,  Second
Installment Shares,  Third Installment Shares and Fourth Installment Shares; and
(iii) the date of the termination of the License  Agreement,  in the case of the
Abandonment Fee Shares.                                                         

"Company Subsidiary" shall have the meaning set forth in Section 3.2.           

"Effective Date" shall have the meaning set forth in the License Agreement.     

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of
the rules and regulations promulgated thereunder.                               

"FDA" means the United  States Food and Drug  Administration,  or any  successor
entity.                                                                         

"FDA Approval" shall have the meaning set forth in the License Agreement.       

"First  Installment  Shares"  shall  have the  meaning  set  forth on  Exhibit A
attached hereto.                                                                

"First Milestone" shall have the meaning set forth on Exhibit A attached hereto.

"Fourth  Installment  Shares"  shall  have the  meaning  set forth on  Exhibit A
attached hereto.                                                                

"Fourth  Milestone"  shall  have the  meaning  set forth on  Exhibit A  attached
hereto.                                                                         

"Governmental Authority" means any: (a) nation, state, commonwealth,  territory,
county, municipality, district or other jurisdiction of any nature; (b) federal,
state,  local  municipal,  foreign or other  government;  or (c) governmental or
quasi-governmental authority of any nature.                                     

"Initial Closing" shall have the meaning set forth in Section 2.2(a).           

"Initial Closing Shares" shall have the meaning set forth in Section 2.1(a).    

"Installment Purchase" shall have the meaning set forth in Section 2.1(b).      

"Intellectual Property" means intellectual property or proprietary rights of any
description  including:  (i) rights in any patent, patent application (including
any provisionals, continuations, divisions,  continuations-in-part,  extensions,
renewals,  reissues,  revivals  and                                             

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reexaminations,  any  national  phase PCT  applications,  any PCT  international
applications, and all foreign counterparts),  copyright, industrial design, URL,
domain name,  trademark,  service mark,  logo,  trade dress or trade name;  (ii)
related  registrations and applications for  registration;  (iii) trade secrets,
moral rights or publicity rights; (iv) inventions, discoveries, or improvements,
modification,  know-how,  technique,  methodology,  writing, work of authorship,
design or data, whether or not patented, patentable, copyrightable or reduced to
practice,  including any inventions,  discoveries,  improvements,  modification,
know-how,  technique,  methodology,  writing, work of authorship, design or data
embodied or disclosed in any: (1) computer source codes (human readable  format)
and  object  codes  (machine   readable   format);   (2)   specifications;   (3)
manufacturing, assembly, test, installation, service and inspection instructions
and procedures; (4) engineering,  programming, service and maintenance notes and
logs; (5) technical, operating and service and maintenance manuals and data; (6)
hardware reference manuals;  and (7) user documentation,  help files or training
materials; and (v) good will related to any of the foregoing.                   

"Losses"  means losses,  claims,  damages,  liabilities  and expenses of a party
being indemnified under this Agreement.                                         

"Material Adverse Effect" shall mean, any event, circumstance,  change or effect
that is or is  reasonably  likely  to be  materially  adverse  to the  business,
results of operations,  financial  condition or prospects of (a) the Company and
the Company Subsidiaries or (b) BSC, as the case may be.                        

"Milestones" shall have the meaning set forth in Section 2.1(b).                

"Milestone  Achievement  Notice"  shall  have the  meaning  set forth in Section
2.1(b).                                                                         

"Person"  (whether  such  term is  capitalized  or  not)  means  an  individual,
corporation,  partnership,  limited liability company, joint venture, syndicate,
person (including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity.                             

"Program" shall have the meaning set forth in the License Agreement.            

"Program Schedule" shall have the meaning set forth in the License Agreement.   

"Registration  Rights  Agreement"  shall mean that certain  Registration  Rights
Agreement, dated as of the date hereof, among the Company and BSC.              

"RPM  Equipped  EP-WorkMate  Systems"  shall have the  meaning  set forth in the
License Agreement.                                                              

"SEC" shall mean the Securities and Exchange Commission.                        

"Second  Installment  Shares"  shall  have the  meaning  set forth on  Exhibit A
attached hereto.                                                                

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"Second  Milestone"  shall  have the  meaning  set forth on  Exhibit A  attached
hereto.                                                                         

"Securities  Act" shall mean the Securities Act of 1933, as amended,  and all of
the rules and regulations promulgated thereunder.                               

"Third  Installment  Shares"  shall  have the  meaning  set  forth on  Exhibit A
attached hereto.                                                                

"Third Milestone" shall have the meaning set forth on Exhibit A attached hereto.

2.   PURCHASE AND SALE OF SHARES; CLOSINGS.                           

          2.1  PURCHASE AND SALE.  Subject to and upon the terms and  conditions
set forth in this Agreement, the Company hereby agrees to issue and sell to BSC,
and BSC hereby agrees to purchase from the Company, such number of Shares as may
be determined as follows:                                                       

          (a) Upon the parties' execution of this Agreement, BSC shall purchase,
for an aggregate purchase price of $500,000, such nearest whole number of Shares
as shall be equal to the quotient  obtained by dividing  $500,000 by the Company
Share Price, determined as of the date hereof (the "Initial Closing Shares").   

          (b) BSC shall  purchase such number of  additional  Shares as shall be
determined  pursuant  to  Exhibit A attached  hereto  (each  such  purchase,  an
"Installment Purchase") within five days of the achievement, to BSC's reasonable
satisfaction,  of each of the applicable milestones (the "Milestones") set forth
on Exhibit A in accordance  with the provisions  set forth thereon.  The Company
shall be required to give BSC prompt written  notice of the  achievement of each
Milestone  (each,  a  "Milestone  Achievement  Notice").  In  the  case  of  the
Milestones  relating to the First  Installment  Shares,  the Second  Installment
Shares and the Third  Installment  Shares,  BSC shall be entitled to request and
receive such  additional  information  relating to the  achievement  of any such
Milestone,  and to conduct such additional  investigation as it shall reasonably
request for purposes of determining whether such Milestone has been achieved. In
the event that BSC disagrees that any Milestone has been  achieved,  BSC and the
Company agree to discuss such  disagreement in good faith. Upon the agreement of
BSC and the Company that a Milestone  has been  achieved,  the relevant  Closing
shall be jointly  scheduled by the Company and BSC. BSC shall have no obligation
to purchase any Shares  pursuant to a Milestone  unless such  Milestone has been
achieved in accordance with the provisions of Exhibit A and this Section 2.1(b).

2.2  CLOSINGS.                                              

          (a) At the initial closing of the transactions contemplated under this
Agreement  (the  "Initial  Closing"),  the Company  shall deliver to BSC a stock
certificate,  registered in the name of BSC,  representing the number of Initial
Closing Shares purchased by BSC as of the Initial  Closing,  or shall cause such
Initial  Shares to be credited to the account of BSC  electronically  though the
Depository  Trust  Company  ("DTC")  against                                    

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payment of the  purchase  price of  $500,000  by wire  transfer  of  immediately
available  funds to such account or accounts as the Company  shall  designate in
writing.  The Initial  Closing shall take place at the Boston offices of Bingham
McCutchen LLP, 150 Federal  Street,  Boston,  Massachusetts  02110 (the "Closing
Location")  at 10:00 a.m. on September 5, 2002 or at such other  location,  date
and  time as may be  agreed  upon  between  BSC and the  Company  (unless  other
arrangements  to close by mail or fax are mutually agreed upon by the parties as
to the Initial Closing or any subsequent Closing).                              

