Document:

NOTE PURCHASE AGREEMENT

      THIS AGREEMENT is entered into as of November 15, 2000 (the "Effective
Date"), between EP MedSystems, Inc. (the "Company"), a New Jersey corporation,
and Medtronic, Inc. ("Medtronic"), a Minnesota corporation.

                                    RECITALS:

      A. Medtronic desires to make a secured loan to the Company, on the terms
and subject to the conditions set forth in this Agreement.

                                   AGREEMENTS:

      NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

      1.1 Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:

"Affiliate" of a specified person (natural or juridical) means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. "Control"
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting power in the case of a business entity other than a corporation.

"Agreement" means this Agreement and all Exhibits and Schedules hereto.

"Closings" shall have the meaning given to such term in Section 2.2.

"Company Subsidiaries" means all subsidiaries of the Company.

"Confidential Information" means discoveries, ideas, technology, processes,
know-how, trade secrets, and unpublished information disclosed (whether before
or during the term of this Agreement) by one of the parties (the "disclosing
party") to the other party (the "receiving party") or generated under this
Agreement, and which is marked as proprietary or confidential as provided below,
excluding information that:

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            (a) was already in the possession of receiving party prior to its
      receipt from the disclosing party (provided that the receiving party is
      able to provide the disclosing party with reasonable documentary proof
      thereof);

            (b) is or becomes part of the public domain by reason of acts not
      attributable to the receiving party;

            (c) is or becomes available to receiving party from a source other
      than the disclosing party which source, to receiving party's knowledge,
      has rightfully obtained such information and has no obligation of
      non-disclosure or confidentiality to the disclosing party with respect
      thereto;

            (d) has been independently developed by the receiving party without
      breach of this Agreement or use of any Confidential Information of the
      other party; or

            (e) has been or must be publicly disclosed by reason of legal,
      accounting or regulatory requirements beyond the reasonable control, and
      despite the reasonable efforts of the receiving party.

All Confidential Information disclosed by one party to the other under this
Agreement shall be in writing and bear a legend "Proprietary," "Confidential" or
words of similar import or, if disclosed in any manner other than writing, shall
be preceded by an oral statement indicating that the information is proprietary
or confidential, and shall be followed by transmittal of a reasonably detailed
written summary of the information provided to the receiving party with
identification as Confidential Information designated as above within 30 days.

"Environmental Laws or Regulations" means any national or local statute, law,
ordinance or regulation that relates to or deals with hazardous substances,
human health or the environment, and all regulations promulgated by a regulatory
body pursuant to any of the foregoing statutes, laws, regulations, or
ordinances.

"Financial Statements" means the Company's financial statements dated December
31, 1999.

"First Closing" shall have the meaning given to such term in Section 2.2.

"Intellectual Property" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications therefor;
copyrights and copyright registrations and applications; all discoveries, ideas,
technology, know-how, trade secrets, processes, formulas, drawings and designs,
computer programs or software; and all amendments, modifications, and
improvements to any of the foregoing.

"Jenkins" means David A. Jenkins.

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"Knowledge" means actual knowledge of a fact or the knowledge that such person
could reasonably be expected to have based on reasonable inquiry. The knowledge
of the Company shall include the knowledge of the Company's directors and/or
officers.

"Liens" means liens, mortgages, charges, security interests, claims, voting
trusts, pledges, encumbrances, options, assessments, restrictions, or
third-party or spousal interests of any nature.

"Loan" has the meaning set forth in Section 2.1.

"Material Adverse Effect" means a material adverse effect on (a) the business,
operations, assets or financial condition of the Company, or (b) the ability of
the Company to perform its obligations under this Agreement or any agreement or
instrument to be entered into or filed in connection with this Agreement.

"Medtronic" means Medtronic, Inc. and its Affiliates.

"Note" means the Secured Promissory Note of the Company, payable to Medtronic,
in the principal amount of $3.2 million and otherwise in the form attached
hereto as Exhibit A, which will be secured by the grant to Medtronic by Jenkins
of a pledge of a portion of his stock in _____________.

"Pledge Agreement" means the Stock Pledge Agreement between Jenkins and
Medtronic, in the form attached hereto as Exhibit B, pursuant to which Jenkins
is pledging a portion of his stock in _____________ in favor of Medtronic.

