Document:

Exhibit 4.1

                       PREFERRED STOCK PURCHASE AGREEMENT

      PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") made as of the 23rd
day of October, 2001 by and among EP MEDSYSTEMS, INC. (the "Company") and
CENTURY MEDICAL, INC. (the "Purchaser").

                                    RECITALS

      WHEREAS, the Purchaser has acted as a distributor of the Company's
products since 1997 pursuant to a Distributorship Agreement, dated as of July
16, 1997 (the "Distributorship Agreement"); and

      WHEREAS, the parties wish to maintain such relationship and are
negotiating a modification and extension of such Distributorship Agreement; and

      WHEREAS, in connection with fostering such continued relationship the
Purchaser desires to invest in the Company by purchasing and acquiring shares of
the Company's authorized but unissued Series A Preferred Stock (as defined in
Section 1.1); and

      WHEREAS, the Company desires to issue and sell shares of Preferred Stock
to the Purchaser upon the terms and conditions set forth herein; and

      WHEREAS, such purchase and sale is to be made in reliance upon the
provisions of Rule 901 of Regulation S ("Regulation S") of the United States
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the "Securities Act"), or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to the
purchases of Preferred Shares (as defined in Section 1.1) to be made hereunder;

      NOW, THEREFORE, in consideration of the modification and extension of the
Distributorship Agreement and of the mutual promises herein made, and in
consideration of the representations, warranties and covenants herein contained,
the parties hereto agree as follows:

      SECTION 1. SALE AND PURCHASE OF PREFERRED SHARES; CLOSING

            1.1 Subscription, Sale and Purchase of Preferred Shares.

            (a) Upon the terms and subject to the conditions of this Agreement,
on the Closing Date (as hereinafter defined) the Company agrees to issue, sell
and deliver to the Purchaser, and the Purchaser agrees to purchase and acquire
from the Company, such number of shares of the Company's Series A Convertible
Preferred Stock, without par value per share (the "Series A Preferred Stock") as
shall have a value of U.S.$1.2 million (the "Purchase Price"), which shall be
determined by dividing the Purchase Price by either (i) 115% of the Market Price

                                Ex.4.1 - Page 1
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(as hereinafter defined), if such Market Price is less than U.S.$2.70, or (ii)
110% of the Market Price, if such Market Price is equal to or greater than
U.S.$2.70. For purposes of this Agreement, "Preferred Shares" means the shares
of Preferred Stock purchased by the Purchaser hereunder and "Market Price" means
the average of the closing prices of the Company's Common Stock (as hereinafter
defined) for the ten days immediately prior to the Closing Date.

                  (b) On or before the Closing Date, the Company shall have
adopted and filed with the Secretary of State of the State of New Jersey a
Certificate of Amendment to the Company's Certificate of Incorporation in
substantially the form attached as Exhibit A (the "Designation") setting forth
the rights, preferences, privileges and limitations of the Series A Preferred
Shares, which rights, preferences, privileges and designations shall include
that such Series A Preferred Shares shall be convertible under certain
circumstances into shares of Common Stock (as hereinafter defined) of the
Company on a one-for-one basis (subject to anti-dilution adjustments set forth
therein) (such shares of Common Stock issued or issuable upon the conversion of
the Series A Preferred Stock being referred to as "Conversion Shares").

            1.2 Closing.

                  (a) The closing of the issuance and sale of the Preferred
Shares to the Purchaser shall occur in such location and manner (i.e., by
telecopy exchange of signature pages with originals to follow by overnight
delivery) as the parties may mutually agree, subject to the terms and conditions
hereof. As used herein "Closing" shall mean the closing of the issuance and sale
of the Preferred Shares to the Purchaser and the "Closing Date" shall mean
October 23, 2001 provided that each of the conditions set forth in Sections 4
and 5 hereof shall have been satisfied or waived.

                  (b) On the Closing Date, the parties shall exchange, by
facsimile transmission, this Agreement, the Registration Rights Agreement (as
contemplated under Section 4.8 hereof) and the First Amendment to the
Distribution Agreement (as contemplated under Section 4.12 hereof)
(collectively, the "Transaction Documents"), duly executed by each of them. The
Company shall further deliver, by facsimile transmission, the preferred stock
purchase agreement entered into by the Company and Medtronic, Inc. (as
contemplated by Section 4.10 hereof)(the "Medtronic Agreement"). Upon receipt of
the executed Transaction Documents and the Medtronic Agreement, the Purchaser
shall initiate the delivery, by wire transfer to a bank in the United States
specified by the Company for the account of the Company, of immediately
available funds, in United States Dollars, in an amount equal to the Purchase
Price which Purchase Price shall be received in such account no later than the
close of business on October 26, 2001. Within three (3) business days after the
receipt of the Purchase Price, the Company shall deliver to the Purchaser a copy
of the Transaction Documents bearing original signatures, a copy of the
fully-executed Medtronic Agreement and a stock certificate or certificates
representing the Preferred Shares, duly executed by the Company, registered in
the Purchaser's name (or the name of its nominee), free of all restrictive and
other legends (other than the legend specified in Section 8.2 and otherwise in
form for good delivery).

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      SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company represents and warrants to the Purchaser as follows:

            2.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. Each subsidiary as referred to in the Company
Reports (as hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. The Company and its subsidiaries are each
qualified to do business as a foreign corporation and are in good standing in
all states where the conduct of their respective businesses or their ownership
or leasing of property requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the Company's and the
subsidiaries' business, properties, assets, operations or condition (financial
or otherwise), taken as a whole.

            2.2 Authorization. The Company has all requisite power and authority
to execute and deliver this Agreement and each other agreement required to be
executed and delivered by it pursuant to this Agreement (collectively, the
"Company Agreements") and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Company of this
Agreement, and each other Company Agreement have been duly authorized by all
requisite corporate action, and this Agreement has been duly executed and
delivered by the Company and constitutes (and, when executed and delivered
against payment therefor as contemplated herein, each other Company Agreement
will constitute) the valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms.

            2.3 No Conflict with Law or Documents. The execution, delivery and
performance of this Agreement or any Company Agreement by the Company, the
issuance of the Preferred Shares sold hereunder and of the Conversion Shares
issuable upon conversion of the Preferred Shares and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not
violate any provision of law, any rule or regulation of any governmental
authority, or any judgment, decree or order of any court binding on the Company
and, do not and will not conflict with or result in any material breach of any
of the terms, conditions or provisions of, or constitute a default under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties, assets or outstanding stock of the Company under its
Certificate of Incorporation or By-Laws, or any material indenture, mortgage,
lease, agreement or other instrument to which the Company is a party or by which
it or any of its properties is bound (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations under any
such indenture, mortgage, lease, agreement or other instrument as would not,
individually or in the aggregate, have a material adverse effect

                                Ex.4.1 - Page 3
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on the Company and its subsidiaries' business, properties, assets, operations or
condition (financial or otherwise) taken as a whole).

            2.4 Capital Stock of Company.

                  (a) The authorized capital stock of the Company consists of:
(i) 5,000,000 shares of preferred stock of the Company, no par value per share,
of which no shares are issued and outstanding; and (ii) 25,000,000 shares of
common stock, no par value, $.00l stated value per share (the "Common Stock"),
of which 13,861,217 shares are issued and outstanding as of the date hereof and
all such outstanding shares are validly issued, fully paid and nonassessable and
were issued in accordance with the registration or qualification provisions of
the Securities Act and any relevant state securities laws, or pursuant to valid
exemptions therefrom, (iii) 1,000,000 shares of Common Stock reserved for
issuance pursuant to the Company's 1995 Long Term Incentive Plan, (iv) 360,000
shares of Common Stock reserved for issuance pursuant to the Company's 1995
Director Option Plan, and (v) 147,000 shares of Common Stock reserved for
issuance pursuant to existing non-plan stock options; of which with respect to
the 1995 Long Term Incentive Plan, the 1995 Director Option Plan and other
non-plan stock options, an aggregate of 1,291,008 options have been granted and
are outstanding as of December 31, 2000. A further 362,250 shares of Common
Stock are reserved for issuance pursuant to outstanding warrants issued under a
certain Common Stock and Warrant Purchase Agreement, dated as of August 31,
1999, as subsequently amended, a further 812,500 shares of Common Stock are
reserved for issuance pursuant to outstanding warrants issued under a certain
Common Stock and Warrant Purchase Agreement, dated as of February 16, 2001, as
subsequently amended, and a further 100,000 shares of Common Stock are reserved
for issuance pursuant to an outstanding warrant issued to an executive officer
in connection with his employment under Warrant, dated as of July 20, 2001.

                  (b) There are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of the Company pursuant to any
provision of law or the Certificate of Incorporation or By-Laws of the Company
or by agreement or otherwise. Except as set forth in this Section 2.4, there are
no outstanding subscriptions, warrants, options or other rights (including,
without limitation, conversion or preemptive rights) or commitments of any
character to subscribe for or purchase from the Company, or obligating the
Company to issue, any shares of capital stock of the Company or any securities
convertible into or exchangeable for such shares. The Company is not a party to
any agreement or understanding and, to the best of the Company's knowledge,
except as set forth on Schedule 2.4, there is no agreement or understanding
between any persons and/or entities, which affects or relates to the voting or
giving of written consents with respect to any security.

