-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 AggVbSZeYf5OeXEvwoucBACc1NFEjMPa0KwpQzfl8f10sumkpvdnolkm2qxjxmlU
 6aoXNem7l6SkGkcwojZz/Q==

<SEC-DOCUMENT>0000891836-02-000253.txt : 20020513
<SEC-HEADER>0000891836-02-000253.hdr.sgml : 20020513
ACCESSION NUMBER:		0000891836-02-000253
CONFORMED SUBMISSION TYPE:	SC 13D
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		20020513

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			QUINTON CARDIOLOGY SYSTEMS INC
		CENTRAL INDEX KEY:			0001166409
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				943300396
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13D
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	005-78261
		FILM NUMBER:		02643465

	BUSINESS ADDRESS:	
		STREET 1:		3303 MONTE VILLA PKWY
		CITY:			BOTHELL
		STATE:			WA
		ZIP:			98021
		BUSINESS PHONE:		4254022000

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	QUINTON HOLDING CORP
		DATE OF NAME CHANGE:	20020201

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KONINKLIJKE PHILIPS ELECTRONICS NV
		CENTRAL INDEX KEY:			0000313216
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600]
		STATE OF INCORPORATION:			P7
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SC 13D

	BUSINESS ADDRESS:	
		STREET 1:		REMBRANDT TOWER AMSTELPLEIN 1
		STREET 2:		1096 HA AMSTERDAM
		CITY:			THE NETHERLANDS
		BUSINESS PHONE:		0113140791

	MAIL ADDRESS:	
		STREET 1:		REMBRANDT TOWER AMSTELPLEIN 1
		STREET 2:		1096 HA AMSTERDAM
		CITY:			THE NETHERLANDS

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILIPS NV
		DATE OF NAME CHANGE:	19910903

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILIPS ELECTRONICS N V
		DATE OF NAME CHANGE:	19930727
</SEC-HEADER>
<DOCUMENT>
<TYPE>SC 13D
<SEQUENCE>1
<FILENAME>sc0125-02.txt
<DESCRIPTION>SCHEDULE 13D
<TEXT>
                                                           OMB APPROVAL
                                                 -------------------------------
                                                 OMB Number:           3235-0145
                                                 Expires:       October 31, 2002
                                                 Estimated average burden
                                                 hours per response........14.90
                                                 -------------------------------

                                   UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  SCHEDULE 13D
                    UNDER THE SECURITIES EXCHANGE ACT OF 1934
                         (AMENDMENT NO. ______________)*

                        Quinton Cardiology Systems, Inc.
- --------------------------------------------------------------------------------
                                (Name of Issuer)

                         Common Stock, without par value
- --------------------------------------------------------------------------------
                         (Title of Class of Securities)

                                   748773 10 8
- --------------------------------------------------------------------------------
                                 (CUSIP Number)

                                 Belinda W. Chew
                  Philips Electronics North America Corporation
                           1251 Avenue of the Americas
                            New York, New York 10020
- --------------------------------------------------------------------------------
           (Name, Address and Telephone Number of Person Authorized to
                       Receive Notices and Communications)

                                  May 10, 2002
- --------------------------------------------------------------------------------
             (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box |_|.

NOTE:  Schedules  filed in paper format shall include a signed original and five
copies of the  schedule,  including all  exhibits.  See ss.  240.13d-7 for other
parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).


     PERSONS WHO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM
     ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY  VALID OMB
     CONTROL NUMBER.


SEC 1746 (03-00)

<PAGE>

                                  SCHEDULE 13D
- ----------------------                                   -----------------------
CUSIP NO. 748773 10 8                                       PAGE 2 of 25 PAGES
- ----------------------                                   -----------------------
- --------------------------------------------------------------------------------
 1.  NAME OF REPORTING PERSONS.
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
          Koninklijke Philips Electronics N.V.
- --------------------------------------------------------------------------------
 2.  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
                                                                        (a)  [X]
                                                                        (b)  [ ]
- --------------------------------------------------------------------------------
 3.  SEC USE ONLY

- --------------------------------------------------------------------------------
 4.  SOURCE OF FUNDS (SEE INSTRUCTIONS)
          WC
- --------------------------------------------------------------------------------
 5.  CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
     ITEMS 2(d) OR 2(e)                                                      [ ]
- --------------------------------------------------------------------------------
 6.  CITIZENSHIP OR PLACE OF ORGANIZATION
          The Netherlands
- --------------------------------------------------------------------------------
                 7.  SOLE VOTING POWER
  NUMBER OF              0
    SHARES       ---------------------------------------------------------------
BENEFICIALLY     8.  SHARED VOTING POWER
  OWNED BY               6,246,212
    EACH         ---------------------------------------------------------------
 REPORTING       9.  SOLE DISPOSITIVE POWER
   PERSON                1,189,997
    WITH         ---------------------------------------------------------------
                 10. SHARED DISPOSITIVE POWER
                         0
- --------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
          6,246,212
- --------------------------------------------------------------------------------
12.  CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
     (SEE INSTRUCTIONS)                                                      [ ]
- --------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
          55.2%
- --------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
          CO/HC
- --------------------------------------------------------------------------------

<PAGE>

                                  SCHEDULE 13D
- ----------------------                                   -----------------------
CUSIP NO. 748773 10 8                                       PAGE 3 of 25 PAGES
- ----------------------                                   -----------------------
- --------------------------------------------------------------------------------
 1.  NAME OF REPORTING PERSONS.
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
          Philips Holding USA Inc.
- --------------------------------------------------------------------------------
 2.  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
                                                                        (a)  [X]
                                                                        (b)  [ ]
- --------------------------------------------------------------------------------
 3.  SEC USE ONLY

- --------------------------------------------------------------------------------
 4.  SOURCE OF FUNDS (SEE INSTRUCTIONS)
          AF
- --------------------------------------------------------------------------------
 5.  CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
     ITEMS 2(d) OR 2(e)                                                      [ ]
- --------------------------------------------------------------------------------
 6.  CITIZENSHIP OR PLACE OF ORGANIZATION
          Delaware
- --------------------------------------------------------------------------------
                 7.  SOLE VOTING POWER
  NUMBER OF              0
    SHARES       ---------------------------------------------------------------
BENEFICIALLY     8.  SHARED VOTING POWER
  OWNED BY               6,246,212
    EACH         ---------------------------------------------------------------
 REPORTING       9.  SOLE DISPOSITIVE POWER
   PERSON                1,189,997
    WITH         ---------------------------------------------------------------
                 10. SHARED DISPOSITIVE POWER
                         0
- --------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
          6,246,212
- --------------------------------------------------------------------------------
12.  CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
     (SEE INSTRUCTIONS)                                                      [ ]
- --------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
          55.2%
- --------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
          CO
- --------------------------------------------------------------------------------

<PAGE>

                                  SCHEDULE 13D
- ----------------------                                   -----------------------
CUSIP NO. 748773 10 8                                       PAGE 4 of 25 PAGES
- ----------------------                                   -----------------------
- --------------------------------------------------------------------------------
 1.  NAME OF REPORTING PERSONS.
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
          Philips Electronics North America Corporation
- --------------------------------------------------------------------------------
 2.  CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
                                                                        (a)  [X]
                                                                        (b)  [ ]
- --------------------------------------------------------------------------------
 3.  SEC USE ONLY

- --------------------------------------------------------------------------------
 4.  SOURCE OF FUNDS (SEE INSTRUCTIONS)
          AF
- --------------------------------------------------------------------------------
 5.  CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
     ITEMS 2(d) OR 2(e)                                                      [ ]
- --------------------------------------------------------------------------------
 6.  CITIZENSHIP OR PLACE OF ORGANIZATION
          Delaware
- --------------------------------------------------------------------------------
                 7.  SOLE VOTING POWER
  NUMBER OF              0
    SHARES       ---------------------------------------------------------------
BENEFICIALLY     8.  SHARED VOTING POWER
  OWNED BY               6,246,212
    EACH         ---------------------------------------------------------------
 REPORTING       9.  SOLE DISPOSITIVE POWER
   PERSON                1,189,997
    WITH         ---------------------------------------------------------------
                 10. SHARED DISPOSITIVE POWER
                         0
- --------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
          6,246,212
- --------------------------------------------------------------------------------
12.  CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
     (SEE INSTRUCTIONS)                                                      [ ]
- --------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
          55.2%
- --------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
          CO
- --------------------------------------------------------------------------------

<PAGE>

CUSIP Number: 748773 10 8                                           Page 5 of 25


ITEM 1.  SECURITY AND ISSUER

         The class of equity securities to which this statement relates is the
shares of Common Stock, without par value (the "Shares"), of Quinton Cardiology
Systems, Inc. (formerly QIC Holding Corp.), a California corporation
("Quinton"). The principal executive office of Quinton is located at 3303 Monte
Villa Parkway, Bothell, Washington 98021.