"Second Closing" shall have the meaning given to such term in Section 2.2.

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

"_____________" means _____________, a Delaware corporation.

      1.2 Definitional Provisions.

            (a) The words "hereof," "herein," and "hereunder" and words of
      similar import, when used in this Agreement, shall refer to this Agreement
      as a whole and not to any particular provisions of this Agreement.

            (b) Terms defined in the singular shall have a comparable meaning
      when used in the plural, and vice versa.

            (c) References to an "Exhibit" or to a "Schedule" are, unless
      otherwise specified, to one of the Exhibits or Schedules attached to or
      referenced in this Agreement, and references to an "Article" or a
      "Section" are, unless otherwise specified, to one of the Articles or
      Sections of this Agreement.

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            (d) The term "person" includes any individual, partnership, joint
      venture, corporation, trust, unincorporated organization or government or
      any department or agency thereof.

                                    ARTICLE 2
                           PURCHASE OF NOTE; CLOSINGS

      2.1 Loan. Subject to the terms and conditions hereof, at the Closings,
Medtronic shall loan the Company the principal amount of Three Million Two
Hundred Thousand Dollars ($3,200,000) (the "Loan"), of which $1,600,000 shall be
advanced to the Company on the First Closing Date and $1,600,000 shall be
advanced to the Company on the Second Closing Date. The Loan shall be evidenced
by the Note, which shall be executed and delivered by the Company to Medtronic
at the First Closing in the form attached hereto as Exhibit A. The Note shall
bear interest on the unpaid principal balance of the Loan advanced and
outstanding from time to time, from the First Closing Date until the Note is
fully paid, at an annual rate equal to two percentage points in excess of the
prime commercial lending rate quoted by Wells Fargo Bank Minnesota, N.A., in
effect from time to time. The Loan shall be secured by a pledge of _____________
shares of stock of _____________ owned by David A. Jenkins ("Jenkins") pursuant
to a Stock Pledge Agreement in the form attached hereto as Exhibit B (the
"Pledge Agreement").

      2.2 Closings. The consummation of the Loan and the other transactions
contemplated hereby (the "Closings") shall occur at the times and on the dates
described below and in such location and manner (e.g., by telecopy exchange of
signature pages with originals to follow by overnight delivery) as the parties
may mutually agree.

            (a) The first of the two Closings (the "First Closing") shall occur
      simultaneous with the execution of this Agreement by both parties on the
      Effective Date or at such other time and date as the parties may mutually
      agree. The date on which the First Closing occurs is referred to herein as
      the "First Closing Date." At the First Closing, Medtronic shall wire
      transfer funds in the amount of the first $1,600,000 of the Loan to the
      Company's account as designated to Medtronic in writing prior to the First
      Closing Date.

            (b) The second of the two Closings (the "Second Closing") shall
      occur on December 31, 2000, or at such other time and date as the parties
      may mutually agree. The date on which the Second Closing occurs is
      referred to herein as the "Second Closing Date." At the Second Closing,
      Medtronic shall wire transfer funds in the amount of the remaining
      $1,600,000 of the Loan to the Company's account as designated to Medtronic
      in writing prior to the Second Closing Date.

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                                    ARTICLE 3
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company hereby makes the following representations and warranties to
Medtronic:

      3.1 Organization, Qualifications and Corporate Power. The Company and each
Company Subsidiary is a corporation duly incorporated, validly existing and is
in good standing under the laws of its respective jurisdiction of incorporation
and is duly licensed or qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification and where the failure to be so licensed
or qualified would have a Material Adverse Effect. The Company and each Company
Subsidiary has the corporate power and authority to own and hold its properties
and to carry on its business as now conducted and as proposed to be conducted.
The Company has the corporate power and authority to execute, deliver and
perform this Agreement and the Note.

      3.2 Authorization. The execution and delivery by the Company of this
Agreement and the Note, and the performance by the Company of its obligations
hereunder and thereunder, have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Certificate of Incorporation or the Bylaws of
the Company, as amended, or any provision of any indenture, agreement or other
instrument to which the Company or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge, restriction, claim
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company. Except for the consent of the Company's institutional lender, Fleet
Bank, N.A., no consents, approvals, waivers or authorizations of any third party
are legally or contractually required on the part of the Company to enter into
the transactions contemplated hereby.