            2.5 Valid Issuance of the Securities. The Preferred Shares when
issued, sold and delivered to the Purchaser in accordance with this Agreement
will be duly and validly issued, fully paid and non-assessable, and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement and the Registration Rights Agreement and under applicable state and
federal securities laws. The Conversion Shares issuable upon conversion of

                                Ex.4.1 - Page 4
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the Preferred Shares have been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Designation, will be duly and
validly issued, fully paid and not assessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement and the
Registration Rights Agreement and under applicable state and federal securities
laws. There are no New Jersey State or city taxes or other charges payable in
connection with the execution or delivery of the Company Agreements or the
Preferred Shares or the Conversion Shares.

            2.6 Consents and Approvals. Except for filings under Federal and
applicable state securities laws, no permit, consent, approval or authorization
of, or declaration to or filing with, any federal, state, local or foreign
governmental or regulatory authority or other person, not made or obtained,
other than the filing with, and approval of, the NASDAQ National Market System
("NASDAQ") with respect to the listing of the Conversion Shares and the filing
of any registration statement which may be filed pursuant to the Registration
Rights Agreement, is required in connection with the execution or delivery of
this Agreement or any Company Agreement by the Company, the offer, issuance,
sale or delivery of the Preferred Shares or the Conversion Shares, or the
carrying out by the Company of the other transactions contemplated hereby. The
issuance and sale by the Company of the Preferred Shares, as contemplated
hereby, will not require compliance with the notification or other requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder, nor require any action by or
approval of the Company's shareholders as such or of any other individual or
entity which has not already been obtained.

            2.7 Certificate of Incorporation and By-Laws. The copies of the
Company's Certificate of Incorporation, as amended, and By-Laws, as amended, in
the form made available to the Purchaser are true and correct copies of such
documents and are in full force and effect.

            2.8 SEC Filings. The Company has delivered to the Purchaser, or has
made available, prior to the date hereof true and correct copies of (i) its
Annual Report on Form 10-KSB for its year ended December 31, 2000 and its
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2001 and June
30, 2001, as filed with the Securities and Exchange Commission (the "SEC") and
(ii) certain other internal Company financial books and records. All documents
described in this Section 2.8 are hereinafter referred to as the "Company
Reports." The Company has made all filings required to be made by it under the
Securities Act, the Exchange Act and the securities laws of any state, and any
rules and regulations promulgated thereunder. The Company Reports and other
documents filed with the SEC pursuant to the Exchange Act conformed in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder, and none of such documents contained any
untrue statement of material fact or omitted to state a material fact necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The Company is currently eligible to utilize a
registration statement on Form S-3 with respect to the registration of the
Registrable Securities (as defined in the Registration Rights Agreement)
required by Section 1.2 of the Registration Rights Agreement contemplated by
Section 4.8 hereof.

                                Ex.4.1 - Page 5
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            2.9 Litigation. Except as set forth in the Company Reports, there is
no pending or, to the knowledge of the Company, threatened suit, action or
litigation, or administrative, arbitration or other proceeding or governmental
inquiry or investigation questioning the validity of this Agreement, any other
Company Agreement or the transactions contemplated hereby or thereby, or
affecting in any material adverse respect the Company and its subsidiaries,
taken as a whole.

            2.10 Compliance with Laws. The Company and each subsidiary is in
compliance with all laws, ordinances, rules and regulations of governmental
authorities applicable to or affecting it, its properties or its business,
except where non-compliance would not have a material adverse effect on the
business, properties, assets, operations or condition (financial or otherwise)
of the Company and its subsidiaries taken as a whole, and neither the Company
nor any subsidiary has received written notice of any claimed default with
respect to such laws, ordinances, rules and regulations.

            2.11 Financial Statements.

                  (a) (i) The audited consolidated balance sheets and
shareholders' equity of the Company and its subsidiaries as of December 31, 2000
and 1999, (ii) the audited consolidated statements of income and cash flow of
the Company and its subsidiaries, for the two years ended December 31, 2000 and
1999, (iii) the unaudited consolidated balance sheet of the Company and its
subsidiaries as of June 30, 2001, and (iv) the unaudited consolidated statements
of income and cash flows for the period ended June 30, 2001, together with the
notes thereto, copies of all of which have been furnished to the Purchaser, or
have been made available, in each case, present fairly in all material respects
the consolidated financial position of the Company and its subsidiaries at such
dates and the consolidated results of their operations and their consolidated
cash flows for the periods then ended, in conformity with generally accepted
accounting principles, consistently applied ("GAAP"). The audited consolidated
balance sheet dated December 31, 2000 is referred to herein as the "Balance
Sheet".

                  (b) Except as set forth on Schedule 2.11(b) attached hereto,
since December 31, 2000 (the "Balance Sheet Date"), there has not been:

                        (i) any change in the assets, liabilities, financial
                  condition or operating results of the Company from that
                  reflected in the Balance Sheet and except changes in the
                  ordinary course of business;

                        (ii) any damage, destruction or loss, whether or not
                  covered by insurance, materially and adversely affecting the
                  assets, properties, financial condition, operating results,
                  prospects or business of the Company (as such business is
                  presently conducted and as it is proposed to be conducted);

                                Ex.4.1 - Page 6
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                        (iii) any waiver by the Company of a valuable right or
                  of a material debt owed to it;

                        (iv) any satisfaction or discharge of any lien, claim or
                  encumbrance or payment of any obligation by the Company,
                  except in the ordinary course of business and that is not
                  material to the assets, properties, financial condition,
                  operating results or business of the Company (as such business
                  is presently conducted and as it is proposed to be conducted);

                        (v) any material change or amendment to a material
                  contract or arrangement by which the Company or any of its
                  assets or properties is bound or subject;

                        (vi) any material change in any compensation arrangement
                  or agreement with any employee;

                        (vii) any sale, assignment or transfer of any patents,
                  trademarks, copyrights, trade secrets or other intangible
                  assets;

                        (viii) any resignation or termination of employment of
                  any key officer of the Company; and the Company, to the best
                  of its knowledge, does not know of the impending resignation
                  or termination of employment of any such officer;

                        (ix) any mortgage, pledge, transfer of a security
                  interest in, or lien, created by the Company, with respect to
                  any of its material properties or assets, except liens for
                  taxes not yet due or payable;

                        (x) any loans or guarantees made by the Company to or
                  for the benefit of its employees, officers or directors, or
                  any members of their immediate families, other than travel
                  advances and other advances made in the ordinary course of its
                  business;

                        (xi) any declaration, setting aside or payment or other
                  distribution in respect of any of the Company's capital stock,
                  or any direct or indirect redemption, purchase or other
                  acquisition of any of such stock by the Company;

                        (xii) to the best of the Company's knowledge, any other
                  event or condition of any character that might materially and
                  adversely affect the assets, properties, financial condition,
                  operating results or business of the Company (as such business
                  is presently conducted and as it is proposed to be conducted);
                  or

                                Ex.4.1 - Page 7
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                        (xiii) any agreement or commitment by the Company to do
                  any of the things described in this Section 2.11(b).

            2.12 Assets. The Company and each subsidiary has good and marketable
title to all of the real and personal properties and assets reflected on the
Balance Sheet as being owned by the Company or such subsidiary at the Balance
Sheet Date, except for properties and assets sold or otherwise disposed of in
the ordinary course of business since the Balance Sheet Date or that are not
material to its business.

            2.13 Tax Matters. The Company and each subsidiary has filed all U.S.
Federal, state, local, 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 the Purchaser) were materially accurate and complete when filed and
reflect all taxes required to be paid by the Company and its subsidiaries for
the periods reported therein.

            2.14 Patents, Trademarks, Proprietary Rights.

                  (a) To the Company's knowledge, each of the Company and its
subsidiaries owns or has the right to use all of the Intellectual Property
Rights (as defined below), except where such failure would not have a material
adverse effect on the business, properties or assets of the Company and its
subsidiaries, taken as a whole. For purposes of this Agreement, "Intellectual
Property Rights" means all patents, copyrights, trademarks, service marks, trade
names, permits, trade secrets, computer programs, software designs and related
materials and other intellectual property that are used by the Company or a
subsidiary and are material to the conduct of the Company's or a subsidiary's
business.

                  (b) To the Company's knowledge, the Company's and each
subsidiary's use and enjoyment of the Intellectual Property Rights do not
violate any license or conflict with or infringe the intellectual property
rights of others in a manner which would materially and adversely affect the
business, assets, properties, operations or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole. There are no outstanding
options, licenses, or agreements of any kind relating to the transfer or
disposition of any of the foregoing, nor is the Company bound by or a party to
any options, licenses or agreements of any kind relating to the transfer or
disposition of any of its Intellectual Property Rights. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this

                                Ex.4.1 - Page 8
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Agreement or the Registration Rights Agreement, nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed, will, to the best of the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees is now obligated. The Company does not believe it is or
will be necessary to utilize any inventions of any of its employees (or people
it currently intends to hire) made prior to their employment by the Company for
which the Company has not received an irrevocable assignment except as set forth
on Schedule 2.14(b) attached hereto.