ITEM 2.  IDENTITY AND BACKGROUND

         (a) This statement is being filed by Koninklijke Philips Electronics
N.V.("KPENV"), Philips Holding USA Inc. ("PHUSA"), and Philips Electronics North
America Corporation, ("PENAC" and, collectively with KPENV and PHUSA, the
"Reporting Persons"). PENAC is a wholly owned subsidiary of PHUSA, which, in
turn, is a wholly owned subsidiary of KPENV.

         As a result of the Shareholders Agreement, dated as of August 1, 2001
(the "Shareholders Agreement"), by and among W.R. Hambrecht/QIC, LLC, a
California limited liability company ("WRH"), W.R. Hambrecht/QIC Management,
LLC, a California limited liability company ("WRH Management"), and PENAC,
attached hereto as Exhibit 1 and incorporated herein by reference, the Reporting
Persons believe that they, WRH and certain individuals and entities related to
WRH (the "WRH Group") may be deemed to constitute a "group" for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934 and Rule 13d-5(b)(1)
promulgated thereunder. Information about the WRH Group is disclosed in
Quinton's Registration Statement on Form S-1 filed on February 22, 2002, (as
amended from time to time, the "Registration Statement") and the Form 3 filed by
WRH on May 2, 2002, relating to its beneficial interest in the Shares (as
amended from time to time and any other Securities Exchange Act of 1934 reports
filed by the WRH Group in connection with its investment in Quinton, the "WRH
Group Reports").

         Based upon the WRH Group Reports and the Registration Statement, the
Reporting Persons believe that WRH is the direct beneficial owner of 5,056,215
Shares. The Reporting Persons disclaim beneficial ownership of the Shares held
by WRH, and this statement shall not be construed as an admission that any of
the Reporting Persons is, for the purposes of Section 13(d) or 13(g)


<PAGE>

CUSIP Number: 748773 10 8                                           Page 6 of 25


of the Securities Exchange Act of 1934 or for any other purpose, the beneficial
owner of the Shares held by WRH.

         Zymed, Inc., a California corporation ("Zymed"), a wholly owned
subsidiary of PENAC which PENAC acquired in connection with the acquisition by
KPENV of the Healthcare Solutions Group of Agilent, which was consummated on
August 1, 2001, is a non-control member of WRH. Zymed disclaims beneficial
ownership of the Shares held by WRH, and this statement shall not be construed
as an admission that Zymed is, for the purposes of Section 13(d) or 13(g) of the
Securities Exchange Act of 1934 or for any other purpose, the beneficial owner
of the Shares held by WRH.

         Certain information concerning each director and executive officer of
(i) PENAC is set forth in Schedule I hereto and incorporated herein by reference
and (ii) KPENV is set forth in Schedule II hereto and incorporated herein by
reference.

         (b) The principal business address of KPENV is Breitner Center,
Amstelplein 2, 1096 BC Amsterdam, The Netherlands. The principal business
address of PHUSA and PENAC is 1251 Avenue of the Americas, New York, New York
10020.

         (c) The primary business of each of the Reporting Persons is the
manufacture and distribution of electronic and electrical products, systems and
equipment, as well as information technology services.

         (d) None of the Reporting Persons, or to the best knowledge and belief
of the Reporting Persons, any of the individuals listed on Schedule I or II has,
during the past five years, been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors).

         (e) None of the Reporting Persons, or to the best knowledge and belief
of the Reporting Persons, any of the individuals listed on Schedule I or II has,
during the past five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.


<PAGE>


CUSIP Number: 748773 10 8                                           Page 7 of 25


         (f) KPENV is a company incorporated under the laws of the Netherlands.
PHUSA and PENAC are Delaware corporations.

         This Item 2 is qualified in its entirety by reference to Schedules I
and II which are incorporated herein by reference.


ITEM 3.  SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

         Pursuant to the Asset Purchase Agreement, dated as of November 17,
2000, between Agilent Technologies, Inc., a Delaware corporation ("Agilent"),
and KPENV, and the Amendment and Supplemental Agreement, dated as of August 1,
2001, between Agilent and KPENV, on August 1, 2001, PENAC acquired 19 shares of
Class A Common Stock and 2,330,000 shares of Series A Preferred Stock of Quinton
for $4,000,000, the source of which funds was working capital. Each share of
Series A Preferred Stock was convertible into one share of Class A Common Stock
at the option of the holder, subject to certain adjustments.

         Pursuant to Article III(d)(3)(ff) of the Certificate of Amendment of
Articles of Incorporation of Quinton, dated June 2, 1998 (the "Certificate of
Amendment"), the holders of Series A Preferred Stock were entitled to receive
certificates of adjustment regarding certain anti-dilution adjustments upon the
grant of certain shares of Class A Common Stock or certain options to purchase
shares of Class A Common Stock under Quinton's 1998 Equity Incentive Plan. In
place of these certificates of adjustment PENAC was granted 287,977 additional,
uncertificated shares of Series A Preferred Stock, recorded on the books of
Quinton as of August 1, 2001.

         On April 5, 2002, pursuant to a 2.2-for-1 stock split and a
redesignation of the Class A Common Stock into Shares, the 19 shares of Class A
Common Stock held by PENAC were redesignated into 8 Shares.

         Assuming a 2.2-for-1 stock split and conversion of the Series A
Preferred Stock into Shares at the closing of the initial public offering
referred to in the Registration Statement, the 2,617,977 shares of Series A
Preferred Stock held by PENAC will be converted into 1,189,989 Shares.

         The Reporting Persons have not purchased or sold any securities of
Quinton in the last 60 days.


<PAGE>


CUSIP Number: 748773 10 8                                           Page 8 of 25


         None of the persons listed on Schedule I or II hereto has contributed
any funds or other consideration towards the purchase of the shares of Quinton
reported in this statement.

         Information about the WRH Group is disclosed in the Registration
Statement and the WRH Group Reports.


ITEM 4.  PURPOSE OF TRANSACTION

         1,059,098 Shares were acquired by the Reporting Persons in connection
with the Agilent Transaction and 130,899 shares were acquired as a result of
anti-diluation adjustments.

         Pursuant to a Letter Agreement, dated February 19, 2002 (the "Letter
Agreement"), by and among PENAC, KPENV and Agilent, attached hereto as Exhibit 2
and incorporated herein by reference, PENAC is a successor in interest to
Hewlett-Packard Company, a Delaware corporation ("HP"), in an Investors' Rights
Agreement, dated as of May 27, 1998 (the "Investors' Rights Agreement"), between
Quinton, WRH and HP (the "Investors' Rights Agreement"), attached hereto as
Exhibit 3 and incorporated herein by reference.

         Pursuant to the Investors' Rights Agreement, subject to certain
conditions and limitations set forth therein, WRH and PENAC may require Quinton
to use its best efforts to include their Shares in any registration by Quinton
of its Shares at Quinton's expense. These registration rights are subject to
conditions and limitations including that, if the registration is in connection
with an underwritten public offering, the holder is obligated to participate in
the underwriting and the underwriters have the right to exclude all or limit the
number of the holder's shares included in the registration statement. The
Investors' Rights Agreement also imposes certain restrictions on the transfer of
shares held by WRH and PENAC, and by any successors in interest to them,
including requiring any transferee to agree to be bound by the transfer
restrictions in the Investors' Rights Agreement and requiring either that an
effective registration statement cover the disposition or that Quinton be
notified of the disposition by the transferor and that the transfer not require
registration.