          (b) Each and any  subsequent  closing of the sale and  purchase of the
First Installment Shares, Second Installment Shares, Third Installment Shares or
Fourth Installment  Shares based upon achievement of Milestones  pursuant to the
terms and conditions  hereof (such closings are referred to  respectively as the
"First Installment Closing",  "Second Installment  Closing",  "Third Installment
Closing",  and "Fourth Installment Closing", and each, with the Initial Closing,
a "Closing"),  shall be held at the Closing Location.  At each such Closing, the
Company shall deliver to BSC a stock certificate,  registered in the name of BSC
representing  the number of Shares purchased by BSC pursuant to such Installment
Purchase,  or shall  cause  such  Shares to be  credited  to the  account of BSC
electronically  though DTC to an  account  designated  by BSC to the  Company no
later than twenty-four (24) hours prior to any such issuance, against payment of
the purchase price therefor by wire transfer of immediately  available  funds to
such account or accounts as the Company shall designate in writing.             

          2.3  ABANDONMENT  FEE. If the Company  elects to terminate the License
Agreement pursuant to Section 11.2(a) thereof,  (for any reason or for no reason
under such Section 11.2(a),  provided BSC has delivered the BSC Deliverables (as
defined  thereunder)  to the Company),  then the Company shall promptly give BSC
written notice of such  termination and shall  forthwith,  at its election,  (i)
without additional consideration, pay an abandonment fee (the "Abandonment Fee")
to  BSC  payable,  at  the  Company's  option,  in  the  form  of:  (i) a  stock
certificate,  registered  in the name of BSC, for such  nearest  whole number of
shares of Company Common Stock as shall equal the quotient  obtained by dividing
$1,000,000  by the  Company  Share Price (the  "Abandonment  Fee  Shares"),  or,
alternatively, the Company shall cause the Abandonment Fee Shares to be credited
to the account of BSC electronically  though DTC to an account designated by BSC
to the Company no later than  twenty-four (24) hours prior to any such issuance;
or (ii) pay the  Abandonment Fee of $1,000,000 to BSC in the form of cash. It is
agreed  by BSC and the  Company  that  (i) the  Abandonment  Fee is an  accurate
estimate  of the  damages  that would be  incurred  by BSC in the event that the
Company elects to terminate the License Agreement  pursuant to this Section 2.3,
(ii) the Abandonment Fee shall serve as the sole liquidated damages available to
BSC in the event of such termination, and (iii) in no event shall the Company be
liable for any  penalty or other fees  associated  with the  termination  of the
License Agreement.                                                              

     3.  REPRESENTATIONS  AND  WARRANTIES  OF THE  COMPANY.  The Company  hereby
represents  and  warrants to BSC as follows as of the date hereof and as of each
Closing Date:                                                                   

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          3.1  INCORPORATION.  The  Company  is a  corporation  duly  organized,
validly existing and in good standing under the laws of the State of New Jersey,
is qualified to do business in each  jurisdiction  in which the character of its
properties or the nature of its business  requires such  qualification,  and has
all requisite corporate power and authority and all authorizations, licenses and
permits  necessary to own its  properties  and to carry on its businesses as now
conducted,  except where the failure to hold such  authorizations,  licenses and
permits would not have a Material Adverse Effect.                               

          3.2 SUBSIDIARIES. Each subsidiary of the Company set forth on Schedule
3.2 (each, a "Company Subsidiary") is a U.S. corporation or foreign company duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of organization and has all requisite corporate power and authority
and all authorizations, licenses and permits necessary to own its properties and
to carry on its  businesses as now  conducted,  except where the failure to hold
such authorizations, licenses and permits or to be so qualified would not have a
Material  Adverse  Effect.  Each  Company  Subsidiary  is duly  qualified  to do
business and is in good standing in each  jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a Material Adverse Effect. Except
as set forth on Schedule 3.2 hereto, as of the date hereof,  neither the Company
nor any  Company  Subsidiary  owns or holds  the  right to  acquire  any  stock,
partnership  interest  or  joint  venture  interest  or other  equity  ownership
interest in any other Person. The Company owns all of the issued and outstanding
capital stock of each Company Subsidiary.  The Company has made available to BSC
complete  and correct  copies of the  charter,  by-laws,  minute books and other
applicable  organizational documents of the Company and each Company Subsidiary,
in each case with all amendments thereto.                                       

          3.3 CAPITALIZATION.  The authorized capital stock of the Company as of
the date hereof  consists of (i) 25,000,000  shares of Company Common Stock,  of
which  14,963,652  shares are  outstanding on the date hereof and (ii) 5,000,000
shares of  preferred  stock,  of which  373,653  shares of Series A  Convertible
Preferred  Stock are outstanding on the date hereof.  All outstanding  shares of
the  capital  stock of the  Company  have been duly  authorized  and are validly
issued,  fully  paid and  nonassessable.  Except  as set forth on  Schedule  3.3
hereto, as of the date hereof, there are no existing options,  warrants,  calls,
preemptive  (or similar)  rights,  subscriptions  or other  rights,  agreements,
arrangements  or commitments  of any character  obligating the Company to issue,
transfer or sell, or cause to be issued,  transferred or sold, any shares of the
capital  stock of the Company or other  equity  interests  in the Company or any
securities  convertible into or exchangeable for such shares of capital stock or
other equity interests,  and there are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests.                                                

3.4  AUTHORIZATION.                               

          (a) All corporate  action on the part of the Company and its officers,
directors and stockholders necessary for the authorization,  execution, delivery
and performance of this Agreement,  the  Registration  Rights  Agreement and the
License Agreement and the consummation of the transactions  contemplated  herein
and therein has                                                                 

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been taken.  When  executed  and  delivered by the Company and each of the other
parties hereto and thereto,  each of this Agreement,  the License  Agreement and
the Registration  Rights Agreement shall constitute the legal, valid and binding
obligations of the Company,  enforceable  against the Company in accordance with
their respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization  or other  laws  affecting  creditors'  rights  generally  and by
general  equitable  principles.  The Company has full legal right, all requisite
corporate power and all authority and approvals  required to execute and deliver
this Agreement, the Registration Rights Agreement and the License Agreement, and
to carry out and perform  fully the  obligations  of the Company  hereunder  and
thereunder.  This Agreement,  the Registration  Rights Agreement and the License
Agreement  have been duly executed and delivered by the Company,  and,  assuming
due  execution and delivery  hereof and thereof by the other parties  hereto and
thereto,  this  Agreement,  the  Registration  Rights  Agreement and the License
Agreement  will  be  legal,  valid  and  binding   obligations  of  the  Company
enforceable against the Company in accordance with their respective terms.      

          (b) The execution and delivery by the Company of this  Agreement,  the
Registration Rights Agreement and the License Agreement, the consummation of the
transactions contemplated hereby and thereby, and the performance by the Company
of this Agreement,  the Registration  Rights Agreement and the License Agreement
in accordance with their respective terms and conditions will not:              

               (i) violate any provision of the organizational  documents of the
Company or any Company Subsidiary;                                              

               (ii) violate, conflict with or result in the breach of any of the
terms and conditions of,  otherwise  cause the  termination of or give any other
contracting  party the right to  terminate  or cancel,  or  constitute  (or with
notice or lapse of time or both  constitute) a default under,  or accelerate any
rights of any party to, any material indenture, mortgage, lease, loan agreement,
instrument, permit, franchise, license, judgment, or other material agreement or
instrument  to which the Company or any Company  Subsidiary  is bound,  provided
that the Company or such Company Subsidiary  obtains those consents,  approvals,
authorizations or actions of, or makes those filings with or gives those notices
to, any Governmental Authority or any other Person, set forth on Schedule 3.4(b)
hereto (the "Company  Consents and Notices");  or                               

               (iii) if the Company  Consents  and Notices are obtained or made,
violate any laws,  rules,  regulations or orders of any  Governmental  Authority
applicable to the Company or any Company Subsidiary.                            