            2.15 Insurance. The Company and its subsidiaries are, and at all
times during the past two years have been, insured with reputable insurers
against all risks customarily insured against by companies in similar lines of
business and all of the insurance policies and bonds required to be maintained
by the Company and its subsidiaries are in full force and effect.

            2.16 Use of Proceeds. The proceeds from the sale of the Preferred
Shares will be used by the Company for working capital purposes including,
without limitation, research and development expenses.

            2.17 Environmental Compliance.

                  (a) Neither the Company nor any 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 or
any subsidiary aware of any allegations that any such violations have occurred.
Neither the Company nor any subsidiary is aware of any claims, investigations,
litigation or administrative proceedings, whether actual or threatened, against
the Company or any 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 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.

            2.18 Minute Books. The minute books of the Company and its
subsidiaries heretofore made available for inspection by the Purchaser contain
summaries of all meetings of directors and shareholders since the incorporation
of the Company or such subsidiary, as applicable, and reflect accurately in all
material respects all transactions referred to in such minutes or records.

                                Ex.4.1 - Page 9
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            2.19 Labor Agreements and Actions. Neither the Company nor any
subsidiary thereof is bound by or subject to, any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the knowledge of the Company, has sought to represent
any of the employees, representatives or agents of the Company or any such
subsidiary thereof. There is no strike or other labor dispute involving the
Company or any subsidiary thereof pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the business, assets,
properties, operations or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, nor is the Company aware of any labor
organization activity involving any of the employees of the Company or any
subsidiary thereof.

            2.20 Company Status. The Company has registered its Common Stock
pursuant to Section 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and the Company has maintained all
requirements for the continued listing of its Common Stock on NASDAQ, and such
Common Stock is currently listed and traded on NASDAQ. The Company is a
"reporting issuer" as such term is defined in Rule 902 of Regulation S and will
remain a reporting issuer for at least one year from the date hereof.

            2.21 No "Directed Selling Efforts" or "General Solicitation" in
Regard to this Transaction. The offer to sell the Preferred Shares and the
Conversion Shares issuable upon conversion of Preferred Shares was directly
communicated to the Purchaser. At no time was the Purchaser presented with or
solicited by any leaflet, newspaper or magazine article, radio or television
advertisement or any other form of general advertising or solicited or invited
to attend a promotional meeting otherwise than in connection and concurrently
with such communicated offer. The offer to sell the Preferred Shares and the
Conversion Shares was not the result of "directed selling efforts" (as such term
is defined in Rule 902(c) of Regulation S) by any distributor or any affiliate
or any person soliciting on behalf of the Company or any affiliate of the
Company, nor was there conducted in connection therewith any general
solicitation relating to the offer to persons residing within the United States
or "U.S. Persons" (as such term is defined in Rule 902 of Regulation S). The
Company has not conducted any "general solicitation" (as that term is used in
Regulation D) with respect to the Preferred Shares, nor has it made any offers
or sales of the Preferred Shares or solicited any offers to buy the Preferred
Shares, under circumstances that would require registration of the Preferred
Shares under the Securities Act.

            2.22 Third Party Consents; Business Not in Violation. The Company
has obtained from third parties all consents necessary to consummate the
transactions contemplated hereby and by the other Company Agreements. The
business of the Company and its subsidiaries is not being conducted in violation
of any law, ordinance or regulations of any governmental entity, except for
violations or potential violations which either individually or in the aggregate
do not and will not have a material adverse effect on the Company and the
subsidiaries business, properties, assets, operations or condition (financial or
otherwise) taken as a whole.

                                Ex.4.1 - Page 10
<PAGE>

            2.23 Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate of, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

            2.24 Permits. Each of the Company and its subsidiaries possesses all
franchises, certificates, licenses, authorizations and permits or similar
authority necessary to conduct its business as described in the Company Reports
except where the failure to possess such permits would not, individually or in
the aggregate, have a material adverse effect on the Company or its
subsidiaries, or their businesses, properties, assets, operations or condition
(financial or otherwise) taken as a whole ("Material Permits"), and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

            2.25 Company Board of Director Action. The Board of Directors of the
Company at a meeting duly called and held has, by the requisite vote of all
directors present, determined that the issuance and sale of Preferred Shares and
the Conversion Shares issuable upon conversion of Preferred Shares to the
Purchaser pursuant to this Agreement is advisable and in the best interests of
the Company and its shareholders.

            2.26 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.

            2.27 Status of FDA "Warning Letter." The Company has received a
"warning letter," dated July 10, 2001, from the U.S. Food and Drug
Administration (the "Warning Letter"). The Company has contacted the FDA and has
provided a response to the Warning Letter by letter dated August 2, 2001 (the
"Response Letter"). The Company has taken all corrective actions it deems
necessary to address the issues raised in the Warning Letter and has
communicated this to the FDA in its Response Letter. The information contained
in the Response Letter is true and correct on the date hereof and the Response
Letter contains no statements intended to be misleading.

      SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

      The Purchaser understands that the sale to the Purchaser of the Preferred
Shares will not be registered under the Securities Act, on the grounds that the
sale is exempt pursuant to Regulation S of the Securities Act or Section 4(2) of
the Securities Act and/or Regulation D promulgated under Section 4(2) of the
Securities Act, and that the reliance of the Company on such exemptions is
predicated in part on the Purchaser's representations, warranties, covenants and
acknowledgments set forth in this Section 3.

            3.1 Organization and Standing of Purchaser; Principal Place of
Business. The Purchaser is a corporation duly incorporated or organized, validly
existing and in good standing

                                Ex.4.1 - Page 11
<PAGE>

under the laws of Japan and was not formed for the specific purpose of acquiring
the Preferred Shares or the Conversion Shares. The Purchaser's principal place
of business is as set forth in the notice provision contained in Section 10.5
hereof.

            3.2 Non-U.S. Ownership. The Purchaser is not a "U.S. Person" (as
such term is defined in Regulation S) and is not purchasing the Preferred Shares
and/or the Conversion Shares for the account or benefit of a U.S. Person and the
sale of the Preferred Shares and the Conversion Shares has not been pre-arranged
with any U.S. Person or person present in the United States. At the time of the
execution of this Agreement and any offer to purchase hereunder, the Purchaser
was physically outside the United States. The offer leading to the sale
evidenced hereby was made in an "offshore transaction" (as defined in Regulation
S).

            3.3 Purchase Without View to Distribution. Without limiting the
Purchaser's right to sell the Preferred Shares or the Conversion Shares pursuant
to a registration statement or an exemption from registration, the Purchaser
represents and warrants to the Company that the Preferred Shares and the
Conversion Shares to be purchased by it are being acquired by the Purchaser for
its own account for investment only, not as a nominee or agent, and not with a
view to resale or distribution thereof within the meaning of the Securities Act,
and the rules and regulations thereunder, and the Purchaser will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of the
Preferred Shares or the Conversion Shares in violation of the Securities Act or
any applicable state securities laws.

            3.4 Restrictions on Transfer. The Purchaser (i) acknowledges that
the Preferred Shares and the Conversion Shares are "Restricted Securities" under
the Federal securities laws and are not registered under the Securities Act,
(ii) acknowledges that the Preferred Shares and the Conversion Shares must be
held indefinitely by it unless they are subsequently registered under the
Securities Act or an exemption from registration is available, (iii) is aware
that any routine sales under Rule 144 under the Securities Act of any such
shares may be made only in limited amounts and in accordance with the terms and
conditions of that Rule and that in such cases where the Rule is not applicable,
compliance with some other registration exemption will be required, (iv) is
aware that Rule 144 is not presently available for use by the Purchaser for
resale and (v) is aware that, except as set forth in the Registration Rights
Agreement, the Company is not obligated to register under the Securities Act any
sale, transfer or other disposition of the Preferred Shares or the Conversion
Shares.

            3.5 Access to Information. The Purchaser confirms that the Company
has made available to it the opportunity to ask questions of and receive answers
from the Company's officers and directors concerning the terms and conditions of
the offering and the business and financial condition of the Company and its
subsidiaries, and to acquire, and the Purchaser has received to its
satisfaction, such additional information, in addition to that set forth herein,
about the business and financial condition of the Company and its subsidiaries
and the terms and conditions of the offering as it has requested.