         Pursuant to the Shareholders Agreement, WRH has the right to designate
up to three nominees to the board of directors of Quinton and WRH and PENAC (the
"Holders") are required to vote their shares in Quinton in favor of those
nominees. PENAC and

<PAGE>


CUSIP Number: 748773 10 8                                           Page 9 of 25


Zymed each have the right to designate one nominee to Quinton's board of
directors and the Holders are required to vote their shares in Quinton in favor
of those nominees. Neither PENAC nor Zymed has exercised its right to designate
a nominee for election to Quinton's board or indicated whether it intends in the
future to designate a nominee to the board. The Shareholders Agreement also
states that the board of directors of Quinton shall consist of five members and
prohibits an increase in the number of directors of Quinton above seven without
the consent of PENAC. In addition, if WRH or any of its members transfers
control of Quinton or WRH to any transferee that will own more than 50% of
Quinton's outstanding voting stock or more than 50% of the membership units of
WRH, PENAC has the right to sell the shares in Quinton that it holds on the same
terms to such transferee. Shares held by WRH and PENAC cannot be encumbered as
security for debt, and transferees of shares owned by WRH or PENAC must agree to
be bound by the Shareholders Agreement as a condition to transfer. The
Shareholders Agreement also provides that the unanimous written consent of
Quinton's board of directors is required with respect to the payment of
compensation to any of Quinton's employees, consultants or board members who is
an employee, consultant, director or manager of WRH or WRH LLC or any entity
controlled by either of them or which controls either of them, or an employee,
consultant or director of PENAC or Zymed unless such individual is one of
Quinton's full time employees. The Shareholders Agreement can only be terminated
with the consent of the parties thereto.

         In March, 1999, Quinton, Inc. ("QIC"), a Washington corporation and a
wholly owned subsidiary of Quinton, formerly known as Quinton Instrument
Company, Quinton signed an Original Equipment Manufacturer and Distributor
Agreement (the "OEM Agreement") with Zymed, effective as of July 1998, providing
for the purchase of certain Holter monitoring items, and appointed QIC the
exclusive distributor of such products in the United States and Canada for a
period of five years. The OEM Agreement is attached hereto as Exhibit 4 and
incorporated herein by reference. According to the Registration Statement, the
products supplied under this agreement represented a significant portion of
Quinton's revenues, approximately 8% in 1999, 12% in 2000 and 3% in 2001. In the
third quarter of 2000, Zymed terminated the OEM Agreement because the parties
failed to agree on pricing and volume requirements as set forth in the OEM
Agreement. This notice of termination provided for a 180 day notice period that
expired in February 2001. QIC disputed this notice of termination and in


<PAGE>


CUSIP Number: 748773 10 8                                          Page 10 of 25


November 2000 initiated a lawsuit in the United States District court for the
Western District of Washington against Zymed, Agilent and HP, seeking damages
against the defendants for harm to its business resulting from Zymed's
termination of the OEM Agreement. QIC is seeking monetary damages and other
remedies available under the law. On April 8, 2002, the court entered an order
dismissing all of QIC's claims other than the claims related to breach of
contract. The trial date, originally scheduled for late April 2002, has been set
for September 18, 2002.

         The Reporting Persons believe that the claims QIC has made in
connection with the lawsuit are wholly without merit, and they are cooperating
in a vigorous defense of such claims. Regardless of the underlying merit of such
claims, however, the Reporting Persons and/or their respective subsidiaries may
from time to time engage in mediation, arbitration and/or negotiations with
Quinton and QIC with a view to resolving such claims. Any such mediation,
arbitration and/or negotiations may or may not include discussions concerning --
and any resolution of such claims may or may not include -- the acquisition or
disposition by the Reporting Persons of Shares or other securities of Quinton,
the sale or transfer of cash or other assets of Quinton and/or its subsidiaries,
the amendment, modification and/or termination of the Investors Rights Agreement
and/or the Shareholders Agreement, and/or extraordinary corporate transactions.
None of the Reporting Persons, Quinton or QIC is under any obligation to agree
to any resolution or settlement of the litigation.

         Information about the WRH Group is disclosed in the Registration
Statement the WRH Group Reports.

         The foregoing discussion is qualified in its entirety by reference to
the Letter Agreement, the Investors' Rights Agreement, the Shareholders
Agreement and the OEM Agreement.

         Other than as set forth herein, none of the Reporting Persons, or to
the best knowledge and belief of the Reporting Persons, any of the individuals
listed on Schedule I or II, has plans or proposals which relate to or would
result in any of the events described by Items 4(a) through 4(j) of Schedule
13D. Each Reporting Person expects to evaluate on an ongoing basis Quinton's
financial condition, business operations and prospects, market price of the
Shares of Quinton, conditions in securities markets generally, general economic
and industry conditions and


<PAGE>


CUSIP Number: 748773 10 8                                          Page 11 of 25


other factors. Accordingly, each Reporting Person reserves the right to change
its plans and intentions at any time, as it deems appropriate. In particular,
each Reporting Person may at any time and from time to time acquire additional
Shares of Quinton or securities convertible or exchangeable for Shares of
Quinton; may dispose of Shares of Quinton; and/or may enter into privately
negotiated derivative transactions with institutional counterparties to hedge
the market risk of some or all of its positions in such Shares. Any such
transactions may be effected at any time and from time to time subject to any
applicable limitations of the Securities Act and the contractual restrictions
described herein. To the knowledge of each Reporting Person, each of the persons
listed on Schedules I and II hereto may make the same evaluation and reserves
the same rights.


ITEM 5.  INTEREST IN SECURITIES OF THE ISSUER

         (a) The percentage interest, after giving effect to the transactions
described in the Registration Statement, held by each Reporting Person presented
below is based on the number of Shares of Quinton reported in the Registration
Statement to be outstanding as of May 10, 2002 (the "Outstanding Shares").

         PENAC is the direct beneficial owner of 1,189,997 Shares of Quinton,
representing approximately 11.0% of the Outstanding Shares. By virtue of the
Shareholders Agreement, PENAC may be deemed to share voting power and beneficial
ownership in the 5,056,215 Shares beneficially owned by WRH, according to the
Registration Statement, or approximately 44.7% of the Outstanding Shares. PENAC
disclaims beneficial ownership of the Shares held by WRH, and this statement
shall not be construed as an admission that PENAC is, for the purposes of
Section 13(d) or 13(g) of the Securities Exchange Act of 1934 or for any other
purpose, the beneficial owner of the Shares held by WRH.

         PHUSA may be deemed to beneficially own 1,189,997 Shares of Quinton,
representing approximately 11.0% of the Outstanding Shares. By virtue of the
Shareholders Agreement, PHUSA may be deemed to share voting power and beneficial
ownership in the 5,056,215 Shares beneficially owned by WRH, according to the
Registration Statement, or approximately 44.7% of the Outstanding Shares. PHUSA
disclaims beneficial ownership

<PAGE>


CUSIP Number: 748773 10 8                                          Page 12 of 25


of the Shares held by WRH, and this statement shall not be construed as an
admission that PHUSA is, for the purposes of Section 13(d) or 13(g) of the
Securities Exchange Act of 1934 or for any other purpose, the beneficial owner
of the Shares held by WRH.

         KPENV may be deemed to beneficially own 1,189,997 Shares of Quinton,
representing approximately 11.0% of the Outstanding Shares. By virtue of the
Shareholders Agreement, KPENV may be deemed to share voting power and beneficial
ownership in the 5,056,215 Shares beneficially owned by WRH, according to the
Registration Statement, or approximately 44.7% of the Outstanding Shares. KPENV
disclaims beneficial ownership of the Shares held by WRH, and this statement
shall not be construed as an admission that KPENV is, for the purposes of
Section 13(d) or 13(g) of the Securities Exchange Act of 1934 or for any other
purpose, the beneficial owner of the Shares held by WRH.

         None of the Reporting Persons, and to the best knowledge and belief of
the Reporting Persons, none of the persons listed on Schedules I and II hereto,
beneficially owns any Shares of Quinton other than as set forth herein.

         (b) Each Reporting Person has the power to vote or direct the vote and
dispose or direct the disposition of the Shares beneficially owned by such
Reporting Persons as indicated in pages 2 through 4.

         (c) Assuming a 2.2-for-1 stock split and conversion of the Series A
Preferred Stock at the closing of the initial public offering referred to in the
Registration Statement, the 2,617,977 shares of Series A Preferred Stock held by
PENAC will be converted into 1,189,989 Shares.

         (d) No other person has the right to receive or the power to direct the
receipt of dividends from or proceeds from the sale of Shares.

         (e) Not Applicable.

         Information about the WRH Group is disclosed in the Registration
Statement the WRH Group Reports.