          3.5 VALID  ISSUANCE OF THE SHARES.  The Shares to be  purchased by BSC
hereunder will, upon issuance  pursuant to the terms hereof,  be duly authorized
and validly issued,  fully paid and  nonassessable and not subject to any liens,
encumbrances,  preemptive rights or any other similar  contractual rights of the
stockholders of the Company or others, and, based in part on the representations
and warranties of BSC set forth in Section 4 hereof,  will be in compliance with
applicable federal and state securities laws.                                   

3.6 FINANCIAL STATEMENTS; SEC DOCUMENTS.                    

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          (a) The Company has furnished to BSC its audited Statements of Income,
Stockholders'  Equity  and  Cash  Flows  for  each of its  three  most  recently
completed fiscal years ending prior to the date hereof, its audited Consolidated
Balance  Sheet as of the end of each of its two most recently  completed  fiscal
years ending  prior to the date  hereof,  its  unaudited  Statements  of Income,
Stockholders'  Equity  and  Cash  Flows  for the  period  covering  its two most
recently  completed  fiscal  quarters  ending prior to the date hereof,  and its
unaudited Balance Sheet as of its most recently  completed fiscal quarter ending
prior to the date hereof. All such financial statements are hereinafter referred
to collectively  as the "Financial  Statements".  The Financial  Statements have
been  prepared in  accordance  with  generally  accepted  accounting  principles
applied on a consistent basis during the periods  involved,  and fairly present,
in all material respects,  the financial position of the Company and the Company
Subsidiaries  and the  results  of their  operations  as of the date and for the
periods indicated thereon,  except that the unaudited  financial  statements may
not be in accordance with generally  accepted  accounting  principles because of
the absence of footnotes  normally  contained  therein and are subject to normal
year-end audit adjustments which, individually and in the aggregate, will not be
material.                                                                       

          (b) The Company has  furnished to BSC a true and complete  copy of the
Company's  Annual Report on Form 10-KSB for its most recently  completed  fiscal
year ending  prior to the date  hereof  (the  "Latest  10-KSB"),  the  Company's
Quarterly Reports on Form 10-QSB for two most recently completed fiscal quarters
ending prior to the date hereof (collectively the "Prior Two 10-QSBs"),  and any
amendments  thereto,  and any other statement,  report,  registration  statement
(other than  registration  statements on Form S-8) or definitive proxy statement
filed by the Company with the SEC during the period  commencing  as of the start
of its most recently  completed  fiscal year and ending on the date hereof.  The
Company  will,  promptly  upon  the  filing  thereof,  also  furnish  to BSC all
statements,  reports (including,  without limitation,  Quarterly Reports on Form
10-QSB and Current Reports on Form 8-K),  registration statements and definitive
proxy statements filed by the Company with the SEC during the period  commencing
on the date hereof and ending on each Closing Date (all such materials  required
to be  furnished  to BSC  pursuant  to this  sentence  or  pursuant  to the next
preceding  sentence of this  Section 3.6 being  called,  collectively,  the "SEC
Documents").  As of their respective  filing dates, the SEC Documents did comply
and shall comply in all material  respects with the requirements of the Exchange
Act or the  Securities  Act, as  applicable,  and none of the SEC  Documents did
contain or shall  contain any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading,  as of their respective  filing dates.  Except as set
forth on  Schedule  3.6  hereto,  the  Company  has,  during the period that the
Company  has been  subject  to the  requirements  of  Section 12 or 15(d) of the
Exchange Act, filed in a timely manner all reports and other  material  required
to be filed by it  pursuant  to Sections  13, 14 or 15(d) of the  Exchange  Act.
Except  as set forth on  Schedule  3.6  hereto,  the  Company  has not filed any
amendment  to its Latest  10-KSB or either of its Prior Two  10-QSBs.  Since the
filing of its Latest  10-KSB,  the Company  has not filed any Current  Report on
Form 8-K.                                                                       

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          3.7  CONSENTS.  Except  for (i) the filing  and  effectiveness  of any
registration  statement required to be filed by the Company under the Securities
Act in connection with the exercise by BSC of its rights under the  Registration
Rights  Agreement  and  (ii) any  required  state  "blue  sky"  law  filings  in
connection with the transactions contemplated under such registration statement,
all consents,  approvals,  orders and authorizations required on the part of the
Company and each Company  Subsidiary in connection with the execution,  delivery
or performance of this  Agreement,  the License  Agreement and the  Registration
Rights Agreement and the consummation of the  transactions  contemplated  herein
and therein have been obtained and will be effective as of each Closing Date.   

          3.8 INSURANCE. All the insurable properties of the Company and of each
Company  Subsidiary  are insured for the benefit of the Company or such  Company
Subsidiary,  as the case may be,  against all risks usually  insured  against by
persons operating  similar  properties in the locality where such properties are
located under valid and enforceable  policies  issued by insurance  companies of
recognized responsibility in sufficient amounts.                                

          3.9 NASDAQ STOCK MARKET.  The Company Common Stock is currently listed
and  traded  on  the  Nasdaq  Stock  Market,  the  Company  has  maintained  all
requirements for the continued listing of the Company Common Stock on the Nasdaq
Stock Market,  and there are no  proceedings  to revoke or suspend such listing.
The sale of the Shares as contemplated  hereby will not result in a violation of
any Nasdaq rules and regulations.                                               

          3.10 FORM S-3  ELIGIBILITY.  As of the date  hereof,  the  Company  is
eligible to file a  Registration  Statement on Form S-3, or any successor  form,
pursuant to Section 2 of the Registration  Rights Agreement.  The Company is not
aware of any facts that would prevent or destroy such eligibility.              

          3.11 PRIVATE  OFFERING.  Except as set forth on Schedule  3.11 hereto,
during the six months preceding the date of this Agreement,  neither the Company
nor any person  acting on its behalf has,  directly or through any agent,  sold,
offered for sale,  solicited offers to buy or otherwise negotiated in respect of
any security  (as defined in the  Securities  Act) that is or may be  integrated
with the sale of the Shares in a manner that would require the  registration  of
the  Shares  under the  Securities  Act.  Except as set forth on  Schedule  3.11
hereto, during the six months preceding the date of this Agreement,  neither the
Company  nor any person  acting on its behalf has  offered or sold any Shares by
means of any general  solicitation or general  advertising within the meaning of
Rule  502(c)  under  the  Securities   Act.   Assuming  the  accuracy  of  BSC's
representations  in Section 4 hereof,  the  offering and sale of the Shares will
satisfy the requirements of Rule 506 under the Securities Act.                  