                                Ex.4.1 - Page 12
<PAGE>

            3.6 Additional Representations of the Purchaser. The Purchaser
represents and warrants that (i) it is an "accredited investor" as such term is
defined in Rule 501 promulgated under the Securities Act, (ii) it understands
that an investment in the Preferred Shares and the Conversion Shares involves a
high degree of risk and its financial situation is such that it can afford to
bear the economic risk of holding the Preferred Shares and/or the Conversion
Shares for an indefinite period of time and suffer complete loss of its
investment in the Preferred Shares and the Conversion Shares, (iii) its
knowledge and experience in financial and business matters are such that it is
capable of evaluating the merits and risks of its purchase of the Preferred
Shares and the Conversion Shares as contemplated by this Agreement, (iv) it did
not subscribe for the Preferred Shares or the Conversion Shares as a result of
or subsequent to any advertisement, article, notice or other similar media or
broadcast over television or radio; (v) as of the date hereof, neither the
Purchaser nor any of its agents or affiliates holds a short position in the
Common Stock of the Company; (vi) it has all requisite power and authority to
execute, deliver and perform this Agreement, (vii) the purchase of the Preferred
Shares and the Conversion Shares by it has been duly and properly authorized and
this Agreement has been duly executed and delivered by it or on its behalf and
constitutes the valid and binding obligation of the Purchaser, and is
enforceable against the Purchaser in accordance with its terms, and (viii) it
has no contract, arrangement or understanding with any broker, finder of similar
agent with respect to the transactions contemplated by this Agreement.

            3.7 Legends. The Purchaser understands that the certificates
evidencing the Preferred Shares shall bear the legend set forth in Section 8.2
herein.

      SECTION 4. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS

      The Purchaser's obligation to purchase and make payment for the Preferred
Shares subscribed for hereunder by it on the Closing Date is subject, at its
option, to the satisfaction of each of the following conditions:

            4.1 Representations and Warranties. On the Closing Date, the
representations and warranties contained in Section 2 hereof shall be true and
correct in all material respects with the same effect as though made on and as
of the Closing Date, and the Company shall have so certified to the Purchaser in
writing.

            4.2 Performance. All the covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing Date shall have been performed or complied with in all
material respects, and the Company shall have so certified to the Purchaser in
writing.

            4.3 Designation. The Company shall have adopted and filed with the
Secretary of State of the State of New Jersey the Designation.

                                Ex.4.1 - Page 13
<PAGE>

            4.4 Opinion of Counsel to the Company. On the Closing Date, the
Purchaser shall have received an opinion from counsel for the Company, dated the
Closing Date, which shall be in a form reasonably acceptable to the parties.

            4.5 Proceedings; Certified Copies. All proceedings to be taken in
connection with the transactions contemplated by this Agreement to be
consummated on or prior to the Closing Date, and all documents incident thereto,
shall be satisfactory in form and substance to the Purchaser. The Purchaser
shall have received such certified copies or other copies of such documents as
they may reasonably request.

            4.6 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.

            4.7 No Material Adverse Change. There shall have been no material
adverse change since the Balance Sheet Date, except as set forth on Schedule
2.11(b) attached hereto, in the business, properties, assets, operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, and the Company shall have so certified to the Purchaser in writing.

            4.8 Registration Rights Agreement. The Company shall have executed
and delivered a Registration Rights Agreement in the form attached hereto as
Exhibit B.

            4.9 NASDAQ Listing. The Company shall have given or made all notices
or filings with the National Association of Securities Dealers, Inc. (the
"NASD") and shall have complied with all rules and regulations of the NASD
required in connection with the transactions contemplated hereby.

            4.10 Investment by Medtronic. Inc. The Company shall have provided
to the Purchaser, by facsimile transmission, a copy of the Medtronic Agreement
executed by the Company and Medtronic, Inc., including copies of all signature
pages thereto, which agreement shall provide (i) an obligation by Medtronic,
Inc. to purchase shares of Series A Preferred Stock having an aggregate value of
at least $1,200,000, and (ii) that the closing of such purchase shall occur
substantially concurrently with the purchase and sale contemplated hereunder..

            4.11 Fusion Capital Investment. The Securities and Exchange
Commission shall have declared effective the registration statement with respect
to shares of the Company's Common Stock to be sold by Fusion Capital Fund II,
LLC ("Fusion Capital") as contemplated in the Common Stock Purchase Agreement,
dated as of June 11, 2001, entered into between the Company and Fusion Capital
and all other conditions precedent to the investment by Fusion Capital shall
have been satisfied.

                                Ex.4.1 - Page 14
<PAGE>

            4.12 First Amendment to Distribution Agreement. The Company shall
have executed and delivered the First Amendment to the Distribution Agreement in
the form attached hereto as Exhibit C.

      SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS

      The Company's obligation to sell the Preferred Shares subscribed for by
the Purchaser on the Closing Date is subject, at the Company's option, to the
satisfaction of each of the following conditions:

            5.1 Representations and Warranties. On the Closing Date, the
representations and warranties contained in Section 3 hereof shall be true and
correct in all material respects with the same effect as though made on and as
of the Closing Date and the Purchaser shall have so certified to the Company in
writing.

            5.2 Performance. All the covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Purchaser on
or prior to the Closing Date shall have been performed or complied with in all
material respects, and the Purchaser shall have so certified to the Company in
writing.

            5.3 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the transactions contemplated
hereby or otherwise questioning the validity or legality of such transactions
shall have been instituted and be pending.

            5.4 No Change in Regulation S. No amendment to Regulation S has
occurred or interpretive release promulgated or issued thereunder which, in the
reasonable judgment of the Company, would materially adversely affect the sale
by the Company of the Preferred Shares and the Conversion Shares.

      SECTION 6. COVENANTS OF THE COMPANY PRIOR TO CLOSING

            6.1 Operation of Business in Ordinary Course. Prior to the Closing,
the Company and each subsidiary will operate its business only in the usual and
normal course.

            6.2 Conditions Precedent. The Company and the Purchaser shall use
their best efforts to cause the conditions specified in Sections 4 and 5 to be
satisfied by the Closing Date.

      SECTION 7. COVENANTS OF THE PARTIES AFTER CLOSING

            7.1 Reporting Status. So long as the Purchaser beneficially owns any
Preferred Shares or Conversion Shares, the Company covenants that it shall use
its best efforts to file all reports required to be filed with the SEC pursuant
to Section 13 or 15(d) of the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act.

                                Ex.4.1 - Page 15
<PAGE>

            7.2 Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purposes of issuance upon conversion of Preferred Shares,
such number of shares of Common Stock as are equal to the Conversion Shares
issuable upon conversion of the outstanding Preferred Shares. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable.

            7.3 Quality Systems of the Company. The Company shall use its best
efforts to resolve in a timely manner (i) any "warning letter" issues raised by
the U.S. Food and Drug Administration in its follow-up audit to the Warning
Letter; and (ii) any failure to conform with the FDA, ISO or other applicable
standards, rules or regulations raised in any internal or external audits. The
Company shall notify the Purchaser of any such issues or failure to conform
promptly after the Company is made aware thereof.

      SECTION 8. COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFERABILITY

            8.1 Compliance with Securities Act. The Preferred Shares and the
Conversion Shares shall not be transferable, except upon the conditions
specified in this Section 8, which conditions are intended to insure compliance
with the provisions of the Securities Act and applicable state securities laws
in respect of any such transfer.

            8.2 Restrictive Legend. Each certificate representing the Preferred
Shares and Conversion Shares issued upon conversion of the Preferred Shares
shall (unless otherwise permitted by the provisions of Section 8.4 below) be
stamped or otherwise imprinted with the following legend:

            "THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE AND THE SHARES
            OF COMMON STOCK ISSUABLE UPON CONVERSION OF THESE PREFERRED SHARES
            HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED (THE "ACT"), OR ANY APPLICABLE STATE OR FOREIGN SECURITIES
            LAW AND THE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
            OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH REGULATION S UNDER
            THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
            SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR
            PURSUANT TO AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
            SUCH REGISTRATION IS NOT REQUIRED. HEDGING TRANSACTIONS INVOLVING
            THESE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
            THE HOLDER OF THIS C

                                Ex.4.1 - Page 16
<PAGE>

            ERTIFICATE IS SUBJECT TO, AND A BENEFICIARY OF, CERTAIN PROVISISONS
            SET FORTH IN A PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF
            OCTOBER 23, 2001; A COPY OF THE AGREEMENT EVIDENCING SUCH TERMS MAY
            BE OBTAINED FROM THE COMPANY WITHOUT CHARGE."

            8.3 Restrictions on Transferability.

                  (a) The Purchaser acknowledges that the Preferred Shares and
the Conversion Shares issuable upon the conversion of the Preferred Shares have
not been registered under the Securities Act and, except as provided in the
Registration Rights Agreement, such shares are not being registered under the
Securities Act and may not be transferred (and the Company shall have the right
to refuse to transfer such securities) unless (i) in accordance with Regulation
S, (ii) registered under the Securities Act, or (iii) an exemption from
registration exists and the holder of such shares shall have delivered written
notice to the Company describing in reasonable detail the proposed transfer,
together with an opinion of counsel which, to the Company's reasonable
satisfaction, is knowledgeable in securities law matters, to the effect that
such transfer may be effected without registration of such shares under the
Securities Act, in which event, the holder of the shares being transferred shall
not consummate the transfer until (1) the prospective transferee has confirmed
to the Company in writing its agreement to be bound by the provisions of this
Agreement or (2) such holder shall have delivered to the Company an opinion of
such counsel that no subsequent transfer of such Preferred Shares or Conversion
Shares shall require registration under the Securities Act. Promptly upon
receipt of any opinion described in clause (iii) of the preceding sentence, the
Company shall prepare and deliver in connection with the consummation of the
proposed transfer, new certificates for the Preferred Shares or Conversion
Shares being transferred that do not bear the legend set forth in Section 8.2.

