Exhibit 10.3


[LOGO]     WELLS FARGO BANK MINNESOTA,
WELLS      NATIONAL ASSOCIATION                            ARBITRATION AGREEMENT
FARGO
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Wells Fargo Bank Minnesota,              MedAmicus, Inc.
  National Association                   15301 Highway 55 West
900 East Wayzata Boulevard               Plymouth, Minnesota 55447
Wayzata, Minnesota 55391                 (the "Customer") and (the "Borrower")
(the "Bank")

July __, 2001

1.       AGREEMENT TO ARBITRATE. The Bank and Borrower agree to submit to
         binding arbitration by the American Arbitration Association (the "AAA")
         of all claims, disputes and controversies (whether in tort, contract,
         or otherwise, except "core proceedings" under the U.S. Bankruptcy Code)
         arising between themselves and their respective employees, officers,
         directors, attorneys and other agents, which relate in any way without
         limitation to existing and future loans and extensions of credit or
         requests for additional credit, including by way of example but not by
         way of limitation the negotiation, collateralization, administration,
         repayment, modification, default, termination and enforcement of such
         loans or extensions of credit.

2.       RULES GOVERNING ARBITRATION. Arbitration under this Agreement will be
         governed by the Federal Arbitration Act and proceed in Wayzata,
         Minnesota in accordance with AAA Rules.

3.       SELECTION OF ARBITRATOR. Arbitration will be conducted before a single
         neutral arbitrator selected in accordance with AAA Rules and who shall
         be an attorney who has practiced commercial law for at least ten years.

4.       STATUTES OF LIMITATION AND PROCEDURAL ISSUES. The arbitrator will
         determine whether an issue is arbitratable and will give effect to
         applicable statutes of limitation. Judgment upon the arbitrator's award
         may be entered in any court having jurisdiction. The arbitrator has the
         discretion to decide, upon documents only or with a hearing, any motion
         to dismiss for failure to state a claim or any motion for summary
         judgment. The institution and maintenance of an action for judicial
         relief or for any provisional or ancillary remedy shall not constitute
         a waiver of the right of any party, including the plaintiff, to submit
         the controversy or claim to arbitration if any other party contests
         such action for judicial relief.

5.       DISCOVERY. Discovery will be governed by the Minnesota Rules of Civil
         Procedure. Discovery must be completed at least 20 days before the
         hearing date and within 180 days of the commencement of arbitration.
         Each request for an extension and all other discovery disputes will be
         determined by the arbitrator upon a showing that the request is
         essential for the party's presentation and that no alternative means
         for obtaining information are available during the initial discovery
         period.

6.       EXCEPTIONS TO ARBITRATION. This Agreement does not limit the right of
         either party to a) foreclose against real or personal property
         collateral; b) exercise self-help remedies such as setoff or
         repossession; c) obtain provisional remedies such as replevin,
         injunctive relief, attachment or the appointment of a receiver during
         the pendency or before or after any arbitration proceeding; or d)
         obtain a cognovit judgment, if available. These exceptions do not
         constitute a waiver of the right or obligation of either party to
         submit any dispute to arbitration, including those arising from the
         exercise of these remedies.

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7.       ARBITRATION COSTS AND FEES. The arbitrator will award costs and
         expenses in accordance with the provisions of the documents evidencing
         each loan or extension of credit.

  WELLS FARGO BANK MINNESOTA,              MEDAMICUS, INC.
    NATIONAL ASSOCIATION

  BY:  /s/ TERESA SHANNON EARL             BY:  /s/ JAMES D. HARTMAN
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  ITS  VICE PRESIDENT                      ITS  CEO
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