          3.12 ABSENCE OF LITIGATION. There is no action, suit or proceeding or,
to the Company's  knowledge,  any  investigation,  pending,  or to the Company's
knowledge,  overtly threatened against the Company or any Company Subsidiary and
in which an unfavorable  outcome,  ruling or finding in any said matter,  or for
all  matters  taken  as a whole,  might  have a  Material  Adverse  Effect.  The
foregoing includes,  without limitation,  any such action,  suit,               

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proceeding or investigation that questions this Agreement, the License Agreement
or the  Registration  Rights  Agreement  or the right of the Company to execute,
deliver and perform under any of the same.                                      

          3.13 TITLE TO PROPERTIES AND ASSETS,  LIENS,  ETC. Except as set forth
on  Schedule  3.13  hereto,  the Company  has good and  marketable  title to its
properties  and assets,  and good title to its leasehold  estates,  in each case
subject to no mortgage, pledge, lien, lease, encumbrance,  or charge, other than
(i) those resulting from taxes which have not yet become delinquent,  (ii) minor
liens and  encumbrances  which do not  materially  detract from the value of the
property subject thereto or,  individually or in the aggregate,  have a Material
Adverse Effect, (iii) those that have otherwise arisen in the ordinary course of
business,  and (iv) those relating to  indebtedness  for borrowed money that are
reflected in the Financial Statements.                                          

          3.14  COMPLIANCE  WITH  LAWS.  Each of the  Company  and each  Company
Subsidiary has complied, and is in compliance with, all federal,  state, county,
local and foreign laws, rules, regulations, ordinances, and orders applicable to
the operation of its business or to the real property or personal  property that
it  owns or  leases  (including,  without  limitation,  all  such  laws,  rules,
ordinances,  and orders  relating to antitrust,  consumer  protection,  currency
exchange,  environmental  protection,  equal opportunity,  health,  occupational
safety, pension, securities and trading-with-the-enemy  matters), the failure to
comply  with which  would,  individually  or in the  aggregate,  have a Material
Adverse Effect.  Neither the Company nor any Company Subsidiary has received any
notification of any asserted present or past unremedied  failure by it to comply
with any of such laws, rules, regulations, ordinances, or orders.               

          3.15 NO UNDISCLOSED LIABILITIES.  Except as set forth on Schedule 3.15
hereto,  from June 30,  2002 to the date  hereof,  neither  the  Company nor any
Company  Subsidiary  has  incurred  any  liabilities  or  obligations,  fixed or
contingent,  matured  or  unmatured  or  otherwise,  except for  liabilities  or
obligations that,  individually or in the aggregate,  do not or would not have a
Material Adverse Effect.                                                        

          3.16. CHANGES.  Except as set forth on Schedule 3.16 hereto, since the
end of the Company's  last  completed  fiscal  quarter,  there has not been with
respect to the Company and the Company Subsidiaries:                            

          (a) Any change in the  assets,  liabilities,  financial  condition  or
operations of the Company or any Company  Subsidiary  from that reflected in the
Financial  Statements,  other than changes in the ordinary course, none of which
individually or in the aggregate constitutes a Material Adverse Effect;         

          (b) Any resignation or termination of any key officers or employees of
the Company or any Company  Subsidiary;  and to the  knowledge  of the  Company,
there is no impending  resignation  or  termination  of  employment  of any such
officer or employee;                                                            

          (c)  Any  material  change,  except  in the  ordinary  course,  in the
contingent  obligations  of the  Company  or any  Company  Subsidiary  by way of
guaranty, endorsement, indemnity, warranty or otherwise;                        

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          (d) Any  damage,  destruction  or  loss,  whether  or not  covered  by
insurance, which constitutes a Material Adverse Effect;                         

          (e) Any waiver by the Company or any Company  Subsidiary of a material
right  or of a  material  debt  owed to it  other  than in the  ordinary  course
consistent with past practices;                                                 

          (f) Any direct or  indirect  loans made by the  Company or any Company
Subsidiary to any stockholder,  employee,  officer or director of the Company or
any  Company  Subsidiary,  other  than  advances  made  in the  ordinary  course
consistent with past practices;                                                 

          (g) Any material change in any  compensation  arrangement or agreement
with any employee,  officer,  director or stockholder other than in the ordinary
course consistent with past practices;                                          

          (h) Any  declaration or payment of any dividend or other  distribution
of the assets of the Company;                                                   

(i) Any labor organization activity;                        

          (j) Any  indebtedness  for  borrowed  money,  obligation  or liability
incurred, assumed or guaranteed by the Company or any Company Subsidiary, except
those  for  immaterial  amounts  and for  current  liabilities  incurred  in the
ordinary course;                                                                

          (k)  Any  sale,  assignment,  license  or  transfer  of  any  patents,
trademarks,  copyrights,  trade secrets or other intangible assets except in the
ordinary course;                                                                

          (l) Any change in any  material  agreement to which the Company or any
Company  Subsidiary  is a party  or by  which it is  bound  that  constitutes  a
Material Adverse Effect; or                                                     

          (m) Any other event or condition of any character  that  constitutes a
Material Adverse Effect with respect to the Company or any Company Subsidiary.  

          3.17 LABOR MATTERS. The Company has no collective bargaining agreement
with any of its  employees  and, to the Company's  knowledge,  there is no labor
union  organizing  activity pending or threatened with respect to the Company or
any Company  Subsidiary.  There are no disputes  pending or, to the knowledge of
the Company,  overtly threatened between the Company or any Company  Subsidiary,
on the one hand,  and any  employees,  on the other  hand,  other than  employee
grievances  arising  in  the  ordinary  course  of  business  which  would  not,
individually or in the aggregate, have a Material Adverse Effect.               

          3.18 MATERIAL CONTRACTS.  Except as set forth on Schedule 3.18 hereto,
the  contracts  listed as exhibits to the SEC  Documents are all of the material
contracts (as defined in the Exchange Act) to which the Company is a party or by
which it or its assets may be bound.  The  Company  is,  and,  to the  Company's
knowledge,  all other parties to such material  contracts  are, in compliance in
all material respects with their obligations thereunder.                        

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3.19 INTELLECTUAL PROPERTY.                       

          (a) The  operation  of the  business  of each of the  Company and each
Company  Subsidiary as currently  conducted  does not interfere  with,  conflict
with,  infringe  upon,  misappropriate  or  otherwise  violate,  in any material
respect,  the Intellectual  Property rights of any third party, and no action or
claim is pending or  overtly  threatened  alleging  that the  operation  of such
business  interferes with,  conflicts with,  infringes upon,  misappropriates or
otherwise violates, in any material respect, the Intellectual Property rights of
any third party and, to the  knowledge  of the Company,  there is no  reasonable
basis therefor.                                                                 

          (b) The  Company  is the sole  owner of the  entire  right,  title and
interest  in and to the  Company  Owned  Intellectual  Property,  or has a valid
license or other legal right under the Company Licensed  Intellectual  Property,
in  either  case  used in or  necessary  to the  operation  of its  business  as
presently  conducted,  subject to the terms of the license agreements  governing
the Company Licensed Intellectual Property.                                     

          (c)  Except  as set forth on  Schedule  3.19(c)  hereto,  there are no
outstanding options, licenses, or agreements of any kind between the Company and
any third party  relating to the  Company's  Intellectual  Property,  nor is the
Company or any Company  Subsidiary bound by or a party to any options,  licenses
or  agreements  of any kind with  respect to the  patents,  trademarks,  service
marks,  trade  names,   copyrights,   trade  secrets,   licenses,   information,
proprietary rights and processes of any other person or entity.                 