      3.3 Validity. Each of this Agreement and the Note has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms except as may
be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance.

      3.4 Financial Statements. The Financial Statements comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the Securities and Exchange Commission with respect thereto.
The Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and fairly present the
Company's consolidated financial position as of the dates thereof and the
results of the Company's consolidated operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
adjustments). Except as set forth in the Financial Statements and subsequent
filings and reports made under applicable securities laws, neither the Company
nor any Company Subsidiary has any liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to

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December 31, 1999, (ii) amounts drawn on the Company's line of credit with Fleet
Bank, N.A. approximating $1,500,000, and (iii) liabilities of the type not
required under generally accepted accounting principles to be reflected in such
Financial Statements. Such liabilities incurred subsequent to December 31, 1999,
are not, in the aggregate, material to the financial condition or operating
results of the Company.

      3.5 Litigation; Compliance with Law. There is no (i) action, suit, claim,
proceeding or investigation pending or, to the Company's knowledge, threatened
against or affecting the Company or any Company Subsidiary, at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding relating to the Company or any Company Subsidiary pending
under collective bargaining agreements or otherwise or (iii) governmental
inquiry pending or, to the Company's knowledge, threatened against or affecting
the Company or any Company Subsidiary, and there is no basis for any of the
foregoing. Neither the Company nor any Company Subsidiary is in default with
respect to any order, writ, injunction or decree of any court or of any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign. The Company and each Company
Subsidiary has complied with all laws, rules, regulations and orders applicable
to its business, operations, properties, assets, products and services, except
when the failure to so comply would not have a Material Adverse Effect. The
Company and each Company Subsidiary has all necessary permits, licenses and
other authorizations required to conduct its business as conducted and as
proposed to be conducted which, if not obtained, would have a Material Adverse
Effect.

      3.6 Proprietary Information of Third Parties. To the Company's knowledge,
no third party has claimed or has reason to claim that any person employed by or
affiliated with the Company or any Company Subsidiary has (a) violated or may be
violating any of the terms or conditions of his employment, noncompetition or
nondisclosure agreement with such third party, (b) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party, or (c) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees.

      3.7 Title to Properties. The Company or the Company Subsidiaries have good
and marketable title, or valid leasehold interests, to their respective
properties and assets reflected in the most recent Financial Statements (other
than properties and assets disposed of in the ordinary course of business since
the date thereof), and all such properties and assets are free and clear of all
Liens, except for Liens for or current taxes not yet due and payable and minor
imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.

      3.8 Taxes. The Company and each Company Subsidiary has timely filed, or
caused to be timely filed, all federal, state and local tax returns for income
taxes, franchise taxes, sales taxes, withholding taxes, property taxes and, to
the Company's knowledge, all other taxes of every kind whatsoever required by
law to be filed, and all such tax returns are complete and

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accurate and in accordance with all legal requirements applicable thereto. All
taxes shown as due on such returns have been paid, and adequate reserves have
been established for all taxes accrued but not yet payable. No deficiency
assessment with respect to or proposed adjustment of the Company's taxes is
pending or, to the Company's knowledge, threatened.

      3.9 No Defaults. The Company and, to the Company's knowledge, each other
party thereto, have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any material
lease, agreement or contract now in effect to which the Company is a party or by
which it or its property may be bound.

      3.10 Intellectual Property. The Company and each Company Subsidiary owns
or possesses licenses or other rights to use all Intellectual Property necessary
to or used in the conduct of its business as conducted and as proposed to be
conducted, and no claim is pending or, to the Company's knowledge, threatened to
the effect that the operations of the Company or any Company Subsidiary infringe
upon or conflict with the asserted rights of any other person under any
Intellectual Property, and to the Company's knowledge there is no basis for any
such claim (whether or not pending or threatened). No claim is pending or
threatened to the effect that any such Intellectual Property owned or licensed
by the Company or any Company Subsidiary, or which the Company or any Company
Subsidiary otherwise has the right to use, is invalid or unenforceable by the
Company or such Company Subsidiary, and to the Company's knowledge there is no
basis for any such claim (whether or not pending or threatened). To the
Company's knowledge, all technical information developed by and belonging to the
Company or any Company Subsidiary that has not been patented has been kept
confidential.