<PAGE>

CUSIP Number: 748773 10 8                                          Page 13 of 25


         The foregoing discussion is qualified in its entirety by reference to
the Letter Agreement, the Investors' Rights Agreement and the Shareholders
Agreement, each of which is included as an exhibit to this Schedule 13D.


ITEM 6.  CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
         WITH RESPECT TO SECURITIES OF THE ISSUER

         There are no contracts, arrangements, understandings or relationships
between the Reporting Persons (or their wholly owned subsidiaries), and to the
best knowledge and belief of the Reporting Persons, none of the persons listed
on Schedules I and II hereto, and other persons with respect to the Shares of
Quinton aside from:

         Pursuant to the Letter Agreement, PENAC is a successor in interest to
HP in an Investors' Rights Agreement. Pursuant to the Investors' Rights
Agreement, and subject to conditions and limitations, WRH and PENAC may require
Quinton to use its best efforts to include their Shares in any registration by
Quinton of its Shares at Quinton's expense. These registration rights are
subject to conditions and limitations including, if the registration is in
connection with an underwritten public offering, the holder's obligation to
participate in the underwriting and the right of the underwriters to exclude all
or limit the number of shares included in the registration statement. The
Investors' Rights Agreement also imposes restrictions on the transfer of shares
held by WRH and PENAC, and by any successors in interest to them, including
requiring any transferee to agree to be bound by Section 2 of the Investors'
Rights Agreement (which section contains the restrictions on transfer) and
requiring either that an effective registration statement cover the disposition
or that Quinton be notified of the disposition by the transferor and that the
transfer not require registration.

         PENAC is party to the Shareholders Agreement which provides that WRH
has the right to designate up to three nominees to the board of directors of
Quinton and PENAC is required to vote its shares in Quinton in favor of those
nominees. PENAC and Zymed each have the right to designate one nominee to
Quinton's board of directors and WRH is required to vote its shares in Quinton
in favor of those nominees. PENAC has not exercised its right to designate these
nominees for election to Quinton's board

<PAGE>

CUSIP Number: 748773 10 8                                          Page 14 of 25


or indicated whether it intends in the future to designate any nominees to the
board. The Shareholders Agreement also prohibits an increase in the number of
directors of Quinton above seven without the consent of PENAC. In addition, if
WRH or any of its members transfers control of Quinton or WRH to any transferee
that will own more than 50% of Quinton's outstanding voting stock or more than
50% of the membership units of WRH, PENAC has the right to sell the shares in
Quinton that it holds on the same terms to such transferee. Shares held by WRH
and PENAC cannot be encumbered as security for debt, and transferees of shares
owned by WRH or PENAC must agree to be bound by the Shareholders Agreement as a
condition to transfer. The Shareholders Agreement also provides that the
unanimous written consent of Quinton's board of directors is required with
respect to the payment of compensation to any of Quinton's employees,
consultants or board members who is an employee, consultant, director or manager
of WRH or WRH LLC or any entity controlled by either of them or which controls
either of them, or an employee, consultant or director of PENAC or Zymed unless
such individual is one of Quinton's full time employees. The Shareholders
Agreement can only be terminated with the consent of the parties to the
Shareholders Agreement.

         Information about the WRH Group is disclosed in the Registration
Statement the WRH Group Reports.

         The foregoing discussion is qualified in its entirety by reference to
the Letter Agreement, the Investors' Rights Agreement, the Shareholders
Agreement and the OEM Agreement, each of which is incorporated herein by
reference.

ITEM 7.  MATERIAL TO BE FILED AS EXHIBITS


Exhibit No.    Exhibit Description
- -----------    -----------------------

1.             Shareholders Agreement, dated as of August 1, 2001, by and among
               WRH, WRH Management and PENAC

2.             Letter Agreement, dated February 19, 2002, by and among PENAC,
               KPENV and Agilent

3.             Investors' Rights Agreement, dated as of May 27, 1998, between
               Quinton, WRH and HP


<PAGE>


CUSIP Number: 748773 10 8                                          Page 15 of 25


4.             Original Equipment Manufacturer and Distributor Agreement,
               effective as of July 1, 1998, between QIC and Zymed

5.             Joint Filing Agreement




<PAGE>

CUSIP Number: 748773 10 8                                          Page 16 of 25



                                   SIGNATURES

         After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.

Dated:  May 13, 2002
                                            KONINKLIJKE PHILIPS ELECTRONICS N.V.


                                            By:  /s/ A. Westerlaken
                                                --------------------------------
                                                Name:  A. Westerlaken
                                                Title: Senior Vice President and
                                                       General Secretary


                                           PHILIPS HOLDING USA INC.


                                            By:  /s/ Belinda W. Chew
                                                --------------------------------
                                                Name: Belinda W. Chew
                                                Title: Senior Vice President


                                            PHILIPS ELECTRONICS NORTH AMERICA
                                              CORPORATION


                                            By:  /s/ Belinda W. Chew
                                                --------------------------------
                                                Name: Belinda W. Chew
                                                Title: Senior Vice President


<PAGE>


CUSIP Number: 748773 10 8                                          Page 17 of 25



                                   SCHEDULE I

         Name, Business Address, Principal Occupation or Employment and
Citizenship of all Directors and Executive Officers of Philips Electronics North
America Corporation. Each person listed below is not employed, other than by
Philips Electronics North America Corporation, and thus no employer, employer's
address or principal place of business of employer is listed.


Name:                                       William E. Curran
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Director, President and Chief
                                            Executive Officer.
Citizenship:                                United States


Name:                                       Martha Lee
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Senior Vice President and Chief
                                            Financial Officer.
Citizenship:                                United States


Name:                                       Kevin W. Doran
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Senior Vice President.
Citizenship:                                United States


Name:                                       Belinda W. Chew
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020

<PAGE>


CUSIP Number: 748773 10 8                                          Page 18 of 25


Principal Occupation:                       Director, Senior Vice President,
                                            General Counsel and Secretary.
Citizenship:                                United States


Name:                                       Thomas B. Patton
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Vice President.
Citizenship:                                United States


Name:                                       Robert N. Smith
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Vice President.
Citizenship:                                United States


Name:                                       Raymond C. Fleming
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Treasurer and Controller.
Citizenship:                                United States


Name:                                       Warren T. Oates, Jr.
Business Address:                           Philips Electronics North America
                                            Corporation
                                            1251 Avenue of the Americas
                                            New York, New York 10020
Principal Occupation:                       Assistant Secretary.
Citizenship:                                United States


Name:                                       Thomas M. Hafner
Business Address:                           Philips Electronics North America
                                            Corporation
                                            64 Perimeter Center East
                                            Atlanta, Georgia 30346

<PAGE>


CUSIP Number: 748773 10 8                                          Page 19 of 25



Principal Occupation:                       Attesting Secretary (Appointed).
Citizenship:                                United States


Name:                                       Jack E. Haken
Business Address:                           Philips Electronics North America
                                            Corporation
                                            580 White Plains Road
                                            Tarrytown, New York 10591
Principal Occupation:                       Attesting Secretary (Appointed).
Citizenship:                                United States


Name:                                       Michael E. Marion
Business Address:                           Philips Electronics North America
                                            Corporation
                                            580 White Plains Road
                                            Tarrytown, New York 10591
Principal Occupation:                       Attesting Secretary (Appointed).
Citizenship:                                United States



<PAGE>




CUSIP Number: 748773 10 8                                          Page 20 of 25



                                   SCHEDULE II

         Name, Business Address, Principal Occupation or Employment and
Citizenship of:


A. All Members of the Supervisory Board of Koninklijke Philips Electronics N.V.


         Unless otherwise indicated each person listed below is not employed,
other than as a member of the Supervisory Board, and thus no employer,
employer's address or principal place of business of employer is listed.