          (d)  The  Company  has  no  present  knowledge  from  which  it  could
reasonably  conclude  that  the  Company  Owned  Intellectual  Property  and any
Intellectual  Property  licensed  to the  Company  under  the  Company  Licensed
Intellectual  Property,  are invalid or  unenforceable,  and,  to the  Company's
knowledge,  the same have not been adjudged invalid or unenforceable in whole or
in part.  The Company  Owned  Intellectual  Property  and the  Company  Licensed
Intellectual  Property constitute all of the Intellectual Property necessary for
the  operation  of the business of the Company and the Company  Subsidiaries  as
currently conducted.  The Company has complied in all material respects with all
of its obligations of confidentiality in respect of the claimed trade secrets or
proprietary  information of others and knows of no violation of such obligations
of confidentiality as are owed to it.                                           

          (e) No claims or actions  have been  asserted,  are pending or overtly
threatened  against  the  Company or any Company  Subsidiary  that if  adversely
determined to the Company would have a Material Adverse Effect (i) based upon or
challenging or seeking to deny or restrict the ownership by or license rights of
the  Company or any of the  Company  Subsidiaries  of any of the  Company  Owned
Intellectual Property or Company Licensed Intellectual  Property,  (ii) alleging
that any services  provided by,  processes used by, or products  manufactured or
sold by the Company or any of its subsidiaries  infringe or  misappropriate  any
Intellectual  Property  right of any third party in any  material  respects,  or
(iii) alleging that the Company Licensed Intellectual Property is being licensed
or sublicensed in conflict with the terms of any license or other agreement.    

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          (f) As of the date hereof, to the knowledge of the Company,  no person
is engaging in any activity that infringes or misappropriates  the Company Owned
Intellectual  Property or Company Licensed Intellectual Property in any material
respect. Except as set forth on Schedule 3.19(f) hereto, neither the Company nor
any Company Subsidiary has granted any license or other right to any third party
with  respect to the Company  Owned  Intellectual  Property or Company  Licensed
Intellectual  Property.   The  execution,   delivery  and  performance  of  this
Agreement,  the License Agreement and the Registration  Rights Agreement and the
consummation of the transactions  contemplated herein and therein by the Company
will not breach,  violate or conflict with any material  instrument or agreement
concerning the Company Owned Intellectual  Property,  or cause the forfeiture or
termination  or give rise to a right of forfeiture or  termination of any of the
Company Owned Intellectual Property that would have a Material Adverse Effect.  

          (g) The Company has  delivered  or made  available  to BSC correct and
complete  copies  of  all  the  material   licenses  of  the  Company   Licensed
Intellectual Property,  other than licenses of commercial off-the-shelf computer
software. With respect to each such license:                                    

               (i) such  license  is valid  and  binding  and in full  force and
effect and represents the entire agreement  between the respective  licensor and
licensee with respect to the subject matter of such license;                    

               (ii) such  license  will not cease to be valid and binding and in
full force and  effect on terms  identical  in all  material  respects  to those
currently  in  effect  as a  result  of the  consummation  of  the  transactions
contemplated  by this  Agreement,  the License  Agreement  and the  Registration
Rights  Agreement,  nor will the consummation of the  transactions  contemplated
hereby or thereby  constitute a material breach or default under such license or
otherwise so as to give the licensor a right to terminate such license;         

               (iii)  neither the Company  nor any  Company  Subsidiary  has (A)
received any notice of  termination  or  cancellation  under such  license,  (B)
received any notice of a material  breach or default under such  license,  which
breach has not been  cured,  or (C) granted to any other third party any rights,
adverse or otherwise, under such license that would constitute a material breach
of such license; and                                                            

               (iv)  neither the Company  nor, to the  knowledge of the Company,
any  other  party to such  license  (including  any  Company  Subsidiary)  is in
material  breach or default  thereof,  and, to the knowledge of the Company,  no
event has occurred that, with notice or lapse of time,  would  constitute such a
material breach or default or permit  termination,  modification or acceleration
under such license.                                                             

          (h) Except as set forth on Schedule 3.19(h) hereto, the Company is not
aware  that any of the  respective  employees,  officers,  directors,  agents or
consultants  of the  Company  or  any  Company  Subsidiary  is  (i)  subject  to
confidentiality  restrictions  in favor of any third  person the breach of which
could subject the Company or any of its  subsidiaries to any liability,  or (ii)
obligated under any contract  (including  licenses,  covenants or               

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commitments  of any  nature) or other  agreement,  or  subject to any  judgment,
decree or order of any court or administrative  agency,  that would interfere in
any material respect with their duties to the Company or any Company Subsidiary,
as applicable, or that would conflict in any material respect with the Company's
or any Company Subsidiary's business as presently proposed to be conducted. Each
key employee,  officer and consultant of the Company and each Company Subsidiary
has executed a proprietary  information and inventions  agreement in the form of
Exhibit B attached hereto. No current or former employee,  officer or consultant
of the Company or any Company  Subsidiary has excluded works or inventions  made
prior to his or her employment or relationship  with the Company or such Company
Subsidiary  from his or her assignment of inventions  pursuant to such employee,
officer or consultant's proprietary information and inventions agreement.       

          (i)  Each  of the  Company  and  each  Company  Subsidiary  has  taken
reasonable  steps in accordance  with normal  industry  practice to maintain the
confidentiality  of  its  trade  secrets  and  other  confidential  Intellectual
Property.   To  the   knowledge   of  the   Company,   (i)  there  has  been  no
misappropriation  of any material trade secrets or other  material  confidential
Company Owned Intellectual Property by any person; (ii) no employee, independent
contractor or agent of the Company or any Company Subsidiary has misappropriated
any trade  secrets of any other person in the course of such  performance  as an
employee,  independent  contractor or agent; and (iii) no employee,  independent
contractor  or agent of the  Company or any  Company  Subsidiary  is in material
default  or  breach  of any  term of any  employment  agreement,  non-disclosure
agreement,  assignment of invention  agreement or similar  agreement or contract
relating in any way to the protection,  ownership,  development, use or transfer
of Company Owned Intellectual Property.                                         

          (j)  Except to the  extent  already  assigned  to the  Company  or any
Company Subsidiary, neither the Company nor any Company Subsidiary believes that
it is or will be necessary to utilize any inventions or proprietary  information
of any of its respective employees (or people it currently intends to hire) made
prior to their employment by the Company or any Company Subsidiary,  as the case
may be.                                                                         

3.20 FDA MATTERS.                                 

          (a)  Neither  the  Company  nor any  Company  Subsidiary  has sold any
products  anywhere in the world prior to  receiving  any  required or  necessary
approvals or consents from any Governmental Authority, including but not limited
to the FDA under the Food,  Drug & Cosmetics  Act of 1976,  as amended,  and the
regulations  promulgated  thereunder,  or any  corollary  entity  in  any  other
jurisdiction.  Each of the Company and each Company  Subsidiary  has obtained in
the United  States and in all  countries  where it is  currently  marketing  its
products, all applicable material licenses, registrations,  approvals, consents,
clearances  and  authorizations  required  by state or federal  agencies in such
countries  regulating  the safety,  effectiveness  and market  clearance of such
products to sell, promote and market such products.  Neither the Company nor any
Company  Subsidiary has received any notice of, and the Company is not aware of,
any outstanding,  pending or overtly threatened actions,  citations,  decisions,
product recalls, medical device reports,  information requests,  warning letters
or Section 305 notices from the FDA or similar issues                           

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or notifications  from any corollary entity in any other  jurisdiction  that are
material or which the Company is not diligently contesting.                     