      3.11 Governmental Approvals. No registration or filing with, or consent or
approval of or other action by, any federal, state or other governmental agency
or instrumentality is or will be necessary for the valid execution, delivery and
performance by the Company of this Agreement and the Note.

      3.12 Brokers. The Company has no contract, arrangement or understanding
with any broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.

      3.13 Environmental Matters. The Company and each Company Subsidiary has
obtained, and is in full compliance with, all permits, licenses or other
approvals necessary under the Environmental Laws or Regulations with respect to
its business or assets, and is in compliance with all Environmental Laws or
Regulations, except where the failure to be in compliance could not reasonably
be expected to have a Material Adverse Effect.

      3.14 Insurance. The Company and each Company Subsidiary maintains (i)
insurance on all material assets of a type customarily insured, covering
property damage by fire or other casualty; and (ii) adequate insurance
protection against all liabilities, claims, and risks against which it is
customary to insure.

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      3.15 Absence of Certain Changes. Since December 31, 1999, there has been
no material adverse change in the assets, liabilities, business, properties,
operations, financial condition, prospects or results of operations of the
Company or any Company Subsidiary.

      3.16 Disclosure. Neither this Agreement, nor any Schedule or Exhibit to
this Agreement, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
There is no fact that the Company has not disclosed to Medtronic and its counsel
in writing and of which the Company is aware that materially and adversely
affects or could materially and adversely affect the business, prospects,
financial condition, operations, property or affairs of the Company.

                                    ARTICLE 4
                   REPRESENTATIONS AND WARRANTIES OF MEDTRONIC

      Medtronic makes the following representations and warranties to the
Company:

      4.1 Purchase of Note. Medtronic is an "accredited investor" within the
meaning of Rule 501 under the Securities Act and was not organized for the
specific purpose of acquiring the Note. Medtronic has sufficient knowledge and
experience in investing in companies similar to the Company in terms of the
Company's stage of development so as to be able to evaluate the risks and merits
of Medtronic's investment in the Company and Medtronic is able financially to
bear the risks thereof. Medtronic has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management. The Note is being acquired for Medtronic's own account for the
purpose of investment and not with a present view toward its public sale or
distribution; provided, however, that by making the representation herein,
Medtronic does not agree to hold the Note for any minimum or other specific term
and reserves the right to dispose of the Note at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.

      4.2 Corporate Authority. The execution, delivery and performance by
Medtronic of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by all
requisite corporate action on the part of Medtronic, and the execution and the
delivery of this Agreement and consummation of the transactions contemplated
hereby and compliance with and fulfillment of the terms and provisions hereof
will not (i) conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the Articles of Incorporation or
Bylaws of Medtronic, or (ii) require any affirmative approval, consent,
authorization or other order or action of any court, governmental authority,
regulatory body, creditor or any other person. Medtronic has all requisite power
and authority to do and perform all acts and things required to be done by it
under this Agreement and the agreements contemplated hereby. This Agreement has
been duly executed and delivered by Medtronic and constitutes the legal, valid
and binding obligation of Medtronic enforceable in

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accordance with its terms except as may be limited by laws affecting creditors'
rights generally or by judicial limitations on the right to specific
performance. No consents, approvals, waivers or authorizations of any third
party are legally or contractually required on the part of Medtronic to enter
into the transactions contemplated hereby.

                                    ARTICLE 5
                                    COVENANTS

      5.1 Best Efforts. The Company will use its best efforts to satisfy in a
timely fashion each of the conditions to be satisfied by it under Article 6 of
this Agreement.

      5.2 Financial Information, Reports, Etc. As long as all or any portion of
the Loan remains outstanding, the Company shall furnish to Medtronic:

            (a) within 90 days after the end of each fiscal year of the Company,
      a balance sheet of the Company as of the end of such fiscal year and the
      related statements of income, stockholders' equity and cash flows for the
      fiscal year then ended, prepared in accordance with generally accepted
      accounting principles and certified by a firm of independent public
      accountants of recognized national standing selected by the Company's
      shareholders' meeting;

            (b) within 45 days after the end of each fiscal quarter in each
      fiscal year (other than the last fiscal quarter in each fiscal year) a
      balance sheet of the Company and the related statements of income,
      stockholders' equity and cash flows, unaudited but prepared in accordance
      with generally accepted accounting principles and certified by the Chief
      Financial Officer of the Company, such balance sheet to be as of the end
      of such fiscal quarter and such statements of income, stockholders' equity
      and cash flows to be for such fiscal quarter and for the period from the
      beginning of the fiscal year to the end of such fiscal quarter, in each
      case with comparative statements for the corresponding period in the prior
      fiscal year;

            (c) promptly after the commencement thereof, notice of all actions,
      suits, claims, proceedings, investigations and inquiries of the type
      described in Section 3.5 that would likely have a Material Adverse Effect;
      and

            (d) promptly, from time to time, such other information regarding
      the business, prospects, financial condition, operations, property or
      affairs of the Company and its subsidiaries as Medtronic may reasonably
      request.