Name:                      Prof. K.A.L.M. van Miert
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      President of Nyenrode University.
                           Member of the Supervisory Boards of
                           Wolters Kluwer, RWE, DHV, Agfa Gevaert
                           and De Persgroep.  Member of the
                           advisory boards of Goldman Sachs,
                           Rabobank, Guidant Europe and Eli Lily.
Employer:                  Nyenrode University
Employer's Address:        Straatweg 25
                           3621 BG Breukelen
                           The Netherlands
Citizenship:               Belgium



Name:                      L.C. van Wachem
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Retired. Chairman of the Supervisory
                           Board of Royal Dutch Petroleum
                           Company. Member of the Supervisory
                           Boards of Akzo Nobel, BMW and Bayer.
                           Member of the Board of Directors of
                           IBM, ATC and Zurich Financial
                           Services.
Citizenship:               The Netherlands


<PAGE>

CUSIP Number: 748773 10 8                                          Page 21 of 25


Name:                      L. Schweitzer
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Chairman and Chief Executive Officer
                           of Renault. Member of the Boards of
                           Banque Nationale de Paris,
                           Electricite de France and Volvo.
Employer:                  La regie nationale des usines Renault
Employer's Address:        34 Quai du Point du Jour
                           BP 103 92109
                           Boulogne Bilancourt
                           Cedex, France
Principal Business
  of Employer:             Design, manufacture and sale of
                           automobiles and related businesses
Citizenship:               France


Name:                      Sir Richard Greenbury
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Retired. Member of the Board of
                           Electronics Boutique Plc.
Citizenship:               United Kingdom


Name:                      W. de Kleuver
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Retired.  Member of the Supervisory Board of HBG.
Citizenship:               The Netherlands


Name:                      J-M. Hessels
Business Address:          Royal Philips Electronics
                           Rembrandt Tower

<PAGE>

CUSIP Number: 748773 10 8                                          Page 22 of 25


                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Chairman of the Supervisory Board of
                           Euronext. Member of the Supervisory
                           Boards of Laurus, Schiphol Group,
                           Royal Vopak, Heineken and Fortis.
Citizenship:               The Netherlands


B. Board of Management and Group Management Committee of Royal Philips
Electronics


         Unless otherwise indicated, all of the members of the Board of
Management and Group Management Committee are employed by Royal Philips
Electronics at Rembrandt Tower, Amstelplein 1, 1096 HA Amsterdam, The
Netherlands, whose principal business is the manufacture and distribution of
electronic and electrical products, systems and equipment.


Name:                      Gerard J. Kleisterlee
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      President and Chief Executive
                           Officer of Royal Philips
                           Electronics.
Citizenship:               The Netherlands


Name:                      Jan H.M. Hommen
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Executive Vice-President and Chief
                           Financial Officer of Royal Philips
                           Electronics. Member of the
                           Supervisory Board of Atos Origin
                           S.A.
Citizenship:               The Netherlands


Name:                      Arthur van der Poel
Business Address:          Royal Philips Electronics
                           Rembrandt Tower

<PAGE>

CUSIP Number: 748773 10 8                                          Page 23 of 25



                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Executive Vice-President of Royal
                           Philips Electronics. Member of the
                           Board of Directors of Taiwan
                           Semiconductor Manufacturing Company
                           Ltd.
Citizenship:               The Netherlands


Name:                      Ad Huijser
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Executive Vice-President and Chief
                           Technology Officer of Royal Philips
                           Electronics.
Citizenship:               The Netherlands


Name:                      Gottfried H. Dutine
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Executive Vice-President of
                           Royal Philips Electronics.
Citizenship:               Germany


Name:                      Ad H.A. Veenhof
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and
                           President/CEO of the Domestic
                           Appliances and Personal Care
                           division, of Royal Philips
                           Electronics.
Citizenship:               The Netherlands


Name:                      Hans M. Barella
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and
                           President/CEO of the Medical Systems
                           division, of Royal Philips
                           Electronics.
Citizenship:               The Netherlands


Name:                      Jan Oosterveld
Business Address:          Royal Philips Electronics
                           Rembrandt Tower

<PAGE>

CUSIP Number: 748773 10 8                                          Page 24 of 25


                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President of Royal
                           Philips Electronics. Member of the
                           Board of Directors of Tivo Inc.
Citizenship:               The Netherlands


Name:                      Arie Westerlaken
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, General
                           Secretary, Chief Legal Officer and
                           Secretary to the Board of
                           Management, of Royal Philips
                           Electronics. Member of the
                           Supervisory Board of Atos
                           Origin S.A.
Citizenship:               The Netherlands

Name:                      David Hamill
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and
                           President/CEO of the Lighting
                           division, of Royal Philips
                           Electronics.
Citizenship:               United Kingdom


Name:                      Guy J.M. Demuynck
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and CEO of
                           the Consumer Electronics Mainstream
                           division, of Royal Philips
                           Electronics.
Citizenship:               Belgium


Name:                      Tjerk Hooghiemstra
Business Address:          Royal Philips Electronics



<PAGE>

CUSIP Number: 748773 10 8                                          Page 25 of 25


                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President of Royal
                           Philips Electronics.
Citizenship:               The Netherlands



Name:                      Matt T. Medeiros
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and
                           President/CEO of the Components
                           division, of Royal Philips
                           Electronics.
Citizenship:               United States



Name:                      Scott McGregor
Business Address:          Royal Philips Electronics
                           Rembrandt Tower
                           Amstelplein 1
                           1096 HA Amsterdam, The Netherlands
Principal Occupation:      Senior Vice-President, and
                           President/CEO of the Semiconductors
                           division, of Royal Philips
                           Electronics.
Citizenship:               United States


<PAGE>


                                LIST OF EXHIBITS

Exhibit No.         Exhibit Description
- -----------         -------------------

10.1                Shareholders Agreement, dated as of August 1, 2001, by and
                    among WRH, WRH Management and PENAC

10.2                Letter Agreement, dated February 19, 2002, by and among
                    PENAC, KPNV and Agilent

10.3                Investors' Rights Agreement, dated as of May 27, 1998, by
                    and between Quinton, WRH and HP

10.4                Original Equipment Manufacturer and Distributor Agreement,
                    effective as of July 1, 1998, by and between Zymed and QIC

99.1                Joint Filing Agreement

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>ex-10_1.txt
<DESCRIPTION>SHAREHOLDERS AGREEMENT
<TEXT>
                                  Exhibit 10.1

                             SHAREHOLDERS AGREEMENT


         This  Shareholders  Agreement (the "Agreement") is made as of August 1,
2001,  by and among W.R.  Hambrecht/QIC,  LLC, a  California  limited  liability
company ("WRH/QIC"),  Philips Electronics North America Corporation,  a Delaware
corporation ("PENAC") (collectively, the "Shareholders"), and W.R. Hambrecht/QIC
Management,  LLC, a California  limited liability  company (the "Manager"),  and
such other  persons who  execute  this  Agreement  from time to time and thereby
agree to be bound by this Agreement as Shareholders.

                                    RECITALS

A. Each of the  Shareholders  is now or may become the owner of shares of voting
stock of QIC Holding  Corp.,  a California  corporation,  or any successor  (the
"Holding Company").


B. As a material  inducement  to the  purchase  by WRH/QIC  and  Hewlett-Packard
Company,  a  Delaware  corporation  ("HP"),  of their  respective  shares in the
Holding  Company,  WRH/QIC,  HP and  the  Manager  entered  into a  Shareholders
Agreement,  dated as of May 27, 1998 (the  "Original  Shareholders  Agreement"),
with  respect to the voting and  transfer of the shares in the  Holding  Company
held by WRH/QIC and HP,  including  any other  shares of the  Holding  Company's
capital stock which might  thereafter be owned by WRH/QIC and HP (the "Shares"),
for the purpose of  protecting  WRH/QIC and HP, as well as providing  continuity
for the Holding  Company's  business in the event of the  occurrence  of certain
events discussed in the Original Shareholders Agreement.

C. WRH/QIC is organized  under the terms of an Operating  Agreement  dated as of
April 22, 1998 (the  "Operating  Agreement").  As a material  inducement  to the
purchase  by HP of its shares in the  Holding  Company,  the  members of WRH/QIC
agreed  pursuant  to the terms of the  Operating  Agreement  to  restrict  their
ability to  transfer  their  interests  in WRH/QIC in any manner  which would be
inconsistent  with or in  violation  of the  terms of the  Original  Shareholder
Agreement and the Manager agreed to enforce such restrictions.

D. On  August  12,  1999,  HP and  Agilent  Technologies,  Inc.,  at that time a
wholly-owned subsidiary of HP ("Agilent"),  entered into a Master Separation and
Distribution  Agreement  under  which HP  transferred  to  Agilent,  pursuant to
Section 2.6 of the Original  Shareholders  Agreement,  its shares in the Holding
Company.