                  (b) The Purchaser covenants that (i) it is not, and does not
intend to be a "distributor" (as such term is defined in Regulation S) of the
Preferred Shares or the Conversion Shares, but if it so acts then the Purchaser
will comply with all applicable requirement under Regulation S in connection
therewith, (ii) it will not offer or sell the Preferred Shares or the Conversion
Shares within the United States or to, or for the benefit of, any "U.S. Person"
(as such term is defined in Regulation S) except in accordance with the
provisions of Rule 903 or Rule 904 of Regulation S or pursuant to an exemption
from the registration requirements of the Securities Act and otherwise in
accordance with all applicable laws and (iii) neither the Purchaser or its
affiliates nor any person acting on their behalf have engaged or will engage in
"directed selling efforts" (as such term is defined in Regulation S) with
respect to the Preferred Shares and the Conversion Shares and that each of them
has complied and will comply with the "offering restrictions" requirements of
Regulation S.

                  (c) The Purchaser acknowledges that any sale of the Preferred
Shares or the Conversion Shares made in reliance upon Rule 144 promulgated under
the Securities Act

                                Ex.4.1 - Page 17
<PAGE>

may be made only in accordance with the terms of that Rule and further, if that
Rule is not applicable, any resale of the Preferred Shares or the Conversion
Shares under circumstances in which the seller or the person through whom the
sale is made may be deemed to be an underwriter, as such term is defined in the
Securities Act, and may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder.

            8.4 Restriction on Conversion by the Purchaser. Notwithstanding
anything herein, or in the Designation to the contrary, in no event shall the
Purchaser have the right to convert the Preferred Shares if, as a result of such
conversion, the aggregate number of shares of Common Stock beneficially owned by
the Purchaser and its affiliates would exceed 19.9% of the outstanding shares of
the Common Stock following such exercise. For purposes of this Section 8.4,
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act. Nothing in this Section 8.4 shall be deemed to limit or otherwise
affect the Company's right to compel the conversion of the Preferred Shares in
accordance with the provisions of the Designation.

      SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

      All representations and warranties made herein and in the certificates
delivered pursuant hereto are made as of the date hereof and shall survive the
execution and delivery of this Agreement and the issuance and sale of the
Preferred Shares hereunder for a period of one year.

      SECTION 10. MISCELLANEOUS

      10.1 Owner of Preferred Shares. The Company may deem and treat the person
in whose name the Preferred Shares are registered as the absolute owner thereof
for all purposes whatsoever, and the Company shall not be affected by any notice
to the contrary.

            10.2 Successors and Assigns. This Agreement shall be binding upon,
shall inure to the benefit of the respective successors, executors, personal
representatives, heirs, and permitted assigns of each of the parties hereto.

            10.3 Broker or Finder. Each party to this Agreement represents and
warrants that, to the best of its knowledge, no broker or finder has acted for
such party in connection with this Agreement or the transactions contemplated by
this Agreement and that no broker or finder is entitled to any broker's or
finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by such party. The Company shall
indemnify the Purchaser against, and hold it harmless from, any liability, cost,
or expense (including reasonable attorneys' fees and expenses) resulting from
any agreement, arrangement, or understanding made by the Company, and the
Purchaser shall indemnity the Company against, and hold the Company harmless
from, any liability, cost, or expense (including reasonable attorneys' fees and
expenses) resulting from any agreement, arrangement, or understanding made by
the Purchaser with any third party, for brokerage or finder's fees or other
commissions in connection with this Agreement or any of the transactions
contemplated hereby.

                                Ex.4.1 - Page 18
<PAGE>

            10.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without regard to conflicts of law principles.

            10.5 Notice. Any notice or other communications required or
permitted hereunder shall be deemed given when delivered personally, or upon
receipt by the party entitled to receive the notice when sent by registered or
certified mail, postage prepaid, or by a recognized international overnight
courier service addressed as follows or to such other address or addresses as
may hereafter be furnished in writing by notice similarly given by one party to
the other:

     To the Company:      EP MedSystems, Inc.
                          100 Stierli Court, Suite 107
                          Mount Arlington, New Jersey   07856
                          U.S.A.
                          Attention:  David Jenkins, Chief Executive Officer

     To the Purchaser:    Century Medical, Inc.
                          1-6-4 Osaki, Shinagawa-Ku
                          Tokyo, 141-8588
                          Japan
                          Attention : Yasuo Kyotani, President and
                                        Chief Executive Officer

Notice to any holder of Preferred Shares other than the Purchaser shall be given
in a like manner to such holder at the address reflected in the Company's
records.

            10.6 Full Agreement. This Agreement and the Exhibits and Schedules
attached hereto or delivered herewith, and any other documents delivered
herewith, sets forth the entire understanding of the parties with respect to the
transactions contemplated hereby.

            10.7 Headings. The headings of the sections of this Agreement are
inserted for convenience of reference only and shall not be considered a part
hereof.

            10.8 Amendment. This Agreement may be modified, amended or changed
only by a written instrument executed by the Company and the Purchaser.

            10.9 Schedules and Exhibits. Disclosure of any fact or item in any
Schedule or Exhibit hereto referenced by a particular paragraph or section in
this Agreement shall be deemed to be disclosed with respect to any other
paragraph or section (whether or not an explicit cross-reference appears) should
the existence of such fact or item or its contents be relevant to that other
paragraph or section.

                                Ex.4.1 - Page 19
<PAGE>

            10.10 Counterparts. This Agreement may be executed concurrently in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument upon delivery, by telefax
or otherwise, of all counterparts to all parties hereto.

      10.7 Disclosure/Publicity. The parties acknowledge and agree that the
Company shall make public disclosure with the SEC and otherwise as appropriate
describing the terms of the transaction consummated at closing.

                            [Signature Page Follows]

                                Ex.4.1 - Page 20
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has fully executed this
Agreement on the date first set forth above.

                                    EP MEDSYSTEMS, INC.

                                    By: s/ David A. Jenikins
                                    Name: David A. Jenkins
                                    Title: Chief Executive Officer

                                    CENTURY MEDICAL, INC.

                                    By: s/ Yasuo Kyotani
                                    Name: Yasuo Kyotani
                                    Title: President and Chief Executive Officer

                                Ex.4.1 - Page 21
<PAGE>

                                  Schedule 2.4

                          Capital Stock of the Company

      David Jenkins, the Company's Chairman of the Board and Chief Executive
Officer, is a shareholder of the Company owning stock directly and through his
50% ownership interest in Cardiac Capital, LLC. Mr. Jenkins is a party to a
letter agreement with Rollins Investment Fund, the other 50% owner of Cardiac
Capital, LLC, pursuant to which Mr. Jenkins has agreed that he shall forebear
from selling any shares of common stock of the Company owned by him and shall
cause his spouse, lineal descendants and any trust for the benefit of any of
them to similarly forebear from selling any shares of common stock of the
Company owned by any of them in the first year following the closing of the
private placement financing in which Cardiac Capital, LLC purchased its shares
(i.e. the period from March 28, 2001 through March 27, 2002) without the prior
written consent of the Rollins Investment Fund. The agreement further provides
that, notwithstanding any provision to the contrary contained in the Operating
Agreement of Cardiac Capital, LLC, the decision of Cardiac Capital to exercise
its registration rights after the first anniversary of the closing may be made
by Rollins Investment Fund in its sole judgment without the consent of Mr.
Jenkins.

                                Ex.4.1 - Page 22
<PAGE>

                                Schedule 2.11(b)

                         Changes Since December 31, 2000

      (vi) The Company has not made any material change to an agreement with any
employee but has entered into an employment agreement with a new employee,
Reinhard Schmidt, which agreement has not been previously disclosed. Mr. Schmidt
was also appointed to the Company's Board of Directors as of August 25, 2001.

      (x) In connection with his new employment with the Company, Mr. Schmidt
purchased 100,000 shares of the Company's common stock borrowing $220,000 from
the Company in order to effect the purchase. The promissory note is secured by a
pledge of the shares so purchased.

      (xii) The Company's cash position as of June 30, 2001 was approximately
$1,482,000. Also, the Company received a "warning letter" from the U.S. Food and
Drug Administration on July 10, 2001, following a recent inspection. The letter
requires the Company to investigate and correct various observations made by the
FDA with respect to the Company's facilities and procedures including those
relating to its quality assurance systems. By correspondence, dated August 2,
2001, as well as by telephonic communications, the Company has responded to the
"warning letter," has received an acknowledgement letter from the FDA, dated
September 17, 2001, and is awaiting reinspection.