      5.3 Compliance with Law. As long as all or any portion of the Loan remains
outstanding, the Company will conduct its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations, the failure to comply with which
would have a Material Adverse Effect.

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      5.4 Compliance with Loan Covenants. As long as all or any portion of the
Loan remains outstanding, the Company will use its best efforts to comply with
each of the covenants contained in the agreements and instruments entered into
with Fleet Bank, N.A. and/or such other or additional institutional lenders from
which the Company may obtain financing from time to time. If the Company fails
to be in such compliance in any material respect, or if it receives notice of
default from any such lender with respect to any such financing, the Company
shall immediately give written notice thereof to Medtronic, specifying the
nature of the default.

                                    ARTICLE 6
                   CONDITIONS TO THE OBLIGATIONS OF MEDTRONIC

      The obligations of Medtronic to make the Loan are subject to the
satisfaction, (i) on the First Closing Date, of the conditions set forth in
Sections 6.1 through 6.7 below, inclusive, and (i) on the Second Closing Date,
of the conditions set forth in Sections 6.1 through 6.8 below, inclusive.

      6.1 Representations and Warranties to be True and Correct. The
representations and warranties contained in Article 3 (with the exception of the
representations and warranties contained in Section 3.4) shall be true, complete
and correct on and as of such Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President and Chief Financial Officer of the Company shall have certified to
such effect to Medtronic in writing.

      6.2 Performance. The Company and/or Jenkins, as applicable, shall have
performed and complied with all agreements contained in this Agreement, the
Note, and the Pledge Agreement that are required to be performed or complied
with by them prior to or at such Closing Date, and the President and Chief
Financial Officer of the Company shall have certified to Medtronic in writing to
such effect and to the further effect that all of the conditions set forth in
Section 6.1 through 6.7, inclusive, have been satisfied.

      6.3 All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to Medtronic and its counsel, and Medtronic and its counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.

      6.4 Supporting Documents. Medtronic and its counsel shall have received
such additional supporting documents and other information as Medtronic or its
counsel reasonably may request in connection with the transactions contemplated
hereby.

      6.5 Required Consents. The Company shall have obtained the written consent
or approval of each person whose consent or approval Medtronic reasonably
believes is required in connection with this Agreement, the Note, and the Pledge
Agreement.

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      6.6 Litigation Affecting Closing. No suit, action or other proceeding
shall be pending or threatened by any third party or by or before any court or
governmental agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement, the Note, or the
Pledge Agreement, or the consummation of the transactions contemplated hereby or
thereby, and no investigation that might result in any such suit, action or
other proceeding shall be pending or threatened.

      6.7 Legislation. No statute, rule, regulation, order, or interpretation
shall have been enacted, entered or deemed applicable by any domestic or foreign
government or governmental or administrative agency or court that would make the
transactions contemplated by this Agreement illegal.

      6.8 _____________ Transaction. On or before the Second Closing Date, the
Investment Agreement between Medtronic and _____________, dated on or about the
date hereof, shall have been executed and the First Closing thereunder shall
have occurred.

                                    ARTICLE 7
                                 INDEMNIFICATION

      7.1 Indemnification of Medtronic. The Company shall indemnify, defend and
hold harmless Medtronic and each of its subsidiaries, officers, directors and
stockholders (Medtronic and such other indemnities referred to in this Article 7
as "Medtronic") from and against and in respect of any and all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, interest
and penalties, costs and expenses (including, without limitation, reasonable
legal fees and disbursements incurred in connection therewith and in seeking
indemnification therefor, and any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim, appeal, demand,
assessment or judgment) ("Indemnifiable Losses"), resulting from, arising out
of, or imposed upon or incurred by any person to be indemnified hereunder by
reason of any breach of any representation, warranty, covenant or agreement of
the Company contained in this Agreement or any agreement, certificate or
document executed and delivered by the Company pursuant hereto or in connection
with any of the transactions contemplated by this Agreement.