          (b)  Except  as set  forth on  Schedule  3.20(b)  hereto,  each of the
Company and each Company  Subsidiary  has (i) complied in all material  respects
with all applicable  laws,  regulations and  specifications  with respect to the
design, manufacture, labeling, testing and inspection of all of its products and
the  operation  of  manufacturing  facilities  promulgated  by  the  FDA  or any
corollary  entity  in any  other  jurisdiction,  and (ii)  conducted  all of its
clinical  trials with reasonable care and in accordance with all applicable laws
in all material  respects and in accordance  with the stated  protocols for such
clinical trials.                                                                

          (c) All of the  Company's  submissions  to the  FDA and any  corollary
entity  in any  other  jurisdiction  whether  oral,  written  or  electronically
delivered  were true,  accurate and complete in all material  respects as of the
date made, and together with any amendments to such  submissions or supplemental
information  provided to the FDA or such other  corollary  entity,  remain true,
accurate and complete in all material respects as of the date hereof, and do not
materially  misstate any of the statements or information  included therein,  or
omit to state a material  fact  necessary  to make the  statements  therein  not
misleading.                                                                     

          3.21 TAX MATTERS.  The Company and each Company  Subsidiary  has filed
all  federal,  state,  foreign and other tax returns  which were  required to be
filed on or before the date  hereof and has paid all taxes which have become due
and  payable.  All such  reports  and  returns  (copies  of which have been made
available to BSC) were  materially  accurate and complete when filed and reflect
all taxes  required to be paid by the Company and the Company  Subsidiaries  for
the periods reported therein.                                                   

3.22 ENVIRONMENTAL COMPLIANCE.                    

          (a) Neither the Company  nor any  Company  Subsidiary  has  generated,
stored, treated, discharged or disposed of any hazardous substances or hazardous
waste in violation of any applicable law or regulation, nor is the Company aware
of any overt allegations that any such violations have occurred.  The Company is
not  aware  of  any  claims,   investigations,   litigation  or   administrative
proceedings,  whether actual or  threatened,  against the Company or any Company
Subsidiary  relating to any  environmental  contamination of any property owned,
used or leased by any of them or arising  out of any  alleged  violation  of any
environmental law or regulation.                                                

          (b) To the Company's knowledge, none of the real property owned and/or
occupied by the Company or any Company Subsidiary has ever been used by previous
owners and/or  operators to generate,  manufacture,  refine,  transport,  treat,
store,  handle or dispose of "Hazardous  Substances"  or "Hazardous  wastes," as
such terms are defined in the Comprehensive Environmental Response, Compensation
and  Liability  Act, 42 U.S.C.  9601,  et seq.,  the Resource  Conservation  and
Recovery Act, 42 U.S.C.  6901,  et seq., or applicable  state and local laws, or
any regulations issued under any such laws.                                     

          3.23  BROKERS.  The Company has not dealt with any broker or finder in
connection with the transactions contemplated by this Agreement, and the Company
has not                                                                         

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incurred,  and shall not incur,  directly or  indirectly,  any liability for any
brokerage  or finders'  fees or agents  commissions  or any  similar  charges in
connection with this Agreement or any transaction contemplated hereby.          

          3.24.  FULL  DISCLOSURE.  The  representations  and  warranties of the
Company set forth in this  Agreement  do not contain any untrue  statement  of a
material  fact or omit  any  material  fact  necessary  to make  the  statements
contained herein, in the light of the circumstances  under which they were made,
not misleading.                                                                 

     4.  REPRESENTATIONS  AND  WARRANTIES OF BSC. BSC represents and warrants to
the Company as follows as of the date hereof and as of each Closing Date:       

          4.1  INCORPORATION.  BSC  is a  corporation  duly  organized,  validly
existing  and in good  standing  under  the laws of the  State of  Delaware,  is
qualified  to do business in each  jurisdiction  in which the  character  of its
properties or the nature of its business  requires such  qualification,  and has
all requisite corporate power and authority and all authorizations, licenses and
permits  necessary to own its  properties  and to carry on its businesses as now
conducted,  except where the failure to hold such  authorizations,  licenses and
permits would not have a Material Adverse Effect.                               

          4.2  AUTHORIZATION.  All  corporate  action on the part of BSC and its
officers, directors and stockholders necessary for the authorization, execution,
delivery  and  performance  of this  Agreement,  the License  Agreement  and the
Registration   Rights   Agreement  and  the  consummation  of  the  transactions
contemplated  herein and therein has been taken.  When executed and delivered by
BSC and each of the other parties  hereto and thereto,  each of this  Agreement,
the License Agreement and the Registration Rights Agreement shall constitute the
legal,  valid  and  binding  obligation  of  BSC,  enforceable  against  BSC  in
accordance  with  its  terms,  except  as such  may be  limited  by  bankruptcy,
insolvency,  reorganization or other laws affecting  creditors' rights generally
and by general equitable  principles.  BSC has all requisite power and authority
to enter into each of this Agreement, the License Agreement and the Registration
Rights Agreement and to carry out and perform its obligations under the terms of
this Agreement, the License Agreement and the Registration Rights Agreement.    

          4.3 PURCHASE  ENTIRELY FOR OWN  ACCOUNT.  BSC is acquiring  the Shares
being  purchased by it hereunder for its own account for  investment and not for
resale or with a view to  distribution  thereof in violation  of the  Securities
Act.                                                                            

          4.4 INVESTOR STATUS.  BSC certifies and represents to the Company that
it  is an  "Accredited  Investor"  as  defined  in  Rule  501  of  Regulation  D
promulgated  under the  Securities  Act and was not organized for the purpose of
acquiring any of the Shares.                                                    

          4.5 SHARES NOT REGISTERED.  BSC  understands  that the Shares have not
been  registered  under the  Securities  Act, by reason of their issuance by the
Company  in a  transaction  exempt  from the  registration  requirements  of the
Securities  Act,  and that the                                                  

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Shares must continue to be held by BSC unless a subsequent  disposition  thereof
is registered under the Securities Act or is exempt from such registration.     

          4.6 NO CONFLICT.  The  execution and delivery of this  Agreement,  the
License  Agreement  and  the  Registration  Rights  Agreement  by  BSC  and  the
consummation  of the  transactions  contemplated  hereby  and  thereby  will not
conflict  with or result in any  violation of or default by BSC (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation  or  acceleration  of any  obligation  or to a loss  of a  material
benefit under (i) any provision of the  organizational  documents of BSC or (ii)
any  agreement or  instrument,  permit,  franchise,  license,  judgment,  order,
statute,  law,  ordinance,  rule  or  regulations,  applicable  to  BSC  or  its
respective properties or assets.                                                

          4.7 BROKERS. BSC has not retained, utilized or been represented by any
broker  or finder  in  connection  with the  transactions  contemplated  by this
Agreement.                                                                      

          4.8  CONSENTS.  All  consents,  approvals,  orders and  authorizations
required  on the part of BSC in  connection  with  the  execution,  delivery  or
performance  of  this  Agreement  and  the   consummation  of  the  transactions
contemplated  herein have been obtained and will be effective as of each Closing
Date.                                                                           