                                Ex.4.1 - Page 23
<PAGE>

                                Schedule 2.14(b)

                     Patents, Trademarks, Proprietary Rights

      The Company is a party to a technology purchase agreement, dated as of
March 9, 1998, with Allan Willis (who sometime after entering into the agreement
became an employee of the Company), for the purchase from Mr. Willis of certain
intellectual property which relates to the Company's SilverFlex(TM) technology.
While the assignment of the patent included in the intellectual property does
not address the issue of revocability, the agreement contains two purchase price
components (1) an initial payment and (2) royalty payments up to an aggregate
maximum total of $1 million and provides that either party may terminate the
agreement in the event of default of a material obligation. As such, it is
uncertain what would result in the event of the Company's breach of the
agreement for non-payment of royalties or otherwise.

                                Ex.4.1 - Page 24Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "Agreement") made as of the 23rd day
of October, 2001, by and between EP MEDSYSTEMS, INC. (the "Company") and the
CENTURY MEDICAL, INC. (the "Purchaser").

                                    RECITALS

      WHEREAS, the Company and the Purchaser are parties to a Preferred Stock
Purchase Agreement, dated as of October 23, 2001 (the "Purchase Agreement"); and

      WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Purchaser to invest funds in the Company pursuant to
the Purchase Agreement, the Purchaser and the Company hereby agree that this
Agreement shall govern the rights of the Purchaser to cause the Company to
register shares of Common Stock issuable to the Purchasers upon the conversion
of the Preferred Shares acquired pursuant to the Purchase Agreement and certain
other matters as set forth herein;

      NOW, THEREFORE, in consideration of the mutual promises herein made, and
in consideration of the representations, warranties and covenants herein
contained, the parties hereto agree as follows. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the
Purchase Agreement.

      SECTION 1. REGISTRATION RIGHTS

      The Company covenants and agrees as follows:

            1.1 Definitions. For purposes of this Section 1:

                  (a) The term "Act" means the Securities Act of 1933, as
amended.

                  (b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.

                  (c) The term "Holder" means the Purchaser and any transferees
of Registrable Securities permitted in accordance with Section 1.12.

                  (d) The term "Other Securities" means all securities which may
be, or are requested to be, included in a registration, other than newly issued
shares of Common Stock issued upon conversion of the Preferred Shares not issued
pursuant to the exercise or conversion

                                Ex.4.2 - Page 1
<PAGE>

of warrants, options or other convertible securities, except as provided in the
registration rights agreements and letter agreements identified in Schedule 2.10
hereto.

                  (e) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.

                  (f) The term "Registrable Securities" means (i) the Common
Stock issued or issuable upon conversion of the Preferred Shares purchased
pursuant to the Purchase Agreement, and (ii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the shares referenced in (i) above
(collectively, the "Common Shares").

                  (g) "Registration Statements" means, collectively, the
registration under the Securities Act on Form S-3 or any successor form of the
Registrable Securities, including the Shelf Registration Statement (as defined
below) and "Registration Statement" shall mean, individually, any such
Registration Statement.

                  (h) The term "SEC" means the Securities and Exchange
Commission.

            1.2 Shelf Registration.

                  (a) If, at any time after the Purchaser has a right to convert
the Preferred Shares to Common Stock, the Purchaser requests in writing, the
Company shall promptly, subject to the limitations specified in this Agreement,
(i) file a shelf registration statement on Form S-3 or, if a Form S-3 is not
available for use by the Company, any other form available to the Company as
soon as practicable but in any event within thirty (30) days from the date of
such written request (the "Filing Date") covering the registration under the Act
of all requested Common Shares then outstanding to be offered or sold on a
delayed or continuous basis as provided by this Agreement, pursuant to Rule 415
of the Act (the "Shelf Registration Statement"); and (ii) maintain the
effectiveness of the Shelf Registration Statement until such date as is the
earlier of (A) the date on which all of the Registrable Securities have been
sold and (B) the date on which the Registrable Securities may be immediately
sold without restriction (including without limitation as to volume by each
Holder thereof) and without registration under the Securities Act.

                  (b) If any offering pursuant to Section l.2 (a) hereof
involves an underwritten offering, an underwriter will be selected by the
Holders of at least three-fourths (3/4) of the Registrable Securities then
outstanding and shall be acceptable to the Company. In such event, the right of
any Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders

                                Ex.4.2 - Page 2
<PAGE>

proposing to distribute Registrable Securities through such underwriting shall
(together with the Company as provided in Section 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof in proportion (as
nearly as practicable) to the amount of Registrable Securities of the Company
owned by each Holder and requested by such Holder to be included in such
underwriting; provided, however, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
Other Securities are first entirely excluded from the underwriting.

                  (c) Notwithstanding the foregoing, if the Company shall
furnish to the Holders a certificate signed by the Chief Executive Officer or
President of the Company stating that, in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental (a "Detrimental
Condition") to the Company and its shareholders for a registration statement to
be filed or to become or remain effective, as the case may be, (i) the Company
shall have the right to defer taking action with respect to the filing of the
Shelf Registration Statement, as the case may be, for a period of not more than
ninety (90) days after the Filing Date, (ii) in case a Shelf Registration
Statement has been filed but has not become effective, the Company may cause
such registration statement to be withdrawn or may postpone amending or
supplementing such registration statement until such Detrimental Condition no
longer exists, but in no event for more than ninety (90) days, (iii) in case a
Shelf Registration Statement has been filed and has become effective, the
Company may postpone amending or supplementing such registration statement until
such Detrimental Condition no longer exists, but in no event for more than
ninety (90) days or (iv) require all Holders to suspend or cease selling any
Registrable Securities until such Detrimental Condition no longer exists, but in
no event for more than ninety (90) days, provided that the Company's right
pursuant to this Section 1.2(c) to give notice of a Detrimental Condition may
not be exercised more than once in any twelve (12) month period hereunder. The
Company shall give written notice of its determination to postpone or withdraw a
registration statement and of the fact that the Detrimental Condition for such
postponement or withdrawal no longer exists, in each case, promptly after the
occurrence thereof. The following events or circumstances may be a Detrimental
Condition: a pending material acquisition, merger or sale or purchase of assets,
pending or threatened material litigation, pending or threatened material
regulatory or governmental action, pending material change in the business,
prospects, condition (financial or other) or properties of the Company in each
case, only for so long as disclosure thereof has not been made in any press
release or any filing under the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"). The foregoing list is for illustrative purposes only and
is not meant to be exclusive.

                  (d) If the Company shall give any notice of postponement or
withdrawal of any registration statement or of suspension of selling the
Registrable Securities in accordance with subsection (c) above, the Company
shall not, during the period of

                                Ex.4.2 - Page 3
<PAGE>

postponement, withdrawal or suspension pursuant to clauses (i), (ii), (iii) or
(iv) of the prior paragraph, register any Common Stock, other than pursuant to a
registration statement on Form S-4 or S-8 (or an equivalent registration form
then in effect). Each Holder of Registrable Securities agrees that, upon receipt
of any notice from the Company that the Company has determined to withdraw any
registration statement pursuant to the immediately preceding paragraph, such
Holder will discontinue its disposition of Registrable Securities pursuant to
such registration statement and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such notice.
If the Company shall have withdrawn or prematurely terminated a registration
statement filed under this Section 1.2 (whether pursuant to the immediately
preceding paragraph, or as a result of any stop order, injunction or other order
or requirement of the SEC or any other governmental agency or court), the
Company shall not be considered to have effected an effective registration for
the purposes of this Agreement until the Company shall have filed a new
registration statement covering the Registrable Securities covered by the
withdrawn registration statement and such registration statement shall have been
declared effective and shall not have been withdrawn. If the Company shall give
any notice of withdrawal or postponement of a registration statement, the
Company shall, at such time as the Detrimental Condition that caused such
withdrawal or postponement no longer exists (but in no event later than ninety
(90) days after the date of the postponement or withdrawal), use its reasonable
best efforts to effect the registration under the Act of the Registrable
Securities covered by the withdrawn or postponed registration statement in
accordance with this Section 1.2 (unless the Holder shall have withdrawn such
request).

            1.3 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities (other than a registration relating solely to the sale of
securities to participants in a Company stock option, stock purchase or similar
plan or a SEC Rule 145 transaction) at any time after the date hereof, the
Company shall, at such applicable time, promptly give each Holder of Registrable
Securities written notice of such registration. Upon the written request of each
Holder of such securities given within twenty (20) days after mailing of such
notice by the Company in accordance with Section 2.5, the Company shall, subject
to the provisions of Section 1.8 and Section 2.10, cause to be registered under
the Act only those securities held by each Holder properly noticed pursuant to
this Section 1.3 that each such Holder has requested to be registered. No
registration effected pursuant to this Section 1.3 shall relieve the Company of
its obligations to effect the required registration pursuant to Section 1.2. Any
Holder shall have the right to withdraw his request for inclusion of its
properly noticed securities under this Section 1.3 in any registration statement
pursuant to this Section 1.3 by giving written notice to the Company of its
request to withdraw prior to the filing of such registration statement.