E. On November  17,  2000,  Agilent and  Koninklijke  Philips  Electronics  N.V.
("KPNV"),  entered into an Asset Purchase  Agreement which,  among other things,
provided  for the  transfer  by  Agilent  to KPNV  or one of its  affiliates  of
Agilent's shares in the Holding  Company.  In accordance with Section 2.3 of the
Original Shareholders  Agreement,  Agilent provided WRH/QIC with a First Refusal
Notice of the anticipated transfer and WRH/QIC declined to exercise the right of
first refusal related thereto.

F. PENAC is an indirect, wholly-owned subsidiary of KPNV.

G To complete the transfer of shares from  Agilent to PENAC in  accordance  with
Section 7 of the Original Shareholder Agreement, WRH/QIC and PENAC now desire to
enter into this Shareholders Agreement.

                  NOW, THEREFORE, the Shareholders agree as follows:

1.  COMPOSITION  OF BOARD OF  DIRECTORS.  The Board of  Directors of the Holding
Company shall consist of five (5) members.  Each of the Shareholders  shall vote
all of its shares now or hereafter  owned by it so that each of the following is
elected as a director of the Holding Company: (i) three (3) nominees of WRH/QIC;

<PAGE>


(ii) one (1) nominee of PENAC; and (iii) one (1) nominee of Zymed,  Incorporated
("Zymed").  Prior to each election of directors of the Holding Company, WRH/QIC,
PENAC,  and Zymed shall  designate their  respective  nominees in writing to the
Holding  Company.  The Holding Company shall promptly notify the Shareholders of
these nominees.

         1.1 NUMBER OF DIRECTORS. The Shareholders agree that they will not vote
to increase the number of directors of the Holding Company beyond seven (7), nor
below five (5),  without the consent of PENAC,  which shall not be  unreasonably
withheld.

2.  RESTRICTION  ON CERTAIN  TRANSFERS  OF  CONTROL.  Except as provided in this
Agreement,  no Shareholder  shall  voluntarily  sell,  assign,  transfer,  give,
bequeath,  donate or  otherwise  dispose of, or pledge,  deposit,  or  otherwise
encumber, in any manner, any of the Shares.

         2.1 PENAC'S RIGHT OF FIRST REFUSAL.  Except as provided in Section 2.4,
neither the Holding Company,  the Operating  Company,  WRH/QIC nor any member of
WRH/QIC,  shall enter into any  transaction  (or series of  transactions)  which
would  constitute a Transfer of Control  Transaction (as  hereinafter  defined),
unless at least twenty (20) days prior to entering into any such transaction (or
series of related transactions) (hereinafter a "Proposed Transaction"), PENAC is
notified in writing by the Holding Company,  the Operating Company,  WRH/QIC, or
the member of WRH/QIC,  as the case may be (the  "Relevant  Seller(s)"),  of any
such Proposed  Transaction  (the "First Refusal  Notice") and is given the first
opportunity to enter into such Proposed  Transaction with the Relevant Seller(s)
(the "Right of First Refusal") in the manner  specified  below.  For purposes of
this Agreement, "Transfer of Control Transaction" shall mean (i) a sale or other
transfer of all or substantially all of the assets of Quinton Instrument Company
or any successor  (the  "Operating  Company") or the Holding  Company;  (ii) any
merger, consolidation, refinancing, or recapitalization that changes the control
of the  Operating  Company or Holding  Company;  (iii) one or more  transfers of
voting stock of the Holding  Company which taken alone or together result in any
entity  (including  any  "group"  within the  meaning  of  Section  13d-5 of the
Securities  Exchange  Act of 1934)  other  than  WRH/QIC  or any of the  initial
members of WRH/QIC (other than Zymed),  directly,  indirectly,  beneficially  or
otherwise  owning more than fifty percent (50%) of the outstanding  voting stock
of the Holding Company; or (iv) one or more transfers of membership interests in
WRH/QIC  (the  "Units"),  which  taken  alone or  together  result in any entity
(including  any  "group")  other than  WRH/QIC or any of the initial  members of
WRH/QIC  (other than Zymed),  directly,  indirectly,  beneficially  or otherwise
owning more than fifty percent (50%) of the Units of WRH/QIC.

                  2.1.1 FIRST REFUSAL  NOTICE.  The First  Refusal  Notice shall
specify  the  identity  of  the  potential  acquiror(s)  (the  "Acquiror"),  the
structure  of the  Proposed  Transaction,  the  interests  that would be sold or
otherwise  transferred,  the  price to be paid for such  interests,  the form of
consideration,  the terms of  payment  and the time  within  which the  Relevant
Seller(s)  proposes to enter into any  agreement  to  consummate  such  Proposed
Transaction, and all other material terms and conditions upon which the Relevant
Seller(s)  proposes to enter into the Proposed  Transaction  (the "First Refusal
Terms"),  subject to the customary  conditions.  The First Refusal  Notice shall
include  a  representation  from the party  providing  the  notice  that (i) the
Acquiror  has  entered  into a  non-binding  term  sheet  or  other  non-binding
preliminary  written  document  with the  Relevant  Seller(s)  to enter into the
Proposed  Transaction  on the First Refusal Terms;  (ii) to its  knowledge,  the
Acquiror is prepared to  consummate  the  Proposed  Transaction,  subject to the
satisfaction of customary conditions; (iii) the Relevant Seller(s) has no reason
to believe that the Acquiror will not be able to obtain adequate financing;  and
(iv) the  Relevant  Seller(s)  have a good  faith  intention  to enter  into the
Proposed Transaction,  subject to the satisfaction of customary  conditions,  on
the First Refusal Terms.

                  2.1.2  EXERCISE  OF OPTION.  The First  Refusal  Notice  shall
constitute an irrevocable offer to PENAC to enter into such Proposed Transaction
with the Relevant  Seller(s) on the First  Refusal  Terms or terms  specified by
PENAC which  include cash to the same extent as the First  Refusal Terms and are
in other respects  economically  equivalent (i.e., PENAC may pay cash in lieu of
stock or other  consideration) to the First Refusal Terms (the "PENAC Equivalent
Terms"). The Right of First Refusal shall be exercisable by notice from PENAC to
the Relevant  Seller(s) within twenty (20) days of receipt by PENAC of the First
Refusal  Notice (the  "Option  Period").  Such  notice from PENAC shall  specify
PENAC's Equivalent Terms, if any. If PENAC exercises the Right of First Refusal,
then the Relevant  Seller(s)  shall enter into such  Proposed  Transaction  with
PENAC on the First Refusal Terms,  or, if such terms are specified by PENAC,  on
PENAC's  Equivalent  Terms  and the  Holding  Company,  the  Operating  Company,
WRH/QIC,  and the  members of WRH/QIC  shall each use its best  efforts and take
necessary  actions to permit PENAC to complete the Proposed  Transaction  on the


                                       2

<PAGE>


First Refusal Terms. The closing of such Proposed  Transaction  shall take place
on the second  business  day after  PENAC and all other  relevant  parties  have
obtained  or  made  all  consents,  approvals,  orders,  licenses,  permits  and
authorizations  of,  and  registrations,  declarations  and  filings  with,  any
governmental  authority or any other  person  required to be obtained or made in
connection with the consummation of such Proposed  Transaction,  but not earlier
than twenty (20) days following the date PENAC gives notice exercising its Right
of First Refusal,  nor more than one-hundred and twenty (120) days from the date
of that notice.

                  2.1.3 EXPIRATION OF OPTION PERIOD.  If PENAC does not give the
Relevant Seller written notice of PENAC's desire to exercise this Right of First
Refusal within the Option Period, PENAC's Right of First Refusal shall terminate
and the Relevant Seller(s) may thereafter  consummate the Proposed  Transaction,
but only to the purchaser identified in the First Refusal Terms and on terms and
conditions not  substantially  less favorable to the Relevant  Seller than those
contained  in the Term  Sheet and  provided  that the sale  must be  consummated
within one hundred and twenty (120) days  following the expiration of the Option
Period.  For purposes  hereof,  a downward  adjustment of more than five percent
(5%) in the purchase price to be paid at closing for the Offered Shares shall be
deemed  substantially less favorable,  but a downward adjustment of five percent
(5%) or less shall not be deemed substantially less favorable.