5. CONDITIONS PRECEDENT.                                              

          5.1 CONDITIONS TO THE OBLIGATION OF BSC TO CONSUMMATE THE CLOSINGS. In
addition  to the  conditions  set forth in  Section  2.1(b)  and  Exhibit A, the
obligation of BSC to  consummate  each Closing and to purchase and pay for those
Shares  being  purchased  by it  pursuant  to such  Closing  is  subject  to the
satisfaction of the following  conditions  precedent,  any of which,  other than
with respect to Section  5.1(o),  may be waived by BSC in its sole discretion at
such Closing:                                                                   

          (a) The representations and warranties contained herein of the Company
shall have been true and correct in all material respects when made and shall be
true and correct in all  material  respects on and as of such  Closing Date with
the same force and effect as though  made on and as of such  Closing  Date (with
updated  Schedules  provided  to BSC from time to time being  integrated  herein
solely for  purposes of  determining  the  accuracy of the  representations  and
warranties as of such date).                                                    

          (b)  Each  of  the  Registration  Rights  Agreement  and  the  License
Agreement  shall have been executed and delivered by the Company and shall be in
full force and  effect.  The  Company  shall not be in  material  breach of this
Agreement or the  Registration  Rights  Agreement as of such Closing  Date,  nor
shall the License  Agreement have been terminated  pursuant its terms as of such
Closing Date.                                                                   

          (c) The Company  shall have  performed  in all  material  respects all
obligations and conditions  herein required to be performed or observed by it on
or prior to such Closing Date.                                                  

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          (d) No  proceeding  challenging  this  Agreement  or the  transactions
contemplated hereby, or seeking to prohibit,  alter, prevent or materially delay
such  Closing,  shall  have been  instituted  before any  court,  arbitrator  or
governmental body, agency or official and shall be pending.                     

          (e) The  purchase  of, and payment for, the Shares by BSC shall not be
prohibited  by any  law or  governmental  order  or  regulation.  All  necessary
consents,  approvals,  licenses,  permits,  orders  and  authorizations  of,  or
registrations, declarations and filings with, any governmental or administrative
agency  or of  any  other  person  with  respect  to  any  of  the  transactions
contemplated  hereby shall have been duly  obtained or made and shall be in full
force and effect.                                                               

          (f) All instruments  and corporate  proceedings in connection with the
transactions  contemplated  by this  Agreement to be consummated at such Closing
shall be  satisfactory  in form and  substance  to BSC,  and,  as of the Initial
Closing,  BSC shall have  received  copies  (executed  or  certified,  as may be
appropriate)  of all  documents  which  BSC may  have  reasonably  requested  in
connection with such transactions.                                              

          (g) The offer and sale of the Shares  pursuant to this Agreement shall
be exempt from registration under the Securities Act.                           

          (h) There  shall  have been no  material  adverse  change  (actual  or
threatened),  taken individually or in the aggregate, in the assets, liabilities
(contingent or other), affairs, operations, prospects or condition (financial or
other) of the Company and the Company  Subsidiaries,  taken as a whole, prior to
such Closing Date.                                                              

          (i) The Company  Common Stock shall be listed and eligible for trading
on the Nasdaq Stock Market,  the Company shall have maintained all  requirements
for such  continued  listing on the Nasdaq Stock  Market,  and there shall be no
pending or overtly threatened proceedings to revoke or suspend such eligibility.

          (j) The Company shall have obtained any and all necessary  stockholder
approval  required by the rules and  regulations  of the Nasdaq Stock Market for
the issuance of the Shares at such Closing.                                     

          (k) The Company  Common Stock shall be registered  under Section 12 of
the Exchange Act.                                                               

          (l) The Company shall be in  compliance in all material  respects with
all reporting requirements of the Exchange Act.                                 

          (m) BSC shall have received  from  Stradley,  Ronon,  Stevens & Young,
LLP,  counsel to the  Company,  an  opinion  addressed  to BSC,  dated as of the
Closing Date of the Initial Closing and in the form of Exhibit C hereto.        

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          (n) There  shall not have  been a Change in  Control  (as such term is
defined in the  License  Agreement),  whether or not such  Change in Control has
been consented to by BSC.                                                       

          (o) BSC shall not have purchased at such Closing such number of Shares
that would  cause the  aggregate  number of Shares  purchased  by BSC under this
Agreement to exceed 2,977,766 (which number  represents 19.9% of the outstanding
shares of Company Common Stock immediately prior to any purchases hereunder).   

          5.2  CONDITIONS TO THE  OBLIGATION  OF THE COMPANY TO  CONSUMMATE  THE
CLOSING.  The obligation of the Company to consummate  each Closing and to issue
and sell the Shares to BSC to be  purchased  by it at such Closing is subject to
the satisfaction of the following conditions precedent:                         

          (a) The representations  and warranties  contained herein of BSC shall
be true and correct in all material respects on and as of such Closing Date with
the same force and effect as though made on and as of such Closing Date.        

          (b)  Each  of  the  Registration  Rights  Agreement  and  the  License
Agreement  shall have been  executed  and  delivered by BSC and shall be in full
force and effect.  BSC shall not be in material  breach of this Agreement or the
Registration  Rights  Agreement as of such Closing  Date,  nor shall the License
Agreement  have been  terminated  (except  as  provided  in  Section  2.3 above)
pursuant its terms as of such Closing Date.                                     

          (c) BSC shall have performed in all material  respects all obligations
and conditions  herein required to be performed or observed by it on or prior to
such Closing Date.                                                              

          (d) No  proceeding  challenging  this  Agreement  or the  transactions
contemplated hereby, or seeking to prohibit,  alter, prevent or materially delay
such  Closing,  shall  have been  instituted  before any  court,  arbitrator  or
governmental body, agency or official and shall be pending.                     

          (e) The sale of the Shares by the Company  shall not be  prohibited by
any law or governmental order or regulation. All necessary consents,  approvals,
licenses, permits, orders and authorizations of, or registrations,  declarations
and filings with,  any  governmental  or  administrative  agency or of any other
person with respect to any of the  transactions  contemplated  hereby shall have
been duly obtained or made and shall be in full force and effect.               

          (f) All instruments  and corporate  proceedings in connection with the
transactions  contemplated  by this  Agreement to be consummated at such Closing
shall be  satisfactory  in form and  substance to the  Company,  and the Company
shall have received copies (executed or certified, as may be appropriate) of all
documents  which the Company may have  reasonably  requested in connection  with
such transactions.                                                              

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          (g) The Company shall have obtained any and all necessary  stockholder
approval  required by the rules and  regulations  of the Nasdaq Stock Market for
the issuance of the Shares at such Closing.                                     

6.   TRANSFER, LEGENDS.                                               

          6.1  TRANSFER  OF  SECURITIES.  BSC shall not  sell,  assign,  pledge,
transfer or otherwise dispose or encumber any of those Shares being purchased by
it hereunder,  except (i) pursuant to an effective  registration statement under
the Securities Act or (ii) pursuant to an available  exemption from registration
under the Securities Act and applicable  state securities laws and, if requested
by the  Company,  upon  delivery  by BSC of either an  opinion of counsel of BSC
reasonably  satisfactory to the Company to the effect that the proposed transfer
is exempt  from  registration  under the  Securities  Act and  applicable  state
securities laws or a representation letter of BSC reasonably satisfactory to the
Company setting forth a factual basis for concluding that such proposed transfer
is exempt  from  registration  under the  Securities  Act and  applicable  state
securities  laws. Any transfer or purported  transfer of the Shares in violation
of this Section 6.1 shall be void.  The Company  shall not register any transfer
of the Shares in  violation  of this  Section  6.1.  The  Company  may,  and may
instruct any transfer agent for the Company,  to place such stop transfer orders
as may be  required  on the  transfer  books of the  Company  in order to ensure
compliance with the provisions of this Section 6.1.                             