      7.2 Indemnification of the Company. Medtronic shall indemnify, defend and
hold harmless the Company and each of its subsidiaries, officers, directors and
stockholders (the Company and such other indemnities referred to in this Article
7 as "the Company") from and against and in respect of any and all Indemnifiable
Losses resulting from, arising out of, or imposed upon or incurred by any person
to be indemnified hereunder by reason of any breach of any representation,
warranty, covenant or agreement of Medtronic contained in this Agreement or any
agreement, certificate or document executed and delivered by Medtronic pursuant
hereto or in connection with the transactions contemplated by this Agreement.

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      7.3 Third-Party Claims. If a claim by a third party is made against an
indemnified party and if the indemnified party intends to seek indemnity with
respect thereto under this Article 7, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party's ability to defend such claim against a third party. The indemnified
party shall not settle such claim without the consent of the indemnifying party,
which consent shall not be unreasonably withheld or delayed. If the indemnifying
party acknowledges in writing its indemnity obligations for Indemnifiable Losses
resulting therefrom, the indemnifying party may participate at its own cost and
expense in the settlement or defense of any claim for which indemnification is
sought; provided that such settlement or defense shall be controlled by the
indemnified party.

      7.4 Cooperation as to Indemnified Liability. Each party hereto shall
cooperate fully with the other parties with respect to access to books, records,
or other documentation within such party's control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim that may give
rise to indemnification hereunder.

                                    ARTICLE 8
                                OTHER PROVISIONS

      8.1 Nondisclosure. Each party agrees not to disclose or use (except as
permitted or required for performance by the party receiving such Confidential
Information of its rights or duties hereunder or under the Note) any
Confidential Information of the other party obtained during the term of this
Agreement until the expiration of three years after the termination or
expiration of this Agreement. Each party further agrees to take appropriate
measures to prevent any such prohibited disclosure by its present and future
employees, officers, agents, subsidiaries, or consultants during the term of
this Agreement and for a period of three years thereafter.

      8.2 Further Assurances. At such time and from time to time on and after
the First Closing Date, upon request by the other party, Medtronic and the
Company will execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all such further acts, documents,
instruments, and assurances that may be required to carry out the purposes of
this Agreement.

      8.3 Complete Agreement. The Schedules and Exhibits to this Agreement shall
be construed as an integral part of this Agreement to the same extent as if they
had been set forth verbatim herein. This Agreement, the Schedules and Exhibits
hereto, constitute the entire agreement between the parties hereto with respect
to the subject matters hereof and thereof and supersede all prior agreements
whether written or oral relating hereto.

      8.4 Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements contained in Articles 3
and 4 of this Agreement shall survive the Closings and remain in full force and
effect. No independent investigation of the

                                       12
<PAGE>

Company by Medtronic, its counsel, or any of its agents or employees shall in
any way limit or restrict the scope of the representations and warranties made
by the Company in this Agreement.

      8.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and the permitted successors and assigns of
the parties hereto. The rights of the Company may not be assigned, and the
rights of Medtronic may be assigned only to a subsidiary of Medtronic or,
subject to the prior written consent of the Company, a business organization
that shall succeed to all or substantially all of the assets and business of
Medtronic or such subsidiary.

      8.6 Waiver, Discharge, Amendment, Etc. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall not, absent an
express written waiver signed by the party making such waiver specifying the
provision being waived, be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or any part thereof or the
right of the party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to be a waiver of any other
or subsequent breach. This Agreement may be amended by the Company and
Medtronic, by mutual action approved by their respective Boards of Directors or
their respective officers authorized by such Board of Directors, at any time.
Any amendment to this Agreement shall be in writing and signed by the Company
and Medtronic.