                  2.1.4 TERMINATION ON INITIAL PUBLIC OFFERING. PENAC's Right of
First Refusal shall automatically terminate in the event of any firm commitment,
underwritten  initial public  offering of common stock of the Holding Company or
the  Operating  Company  (an  "IPO") at a price per share of at least  $2.00 (as
adjusted to reflect subsequent  combinations,  stock splits, stock dividends, or
other  recapitalizations)  and either (i) with  aggregate  proceeds  of at least
$10,000,000, or (ii) in an IPO where PENAC sells (or has the right to but elects
not to sell) shares of the Holding  Company or Operating  Company  which provide
aggregate proceeds to PENAC of at least $2,400,000.

         2.2 WRH/QIC RIGHT OF FIRST REFUSAL.  Except as provided in Section 2.4,
if PENAC desires to sell, assign,  transfer,  or otherwise dispose of any of its
shares of the Holding Company,  PENAC shall provide WRH/QIC with a First Refusal
Notice at least  twenty (20) days prior to entering  into such  transaction  and
WRH/QIC shall have a Right of First  Refusal with respect to the proposed  sale,
assignment,  transfer or disposition,  substantially as provided in Section 2.1.
For  purposes of this  Section,  all  references  to "PENAC" in  Sections  2.1.1
through  2.1.3 shall be read as "WRH/QIC",  and all  references to the "Relevant
Seller" shall be read as "PENAC."

                  2.2.1 TERMINATION ON INITIAL PUBLIC OFFERING.  WRH/QIC's Right
of First Refusal shall automatically terminate upon termination of PENAC's Right
of First Refusal.

         2.3  CO-SALE.  Except  as  provided  in  Section  2.4,  if,  after  the
consummation  of the  transaction  set forth in the First  Refusal  Notice,  the
transferee (or any "Group") in such transaction will own more than fifty percent
(50%) of the outstanding  voting stock of the Holding Company or more than fifty
percent (50%) of the Units of WRH/QIC,  PENAC shall have the right,  but not the
obligation,  to sell  its  shares  on the same  terms  and  conditions  as those
applicable  to WRH/QIC,  or the member of  WRH/QIC,  as  specified  in the First
Refusal  Notice,  including  the  same  time of  sale  and  the  same  per-share
consideration.  If the  Transfer of Control  Transaction  set forth in the First
Refusal Notice  involves a sale of Units of WRH/QIC (rather than shares of stock
of the Holding Company), and if PENAC wishes to exercise its co-sale right, then
PENAC shall have the right to exchange  with  WRH/QIC  that number of Shares for
that  number of Units in WRH/QIC  that  would  allow  PENAC to achieve  the same
economic  result as  described  above in the  context of a sale of Shares.  As a
condition to making such exchange,  and as promptly  thereafter as  practicable,
PENAC shall sell its Units on the same terms and conditions as applicable to the
member(s) of WRH/QIC that elected to sell their Units,  including  the same time
of sale and same per-Unit consideration,  but not subject to any fees, costs, or
carrying  interests  which the  members of WRH/QIC  may pay under the  Operating
Agreement; provided, however, that if the sale transaction is not consummated or
if PENAC does not sell its Units in such sale transaction, then PENAC's exchange
of Shares for Units shall be rescinded ab initio.


                                       3

<PAGE>


                  2.3.1  EXERCISE OF CO-SALE  RIGHT.  In order to  exercise  its
rights  under this  Section  2.3,  PENAC shall give  written  notice  thereof to
WRH/QIC and the Relevant  Seller  within  twenty (20) business days from PENAC's
receipt of the First Refusal  Notice,  which notice shall either (i) specify the
number of shares that PENAC intends to sell, or (ii) if applicable,  specify the
number of shares that PENAC  intends to  contribute  to WRH/QIC in exchange  for
Units to be sold in the  transaction.  No sales of shares or Units  shall  occur
until the expiration of such twenty (20) business day period.  If the sum of the
number of  shares  or Units to be sold by  WRH/QIC,  PENAC  and the  members  of
WRH/QIC pursuant to the exercise of these "tag-along"  rights exceeds the number
of shares the  purchaser is willing to buy, then WRH/QIC shall adjust the number
of shares or Units to be sold by  WRH/QIC,  PENAC and the  members of WRH/QIC to
ensure  that the ratio of the number of shares or Units  proposed  to be sold by
WRH/QIC,  or the members of  WRH/QIC,  to the ratio of shares  actually  sold by
WRH/QIC,  or the  members  of  WRH/QIC,  shall be equal to the ratio for  PENAC.
WRH/QIC shall provide in its Operating Agreement that it has the right to adjust
the number of Units sold by its members to comply with this Section 2.3.

         2.4 PERMITTED TRANSFERS.  Notwithstanding any of the provisions of this
Agreement,  (i) any member of WRH/QIC may (a)  transfer  its Units in WRH/QIC to
other initial  members of WRH/QIC,  or to one or more trusts  established by the
member for estate or succession  planning purposes;  or (b) pledge such Units as
collateral security to financial  institutions or other non-operating  companies
in  accordance  with  Section  5 of  this  Agreement;  provided,  however,  that
transfers  can be made to Zymed only as long as Zymed holds  (whether  directly,
indirectly, beneficially, or otherwise) less than 19% of WRH/QIC, and (ii) PENAC
may  transfer  its shares in the  Holding  Company to KPNV or to any one hundred
percent (100%) (directly or indirectly) owned subsidiary of KPNV.

         2.5  MANAGER  OBLIGATION.  The  Manager  covenants  that  it  (and  any
successor)  shall not permit the members of WRH/QIC to transfer  any interest in
WRH/QIC in any way which is  inconsistent  or in conflict with the provisions of
this Agreement or the Operating Agreement.

3. INTERESTED PARTY TRANSACTIONS.

         3.1 INTERESTED  PARTY.  For the purposes of this Agreement,  the phrase
"Interested  Party" shall mean PENAC,  Zymed, W.R. Hambrecht & Co., LLC ("WRH"),
WRH/QIC and their respective employees, affiliates, and investors.

         3.2  SIGNIFICANT  TRANSACTIONS.  Before  the  Holding  Company  or  the
Operating  Company may enter into any transaction with an Interested Party which
would under California corporate law require a shareholder vote, the transaction
shall have been  approved  by the Board of  Directors  at a meeting of the Board
held on notice to PENAC's  nominee  director and the Board shall have found that
the terms and conditions of such proposed  transaction are not less favorable to
the Holding Company or the Operating Company,  as the case may be, than could be
obtained  on  an   arm's-length   basis  from  unrelated   third  parties.   If,
notwithstanding Board approval, PENAC believes that the terms of the transaction
are more favorable to the  Interested  Party than would have been obtained on an
arm's-length  basis,  PENAC shall notify the Board within five (5) business days
after the Board's  approval of the transaction and PENAC may require the company
to  submit  the  proposed  transaction  to an  independent  investment  bank  or
independent public accountants of recognized  national standing (the "Neutral").
The Neutral  shall review the proposed  transaction  and shall decide as soon as
possible,  and in any event  within  thirty (30) days,  whether the terms of the
proposed  transaction are more favorable to the Interested Party than would have
been obtainable in an "arms' length" transaction. The proposed transaction shall
not proceed if the Neutral  determines  it is more  favorable to the  Interested
Party than would have been  obtainable in an "arms' length"  transaction  unless
its terms are amended to satisfy the Neutral's  determination of what provisions
were less than "arms' length."

         3.3 SALARY AND  COMPENSATION  ISSUES.  Any salary,  fee or compensation
matter (other than  reimbursement of travel expenses of directors) which relates
to any  employee,  consultant  or board  member of the  Holding  Company  or the
Operating Company who is an employee, consultant, director or Manager in WRH/QIC
or WRH (or in any  entity  which  is  controlled  by  WRH/QIC  or WRH,  or which
controls  WRH/QIC or WRH), or an employee,  consultant,  or director of PENAC or
Zymed, shall require the unanimous consent of the Board of Directors;  provided,
however,  that the  limitations  in this  Section  3.3  shall  not  apply to any
individual  who is  employed  primarily  by,  or on a  full  time  basis  by the
Operating Company.