          6.2  LEGENDS.  To the extent  applicable,  each  certificate  or other
document  evidencing  any of the Shares  shall be  endorsed  with the legend set
forth below, and BSC covenants that,  except to the extent such restrictions are
waived by the Company,  it shall not transfer the shares represented by any such
certificate  without  complying with the  restrictions on transfer  described in
this Agreement and the legends endorsed on such certificate:                    

     "THE SHARES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
     THE  SECURITIES  ACT OF 1933,  AS AMENDED,  AND MAY NOT BE  OFFERED,  SOLD,
     ASSIGNED, PLEDGED,  TRANSFERRED OR OTHERWISED DISPOSED OF IN THE ABSENCE OF
     AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  SAID ACT OR  PURSUANT  TO AN
     AVAILABLE  EXEMPTION FROM REGISTRATION  UNDER SAID ACT AND, IF REQUESTED BY
     THE  COMPANY,  UPON  DELIVERY  OF EITHER AN OPINION  OF COUNSEL  REASONABLE
     SATISFACTORY TO THE COMPANY THAT THE PROPOSED  TRANSFER IS EXEMPT FROM SAID
     ACT OR OF A  REPRESENTATION  LETTER  SETTING  FORTH  A  FACTUAL  BASIS  FOR
CONCLUDING THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT."       

     7. COMPANY  SHAREHOLDER  APPROVAL.  The Company covenants that it shall use
its best efforts to solicit and obtain from its  stockholders  at any time prior
to any Closing all necessary  approvals in connection with the sale and issuance
of the  Shares  at                                                              

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such Closing,  including  without  limitation any approval required by the rules
and regulations of the Nasdaq Stock Market.                                     

8. SURVIVAL; INDEMNIFICATION; TERMINATION.                            

          8.1  SURVIVAL.   The   representations,   warranties,   covenants  and
agreements set forth in this Agreement  shall survive for one (1) year after the
final Closing contemplated herein.                                              

          8.2  INDEMNIFICATION.  Each  party  shall  indemnify,  defend and hold
harmless, the other party (and its respective Affiliates,  directors,  officers,
employees,  successors  and  assigns)  from and against any and all Losses based
upon,  arising out of or otherwise in respect of any inaccuracy in or any breach
of the  representations  or  warranties  of  such  party  and the  covenants  or
agreements made by such party in this Agreement.                                

          8.3 TERMINATION.  This Agreement may be terminated as follows:  (i) by
mutual agreement of the parties;  (ii) by either the Company or BSC in the event
of a breach by the other  party of any  representation,  warranty,  covenant  or
agreement  set forth  herein that is material  and that is not cured  within ten
(10) days after notice thereof is given by the non-breaching party; and (iii) in
the event that the Third  Milestone is not achieved on or prior to the date that
is six (6) months  after  BSC's  delivery  to the Company of the last of the BSC
Deliverables  in accordance with the License  Agreement,  then BSC may terminate
this Agreement at any time upon written  notice to the Company  effective on the
date of such notice,  and BSC shall  thereafter  have no further  obligation  to
purchase any Shares.  Termination of this Agreement  shall not affect the rights
and  obligations  of either party that may have accrued  prior to the  effective
date of  termination,  or any  obligation  that by its nature or  express  terms
survives termination. Without limiting the foregoing, the provisions of Sections
1, 3, 4, 8 and 9 shall survive any termination of this Agreement.               

9.   MISCELLANEOUS PROVISIONS.                                        

          9.1 RIGHTS CUMULATIVE.  Each and all of the various rights, powers and
remedies  of the  parties  shall  be  considered  to be  cumulative  with and in
addition to any other rights, powers and remedies which such parties may have at
law or in  equity  in the  event  of the  breach  of any of the  terms  of  this
Agreement.  The exercise or partial exercise of any right, power or remedy shall
neither  constitute the exclusive  election  thereof nor the waiver of any other
right, power or remedy available to such party.                                 

9.2  NOTICES.                                               

          (a)  Any  notices,   reports  or  other  correspondence   (hereinafter
collectively referred to as "correspondence")  required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or  delivered  by hand to the party to whom such  correspondence  is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.                                                          

        (b) All correspondence to the Company shall be addressed as follows:

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EP Medsystems, Inc.       
Cooper Run Executive Park 
    575 Route 73 North, Building D
 West Berlin, NJ  08091-9293
            Attention: Reinhard Schmidt, President
Fax:  856-753-8544        

with a copy to:           

           Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square  
 Philadelphia, PA 19103-7098
          Attention: Dean M. Schwartz, Esquire
Fax:  215-564-8120        

(c) All correspondence to BSC shall be addressed as follows:

   Boston Scientific Corporation
 One Boston Scientific Place
Natick, MA 07160          
Attention: President      
Fax: 508-650-8956         

with a copy to:           

   Boston Scientific Corporation
 One Boston Scientific Place
Natick, MA 07160          
Attention: General Counsel
Fax: 508-650-8956         

          9.3 CAPTIONS.  The captions and paragraph  headings of this  Agreement
are  solely  for  the   convenience  of  reference  and  shall  not  affect  its
interpretation.                                                                 

          9.4  SEVERABILITY.  Should any part or provision of this  Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction,  the invalid or unenforceable part or provisions shall be replaced
with a  provision  which  accomplishes,  to the extent  possible,  the  original
business  purpose of such part or provision in a valid and  enforceable  manner,
and the  remainder  of this  Agreement  shall  remain  binding  upon the parties
hereto.                                                                         

          9.5 GOVERNING LAW. This  Agreement  shall be governed by and construed
in accordance  with the internal and  substantive  laws of the  Commonwealth  of

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Massachusetts  and without  regard to any  conflicts of laws concepts that would
apply the substantive law of some other jurisdiction.                           

          9.6 WAIVER.  No waiver of any term,  provision  or  condition  of this
Agreement,  whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing  waiver of any such
term,  provision  or  condition  or as a waiver of any other term,  provision or
condition of this Agreement.                                                    

          9.7  ASSIGNMENT.  The rights and obligations of any party hereto shall
inure to the benefit of and shall be binding upon the authorized  successors and
permitted assigns of such party whether so expressed or not.                    

          9.8 ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement
between the parties  hereto  respecting the subject matter hereof and supersedes
all  prior  agreements,   negotiations,   understandings,   representations  and
statements  respecting the subject matter  hereof,  whether  written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding  upon the  parties  hereto  unless made in writing and
duly executed by the parties hereto.                                            

[signature page immediately follows]

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     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement under
seal as of the day and year first above written.                                

                           EP MEDSYSTEMS, INC.

                                By: /s/ Reinhard Schmidt
                                               ---------------------------------
                              Name: Reinhard Schmidt
                                Title: President and CEO

                                     BOSTON SCIENTIFIC CORPORATION

                                By: /s/ Lawrence C. Best
                                               ---------------------------------
                              Name: Lawrence C. Best
                                      Title: Chief Financial Officer

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10QSB’ Filing		Date		First		Last			Other Filings
Filed on:		11/14/02
For Period End:		9/30/02
		9/5/02		5
		6/30/02		10					10QSB
									List all Filings