      8.7 Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to an executive officer of such party or shall be
sent by a reputable express delivery service or by certified mail, postage
prepaid with return receipt requested, addressed as follows:

if to Medtronic to:

Medtronic, Inc.
7000 Central Avenue NE
Minneapolis, Minnesota 55432

Attention: General Counsel
FAX (763) 572-5459

and to:

Attention: Vice President and Chief Development Officer
FAX (763) 572-5404

if to the Company to:

EP MedSystems, Inc.
100 Stierli Court
Mount Arlington, New Jersey 07856

                                       13
<PAGE>

Attention: President
FAX (856) 753-8544

with copy to:

Sills Cummis Radin Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Steven E. Gross, Esq.
FAX (973) 643-6500

Any party may change the above-specified recipient and/or mailing address by
notice to the other party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by telecopy) or on the day shown on the return receipt
(if delivered by mail or delivery service).

      8.8 Public Announcement. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
party hereto, and the parties shall thereafter use their best efforts to cause a
mutually agreeable release or announcement to be issued. Neither party will
publicly or privately disclose or divulge any provisions of this Agreement or
the transactions contemplated hereby without the other party's written consent,
except as may be required by applicable law, rule, regulation, order or stock
exchange regulation, and except for communications to employees, shareholders,
and members of the Board of Directors and provided, however, that Medtronic
acknowledges that the Company will disclose the provisions of this Agreement,
the Note, and the Pledge Agreement in its periodic reports filed pursuant to
applicable securities laws.

      8.9 Expenses. The Company and Medtronic shall each pay their own expenses
incident to this Agreement and the preparation for, and consummation of, the
transactions provided for herein.

      8.10 Governing Law. The formation, legality, validity, enforceability and
interpretation of this Agreement shall be governed by the laws of the State of
Minnesota, without giving effect to the principles of conflict of laws;
provided, however, that nothing in Minnesota procedural law shall be deemed to
alter or affect the applicability of the Federal Arbitration Act as governing
arbitration of disputes as provided in Section 8.14 and, provided further, that
no Minnesota laws or rules of arbitration shall be applicable.

      8.11 Titles and Headings; Construction. The titles and headings to the
Articles and Sections herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.

                                       14
<PAGE>

      8.12 Benefit. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties hereto or their respective
successors or assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.

      8.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

      8.14 Arbitration. Any dispute arising out of or relating to this
Agreement, including the formation, interpretation or alleged breach hereof,
shall be settled in accordance with Exhibit C attached hereto. The results of
such arbitration proceedings shall be binding upon the parties hereto, and
judgment may entered upon the arbitration award in any court having jurisdiction
thereof. Notwithstanding the foregoing, either party may seek interim injunctive
relief from any court of competent jurisdiction.

      IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the date first above written.

                                    EP MEDSYSTEMS, INC.

                                    By: /s/ David A. Jenkins
                                        --------------------------------------
                                      Its: President
                                           -----------------------------------

                                    MEDTRONIC, INC.

                                    By: /s/ Michael D. Ellwein
                                        --------------------------------------
                                      Its: Vice President
                                           -----------------------------------

                                       15SECURED PROMISSORY NOTE

$3,200,000.00                                                  November 15, 2000
                                                          Minneapolis, Minnesota

                             SECURED PROMISSORY NOTE

      For good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned, EP MedSystems, Inc., a New Jersey corporation
("EP MedSystems"), agrees to pay to the order of Medtronic, Inc. ("Medtronic"),
or its registered assign ("Holder"), at 7000 Central Avenue N.E., Minneapolis,
Minnesota 55432, or such other address provided to EP MedSystems by written
notice from Holder, the principal sum of Three Million Two Hundred Thousand
Dollars ($3,200,000.00), or such lesser sum as is actually advanced and
outstanding from time to time, plus interest from and after the date hereof on
the unpaid principal balance outstanding from time to time at a rate, determined
as of the date hereof and adjusted monthly thereafter, equal to two percentage
points in excess of the prime rate in effect on the particular date of
determination, as quoted by Wells Fargo Bank Minnesota, N.A., Minneapolis,
Minnesota (calculated on the basis of the actual number of days elapsed and a
360-day year), upon the terms and conditions specified below.

      This Note is issued in connection with that certain Note Purchase
Agreement dated November 15, 2000, between Medtronic and EP MedSystems. Payment
of this Note is secured by a pledge of _______ shares of stock of _____________
owned by David A. Jenkins ("Jenkins") pursuant to a Stock Pledge Agreement among
Medtronic, EP MedSystems, and Jenkins of even date herewith.

      1. Payment. This Note shall be repaid in full on the date that is three
years after the date hereof, together with interest accrued to the date of such
payment.