                                Ex.4.2 - Page 4
<PAGE>

            1.4 Obligations of the Company. When required under this Section 1
to effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

                  (a) Prepare and file with the SEC a Shelf Registration
Statement or, if applicable, any other form of registration statement, as the
case may be, with respect to the Registrable Securities and use its reasonable
best efforts to cause such registration statement to become effective within one
hundred twenty (120) days after such registration statement was filed and to
keep such Shelf Registration Statement effective for the period specified in
Section 1.2(a); provided, however, that before filing a registration statement
or prospectus or any amendments or supplements thereto, or comparable statements
under securities or "blue sky" laws of any jurisdiction, the Company will
furnish to one counsel for the Holders (the "Holders' Counsel") participating in
the planned offering (selected by the Holders of three-fourths of the
Registrable Securities then outstanding included in such registration), and the
underwriters, if any, copies of all such documents proposed to be filed
(including all exhibits thereto), which documents will be subject to the
reasonable review and reasonable comment of such counsel.

                  (b) Prepare and file with the SEC as soon as practicable such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.

                  (c) Furnish to the Holders whose Registrable Securities are
covered by the Shelf Registration Statement such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.

                  (d) Use its best efforts to register and qualify the
securities covered by the Shelf Registration Statement under such other
securities or "blue sky" laws of such jurisdictions as shall be reasonably
requested by the Holders whose Registrable Securities are covered by the Shelf
Registration Statement; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or jurisdictions
unless the Company is already subject to service in such jurisdiction.

                  (e) In the event that the Registrable Securities are to be
sold through an underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. The Holders proposing to distribute
Registrable Securities through such underwritten public offering shall also
enter into and perform their obligations under such an agreement.

                  (f) In the event that the Registrable Securities are to be
sold through an underwritten public offering, use its reasonable best efforts to
furnish, on the date that such

                                Ex.4.2 - Page 5
<PAGE>

Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 1, (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, and (ii) a letter, dated such
date, from the independent certified public accountants of the Company addressed
to the underwriters, stating that such accountants are independent public
accountants within the meaning of the Act and the applicable published rules and
regulations thereunder, and otherwise in form and in substance as is customarily
given by independent certified public accountants to underwriters in connection
with an underwritten public offering.

                  (g) Promptly notify (i) each Holder selling Registrable
Securities covered by such registration statement and each managing underwriter,
if any: (A) when the registration statement, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the registration
statement has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (B) of the
issuance by the SEC of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose,
(C) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction or the initiation of any
proceeding for such purpose, and (D) when a prospectus relating to the
registration statement is required to be delivered under the Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and (ii) Holders' Counsel and each managing
underwriter of any request by the SEC for amendments or supplements to such
registration statement or prospectus related thereto or for additional
information. If the notification relates to an event described in clause (i)(D),
the Company shall, in accordance with paragraph (b) of this Section 1.4,
promptly prepare and file with the SEC and furnish to each Holder selling
Registrable Securities covered by such registration statement and each managing
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include 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 the light of the circumstances
under which they were made not misleading.

                  (h) Cooperate with the selling Holders of Registrable
Securities and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the underwriters or, if not an underwritten offering, in
accordance with the instructions of the selling Holders of Registrable
Securities and instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect thereto.

                                Ex.4.2 - Page 6
<PAGE>

                  (i) Comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in any
event within sixteen (16) months thereafter), an earnings statement (which need
not be audited) covering the period of at least twelve consecutive months
beginning with the first day of the Company's first calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder.

                  (j) (i) Cause all such Registrable Securities covered by such
Registration Statement to be listed on the principal securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed, to either cause
all such Registrable Securities to be listed on a national securities exchange
or to secure designation of all such Registrable Securities as a National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
"national market system security" within the meaning of Rule 11Aa 2-1 of the
Exchange Act or, failing that, secure NASDAQ authorization for such shares and,
without limiting the generality of the foregoing, use its reasonable best
efforts to take all actions that may be required by the Company as the issuer of
such Registrable Securities in order to facilitate the managing underwriter's
arranging for the registration of at least two market makers as such with
respect to such shares with the National Association of Securities Dealers, Inc.
(the "NASD").

                  (k) Provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such Registration Statement.

                  (l) Deliver promptly to Holders' Counsel and each underwriter,
if any, copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the SEC or
its staff with respect to the registration statement, other than those portions
of any such memoranda which contain information subject to attorney-client
privilege with respect to the Company, and, upon receipt of such confidentiality
agreements as the Company may reasonably request, make reasonably available for
inspection by Holders' Counsel, by any underwriter, if any, participating in any
disposition to be effected pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by Holders' Counsel
or such underwriter, attorney, accountant or agent in connection with such
registration statement.

                  (m) Use reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement.

                  (n) Upon written request, furnish to each Holder participating
in the offering and the managing underwriter, without charge, at least one
conformed copy of the

                                Ex.4.2 - Page 7
<PAGE>

registration statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference).

            1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1
(including without limitation, to maintain the accuracy of information
previously furnished by the Holders for use in the Shelf Registration Statement)
with respect to the Registrable Securities of the Holders whose Registrable
Securities are covered by the Shelf Registration Statement that each of such
Holders shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably requested by the Company or required to
effect the registration of such Holders' Registrable Securities.

            1.6 Expenses of Registration.

                  (a) "Expenses" shall mean any and all fees and expenses
incident to the Company's performance of or compliance with this Article 1,
including, without limitation: (i) SEC, stock exchange or NASD registration and
filing fees and all listing fees and fees with respect to the inclusion of
securities in NASDAQ, (ii) fees and expenses of compliance with state securities
or "blue sky" laws and in connection with the preparation of a "blue sky"
survey, including without limitation, reasonable fees and expenses of "blue sky"
counsel, (iii) printing and copying expenses, (iv) messenger and delivery
expenses, (v) fees and disbursements of counsel for the Company and (vi) fees
and disbursements of the Company's independent public accountants (including the
expenses of any audit and/or "cold comfort" letter) and fees and expenses of
other persons, including special experts, retained by the Company.

                  (b) The Company shall pay all Expenses (other than
underwriting discounts and commissions and any transfer taxes) with respect to
any registration pursuant to Section 1.2, whether or not such registration
statement becomes effective or remains effective for the period contemplated by
Section 1.2(a).

                  (c) Notwithstanding the foregoing, (i) the provisions of this
Section 1.6 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with "blue sky" laws of each state in which the
offering is made and (ii) in connection with any registration hereunder, each
Holder of Registrable Securities being registered shall pay all underwriting
discounts and commissions and any transfer taxes, if any, attributable to the
sale of such Registrable Securities, pro rata with respect to payments of
discounts and commissions in accordance with the number of shares sold in the
offering by such Holder, and (iii) the Company shall, in the case of all
registration under this Section 1, be responsible for all its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties).

            1.7 Expenses of Company Registration. The Company shall bear and pay
all Expenses incurred in connection with any registration filing or
qualification of Registrable

                                Ex.4.2 - Page 8
<PAGE>

Securities with respect to the registrations pursuant to Section 1.3 for each
Holder (which right may be assigned as provided in Section 1.12), but excluding
underwriting discounts and commissions and transfer taxes, if any, relating to
Registrable Securities.

            1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless such Holders accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the Company (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
shareholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, that the underwriters determine in
their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned as provided in Section 2.10 and
thereafter pro rata among the selling shareholders according to the total amount
of securities entitled to be included therein owned by each selling shareholder
or in such other proportions as shall mutually be agreed to by such selling
shareholders, with Other Securities being eliminated in their entirety first).
For purposes of the preceding parenthetical concerning apportionment, for any
selling shareholder that is a Holder of Registrable Securities and that is a
partnership or corporate partners, retired partners and shareholders of such
Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro-rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.

            1.9 Delay of Registration. The Holders shall not have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.

            1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:

                  (a) To the extent permitted by law, the Company will indemnify
and hold harmless the Holder whose Registrable Securities are covered by a
Registration Statement, its directors, officers, fiduciaries, employees and
shareholders, members, managers, or general or limited partners (and the
directors, officers, employees and shareholders thereof), any underwriter (as
defined in the Act) for such Holders and each person, if any, who controls such
Holders or underwriter within the meaning of the Act or the Exchange Act, and
each officer, director, employee, shareholder or partner of such underwriter,
against any losses, claims,

                                Ex.4.2 - Page 9
<PAGE>

damages, or liabilities (joint or several) or actions or proceedings (whether
commenced or threatened) and expenses (including reasonable fees of counsel and
any amounts paid in any settlement effected with the Company's prior written
consent), to which they may become subject under the Act, the Exchange Act or
any state securities law, insofar as such losses, claims, damages, or
liabilities (or actions or proceedings in respect thereof) ("Claims") or
expenses arise out of or are based upon any of the following statements,
omissions or violations (each, a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus, summary prospectus or final
prospectus contained therein or any amendments or supplements thereto, together
with documents incorporated by reference therein, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Act, the Exchange
Act, any state securities law or NASDAQ; and the Company will pay, as incurred,
to such Holders, and each such underwriter or controlling person any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, expense or action or
proceeding; provided, however, that (A) the indemnity agreement contained in
this Section 1.10 shall not apply to amounts paid in settlement of any such
Claim if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), (B) the Company shall not be liable
in any case for any such Claim to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holders, or any such underwriter or controlling person. Such indemnity
and reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of such indemnified party and shall
survive the transfer of such securities by such Holder.