      2. Prepayment. EP MedSystems may at any time, at its option upon at least
five business days' written notice to the Holder, prepay this Note in whole or
in part without premium. In the event EP MedSystems shall give notice of any
such prepayment, such notice shall specify the principal amount to be prepaid
and the date of the proposed prepayment, and thereupon such principal amount,
together with accrued and unpaid interest thereon to the prepayment date, shall
become due and payable on the prepayment date.

      3. Event of Default. The entire principal amount outstanding shall, at the
option of Medtronic or Holder, become immediately due and payable upon the
occurrence of any of the following events, whether such occurrence shall be
voluntary or involuntary or be effected by operation of law or otherwise (an
"Event of Default"):

            (a) if any principal of or interest on this Note is not paid when
      due, and such nonpayment continues for 10 days; or

            (b) if EP MedSystems materially breaches any provision of the Note
      Purchase Agreement described above, and such default continues for a
      period of 30 days after notice thereof by Medtronic to EP MedSystems; or

                                       1
<PAGE>

            (c) if EP MedSystems or Jenkins materially breaches any provision of
      the Stock Pledge Agreement referred to above, and such default continues
      for a period of 30 days after notice thereof by Medtronic to EP MedSystems
      and Jenkins; or

            (d) if EP MedSystems materially breaches any provision of the
      agreements and instruments entered into with Fleet Bank, N.A. and/or such
      other or additional institutional lenders from which the Company may
      obtain financing from time to time, or receives notice of any such breach
      from any such lender, and either (i) such default continues for a period
      of 30 days after notice thereof by such lender to EP MedSystems or (ii)
      such lender accelerates all or any portion of EP MedSystems' indebtedness
      to such lender or forecloses or takes similar action with respect to any
      collateral securing any such indebtedness; or

            (e) if (i) any creditor of EP MedSystems commences any foreclosure,
      levy, attachment or other action or proceeding to enforce or collect a
      judgment owed by EP MedSystems; or (ii) EP MedSystems makes an assignment
      for the benefit of creditors; or any order, judgment, or decree is entered
      adjudicating EP MedSystems bankrupt or insolvent; or (iii) EP MedSystems
      petitions or applies to any tribunal for the appointment of a trustee,
      receiver, or liquidator of EP MedSystems, or commences any proceedings
      relating to EP MedSystems under any bankruptcy, reorganization,
      insolvency, dissolution, or liquidation law of any jurisdiction, whether
      now or hereafter in effect; or (iv) an order, judgment, or decree is
      entered appointing any such trustee, receiver, or liquidator, or approving
      the petition in any such proceedings, and such order, judgment, or decree
      remains unstayed and in effect for more than 30 days; or (v) any order,
      judgment, or decree is entered in any proceedings against EP MedSystems
      decreeing the dissolution of EP MedSystems and such order, judgment, or
      decree remains unstayed and in effect for more than 30 days.

EP MedSystems shall immediately notify Medtronic or Holder of the occurrence of
any Event of Default.

      4. Costs of Collection. Upon default under any provision of this Note, EP
MedSystems shall pay the costs, including reasonable attorneys' fees, of
Medtronic or Holder of this Note in the pursuit of Medtronic's or Holder's
remedies hereunder.

      5. Waiver of Notices. EP MedSystems hereby waives presentment, demand for
payment, notice of dishonor, and all other notices or demands in connection with
the delivery, acceptance, performance, default or endorsement of this Note. No
delay or failure on the part of Medtronic or Holder, or their respective agents
or representatives, to collect this Note or to exercise any power or right in
connection with its collection shall operate as a waiver thereof, and such
rights and powers shall be deemed continuous.

      6. Amendment. No amendment, modification or waiver of any provision of
this Note shall be effective unless the same shall be in writing and signed by
Medtronic or Holder.

      7. Governing Law. This Note shall be governed by, and interpreted and
construed in accordance with, the laws of the State of Minnesota, without
reference to the choice of law principles thereof.

                                       2
<PAGE>

      ACCORDINGLY, EP MedSystems has caused this Promissory Note to be signed by
its authorized officer as of the date stated above.

                                    EP MEDSYSTEMS, INC.

                                    By: /s/ David A. Jenkins
                                        --------------------------------------
                                           Its: President
                                                ------------------------------

                                       3

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