                  (b) To the extent permitted by law, each Holder whose
Registrable Securities are covered by a Registration Statement will, severally
and not jointly, indemnify and hold harmless the Company, each of its directors,
officers, fiduciaries and employees and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act, any underwriter, and
any controlling person of any such underwriter, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the Exchange Act, insofar as such Claim
arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and such Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 1.10, in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 1.10 shall not apply to amounts paid in settlement of
any such Claim if such settlement is effected without the consent of such
Holder, which consent shall not be unreasonably withheld; provided that, in no
event shall any indemnity under this Section 1.10 exceed the net proceeds from
the offering received by such Holder. Such

                                Ex.4.2 - Page 10
<PAGE>

indemnity and reimbursement of expenses shall remain in full force and effect
regardless of any investigation made by or on behalf of such indemnified party
and shall survive the transfer of such securities by such Holder.

            (c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the indemnifying
party, if (i) representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; or (ii) the indemnifying party
fails to take reasonable steps necessary to defend diligently the action or
proceeding within thirty (30) days after receiving notice from such indemnified
party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 1.10, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 1.10.

                  (d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any Claim or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Claim or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such Claim or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. If, however, the allocation provided in the first
sentence of this paragraph is not permitted by applicable law, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified parry in such proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 1.10(d) were to be determined by pro rata allocation or
by any other method of allocation which does not take

                                Ex.4.2 - Page 11
<PAGE>

account of the equitable considerations referred to in the preceding sentences
of this Section 1.10(d). The amount paid or payable in respect of any Claim
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything in this
Section 1.10(d) to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this Section 1.10(d) to contribute any amount in
excess of the net proceeds received by such indemnifying party from the sale of
Registrable Securities in the offering to which the Claims of the indemnified
parties relate, less the amount of any indemnification payment made by such
indemnifying party pursuant to Section 1.10(b).

                  (e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

                  (f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

            1.11 Reports Under the Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:

                  (a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;

                  (b) take such action as is necessary to maintain the Holder's
ability to utilize Form S-3 for the sale of their Registrable Securities;

                  (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act; and

                  (d) furnish to any Holder, so long as the Holder owns over one
percent (1%) of the outstanding common stock of the Company, forthwith upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the Act and the Exchange Act (at any
time after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed by the Company
with the SEC, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

                                Ex.4.2 - Page 12
<PAGE>

            1.12 Assignment of Registration Rights.

                  (a) The rights to cause the Company to register Registrable
Securities pursuant to this Section 1 may be assigned (but only with all related
obligations) by a Holder to a transferee or assignees of such securities who
acquires at least one percent (1%) of the Registrable Securities (as adjusted
for stock splits, combinations and the like), provided: (i) the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (ii) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including, without limitation, the provisions
of Section 1.14 below; and (iii) such assignment shall be effective only if such
transfer is exempt from registration under the Act and in accordance with the
terms of the Purchase Agreement. For the purposes of determining the number of
shares of Registrable Securities held by a transferee or assignee, the holding
of transferees and assignees of a partnership who are partners or retired
partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
with the partnership; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.

                  (b) Subject to clause (a) above, the right to have the Company
register the Registrable Securities pursuant to this Section 1 may not otherwise
be assigned; provided, however, that (i) any heir or the estate of a Holder
which acquires the Registrable Securities from such Holder by will or intestate
succession shall be entitled to have the Company register the Registrable
Securities pursuant to this Section 1 (provided that such heirs or such estate
shall have a single attorney-in-fact for the purpose of exercising any rights,
receiving any notices or taking any action under this Section 1), and (ii) any
individual Holder may sell, assign or transfer Registrable Securities to his or
her spouse or children or to a trust established for the benefit of his or her
spouse, children or himself or herself, and such transferee shall he entitled to
have the Company register the Registrable Securities pursuant to this Section 1,
if, and only if, such transferee agrees in writing to be bound by the terms of
this Agreement. In each such event and for purposes of this Agreement, the term
"Holder" as used herein shall include all such heirs, such estate or such
transferees.

            1.13 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of three-fourths of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company that would allow such holder or prospective holder
to include such securities in any registration filed under Section 1.2 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders that is included.

                                Ex.4.2 - Page 13
<PAGE>

            1.14 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration, and each Holder agrees to enter into an agreement to such effect
with such underwriter; provided, however, that (a) all officers and directors of
the Company enter into similar agreements, (b) such market stand-off time period
shall not exceed one hundred twenty (120) days, and (c) the market stand-off
period provided by this Section 1.14 shall be effective with respect to only one
registration statement designated by the Company. If the underwriters agree to
any waivers of such restrictions, then the Holders shall be entitled to sell,
transfer or dispose of the same number or amount of securities of the Company as
the person or entity receiving such waiver, upon the same terms and conditions
set forth in such waiver,

            In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holders (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.

            1.15 No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.

      SECTION 2. MISCELLANEOUS

            2.1 Successors and Assigns. Except as otherwise provided herein, and
provided that the transfer or assignment is in accordance with the terms hereof,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties
(including any permitted transferees of any shares of Registrable Securities).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

            2.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New Jersey without regard to principles of
conflicts or choice of laws.

            2.3 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

                                Ex.4.2 - Page 14
<PAGE>

            2.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

            2.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid or by a recognized national overnight courier and addressed to
the party to be notified at the address indicated for such party in the Purchase
Agreement, or at such other address as such party may designate by ten (10)
days' advance written notice to the other parties.

            2.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
three-fourths of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this Section 2.6 shall be binding upon each
Holder of any Registrable Securities then outstanding, each future Holder of all
such Registrable Securities, and the Company.

            2.7 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.

            2.8 Nominees for Beneficial Owners. If Registrable Securities are
held by a nominee for the beneficial owner thereof, the beneficial owner thereof
may, at its option, be treated as the Holder of such Registrable Securities for
purposes of any request or other action by any Holder or Holders of Registrable
Securities pursuant to this Agreement (or any determination of any number or
percentage of shares constituting Registrable Securities held by any Holder or
Holders of Registrable Securities contemplated by this Agreement), provided that
the Company shall have received assurances reasonably satisfactory to it of such
beneficial ownership.

            2.9 No Inconsistent Agreements. Except as provided in Schedule 2.10
hereto, the rights granted to the Holders of Registrable Securities hereunder do
not in any way conflict with and are not inconsistent with any other agreements
to which the Company is a party or by which it is bound. Without the prior
written consent of the Holders of the majority of the Registrable Securities
then outstanding, neither the Company nor any Holder will, on or after the date
of this Agreement, enter into any agreement with respect to its securities which
is inconsistent with the rights granted in this Agreement or otherwise conflicts
with the provisions hereof, other than any lock-up agreement with the
underwriters in connection with any registered offering effected hereunder,
pursuant to which the Company shall agree not to register for sale, and the
Company shall agree not to sell or otherwise dispose of, Common Stock or any
securities

                                Ex.4.2 - Page 15
<PAGE>

convertible into or exercisable or exchangeable for Common Stock, for a
specified period following the registered offering.

            2.10 Prior Registration Rights. Each Purchaser acknowledges that its
rights and obligations under this Agreement are granted subject to the prior
registration rights identified in Schedule 2.10 hereto.

            2.11 No Piggyback on Registrations. Except as provided in Schedule
2.10 hereto, 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 hereunder, and the Company shall not after the date
hereof enter into any agreement providing such right to any of its security
holders, unless the right so granted is subject in all respects to the prior
rights in full of the Holders set forth herein (but only to the extent such
rights are then in effect), and is not otherwise in conflict with the provisions
of this Agreement.

            2.12 Entire Agreement. This Agreement (including the Exhibits
hereto, if any) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.

                            [signature page follows]

                                Ex.4.2 - Page 16
<PAGE>

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

                                    EP MEDSYSTEMS, INC.

                                    By: s/ David A. Jenkins
                                    Name: David A. Jenkins
                                    Title: Chief Executive Officer

                                    CENTURY MEDICAL, INC.

                                    By: s/ Yasuo Kyotani
                                    Name: Yasuo Kyotani
                                    Title: President and Chief Executive Officer

                                Ex.4.2 - Page 17
<PAGE>

      SCHEDULE 2.10

1.    Registration Rights Agreement between the Company and the Purchasers named
      therein, dated as of March 28, 2001.

2.    Registration Rights Agreement between the Company and the Purchasers named
      therein, dated as of August 31, 1999

3.    Registration Rights Agreement between the Company and the Purchasers named
      therein, dated April 9, 1998.

                                Ex.4.2 - Page 18

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