                                       4

<PAGE>


         3.4 AGREEMENTS WITH INTERESTED  PARTIES.  Except as provided in Section
3.2, before the Holding  Company or Operating  Company enters into any agreement
with an Interested  Party, it shall have been approved by the Board of Directors
of the Holding Company at a meeting of the Board held on notice to PENAC's board
nominee  and at which  the  interest  of any  director  has been  disclosed.  No
director shall be disqualified  from voting on the transaction by reason of such
interest. If,  notwithstanding Board approval,  PENAC believes that the terms of
the  transaction are more favorable than would have been obtainable in an "arms'
length" transaction, PENAC shall notify the Board within five (5) days after the
Board's  approval of the transaction and PENAC may require the company to submit
the proposed  transaction to the Neutral.  The Neutral shall review the proposed
transaction and shall decide as soon as possible, and in any event within thirty
(30) days,  whether the terms of the proposed  transaction are more favorable to
the  Interested  Party  than  would have been  obtainable  in an "arms'  length"
transaction.  If the Neutral  decides  that the terms are more  favorable to the
Interested   Party  than  would  have  been  obtainable  in  an  "arms'  length"
transaction,  then the proposed  transaction  shall not proceed unless its terms
are amended to satisfy the Neutral's  determination of what provisions were less
than "arms' length."


4.       PLEDGES, HYPOTHECATIONS AND OTHER ENCUMBRANCES.

         4.1 SHARES OF THE  HOLDING  COMPANY.  Neither  Shareholder  may pledge,
hypothecate, or otherwise encumber its shares in the Holding Company as security
for any debt  without the consent of the other  Shareholder  (which shall not be
unreasonably  withheld);  provided,  however,  that  either  Shareholder  can so
pledge,  hypothecate,  or  otherwise  encumber  its  shares in  connection  with
obtaining financing for the Operating Company from a financial institution.

         4.2  INVESTORS  IN  WRH/QIC.  WRH/QIC  shall  provide in its  Operating
Agreement  that no member of  WRH/QIC  may  pledge,  hypothecate,  or  otherwise
encumber its Units unless the secured creditor has agreed that, prior to selling
any or all of such Units in satisfaction of the debtor member's obligation, such
Units  shall be  offered  to first to  WRH/QIC,  then to the  other  members  of
WRH/QIC,  and  finally to HP to the extent that the Units are not  purchased  by
WRH/QIC or its  members.  If PENAC buys Units of  WRH/QIC,  those Units shall be
subject to all of the provision in the Operating  Agreement of WRH/QIC,  but not
subject to any fees, costs or carrying interest which the members of WRH/QIC may
pay under the Operating Agreement.

5.  TERMINATION OF AGREEMENT.  This Agreement shall terminate on the earliest of
the written  agreement of all parties  and,  except as necessary to preserve any
causes  of  action  arising  prior to such  termination,  such  time as only one
Shareholder remains.

6. LEGEND ON SHARES.  Each  Shareholder  shall have  placed on the  certificates
representing its shares the following words:

         SALE,  TRANSFER,  HYPOTHECATION,  ENCUMBRANCE,  OR  DISPOSITION  OF THE
         SHARES  REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS
         OF A  SHAREHOLDERS  AGREEMENT  AMONG THE  SHAREHOLDERS  DATED AUGUST 1,
         2001. ALL PROVISIONS OF THE SHAREHOLDERS  AGREEMENT ARE INCORPORATED BY
         REFERENCE IN THIS CERTIFICATE. A COPY OF THE AGREEMENT MAY BE INSPECTED
         AT THE PRINCIPAL  OFFICE OF QIC HOLDING  CORP. AT 550 15TH STREET,  SAN
         FRANCISCO, CALIFORNIA, 94103.

A copy of this  Agreement  shall be  delivered  to the  secretary of the Holding
Company.  Each  Shareholder  shall  have the right to vote his or her shares and
receive the dividends  paid on them until the shares are sold or  transferred as
provided in this Agreement.

7. RESTRICTIONS ON TRANSFEREES.  Each transferee or any subsequent transferee of
shares in the Holding  Company,  or any interest in such shares,  shall hold the
shares or interest in the shares subject to all provisions hereof and shall make
no transfers except as provided in this Agreement.  Transfer of the shares shall
not be entered on the books of the Holding Company until an amended copy of this
Agreement has been executed by the prospective transferee. Failure or refusal to
sign such an amended  copy of this  Agreement  shall not relieve any  transferee
from any obligations under this Agreement.  Any purported  transfer in violation
of any provision of this Agreement shall be void ab initio and shall not operate
to transfer any right, title or interest to the purported transferee.

8.       MISCELLANEOUS PROVISIONS.

         8.1.  FURTHER ACTS. Each party to this Agreement  agrees to perform any
further  acts and  execute  and deliver  any  documents  that may be  reasonably
necessary to carry out the provisions of this Agreement.

         8.2.  AMENDMENTS.  The  provisions  of this  Agreement  may be  waived,
altered,  amended,  modified,  or  repealed,  in whole  or in part,  only on the
written consent of all parties to this Agreement.


                                       5

<PAGE>


         8.3.  SUCCESSORS AND ASSIGNS.  This  Agreement  shall be binding on and
enforceable by and against the parties to it and their respective  heirs,  legal
representatives, successors, and assigns.

         8.4. ENFORCEABILITY.  All provisions of this Agreement are separate and
divisible,  and if any part is held  invalid,  the  remaining  provisions  shall
continue in full force and effect.

         8.5. NOTICES. All notices, requests,  demands, and other communications
under this  Agreement  shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or within three business days after mailing, if mailed to the party
to whom notice is to be given,  by  first-class  mail,  registered or certified,
postage prepaid,  and properly addressed to the party at the following addresses
(or any  other  address  that a party may  designate  by  written  notice to the
others):


                           a.       If to WRH/QIC, to:

                                    W.R. Hambrecht/QIC, LLC
                                    539 Bryant Street, Suite 100
                                    San Francisco, CA 94107
                                    ATTN:  J.D. Delafield

                           b.       If to PENAC, to:

                                    Philips Medical Systems NA
                                    3000 Minuteman Road
                                    Andover, MA  01810
                                    ATTN:  S. Rusckowski

                                    With a copy to:

                                    Philips Medical Systems NA
                                    3000 Minuteman Road, MS230
                                    Andover, MA  01810
                                    ATTN:  S. Freeman

                           c.       If to WRH/QIC Management, to:

                                    W.R. Hambrecht/QIC Management, LLC
                                    539 Bryant Street, Suite 100
                                    San Francisco, CA 94107
                                    ATTN:  J.D. Delafield

                           d.       If to the Holding Company, to:

                                    QIC Holding Corp.
                                    539 Bryant Street, Suite 100
                                    San Francisco, CA 94107
                                    ATTN:  J.D. Delafield

         8.6.  CHOICE OF LAW. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of California.

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

         8.8. ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof,  and any and
all other written or oral  agreements  existing  between the parties  hereto are
expressly cancelled.

                                       6

<PAGE>


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


                                  W.R. HAMBRECHT/QIC, LLC


                                  By:    /s/ J.D. Delafield
                                       -----------------------------------------
                                  Name:    J.D. Delafield
                                         ---------------------------------------
                                  Title:
                                         ---------------------------------------

                                  PHILIPS ELECTRONICS NORTH AMERICA CORPORATION


                                  By:    /s/ Belinda W. Chew
                                       -----------------------------------------
                                  Name:    Belinda W. Chew
                                         ---------------------------------------
                                  Title:   Senior Vice President
                                         ---------------------------------------

                                  W.R. HAMBRECHT/QIC MANAGEMENT, LLC


                                  By:    /s/ J.D. Delafield
                                       -----------------------------------------
                                  Name:    J.D. Delafield
                                         ---------------------------------------
                                  Title:   Manager
                                         ---------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>ex-10_2.txt
<DESCRIPTION>LETTER AGREEMENT
<TEXT>
                                  EXHIBIT 10.2

                  PHILIPS ELECTRONICS NORTH AMERICA CORPORATION




                                                               February 19, 2002


TO AGILENT TECHNOLOGIES, INC.:

         With reference to the Investors' Rights Agreement, dated as of May 27,
1998, between QIC Holding Corp. (the "Company"), W.R. Hambrecht/QIC, LLC, and a
predecessor in interest to Agilent Technologies, Inc. ("Agilent"), as amended
(the "Agreement"), Agilent, Koninklijke Philips Electronics N.V ("Philips") and
Philips Electronics North America Corporation ("PENAC") hereby agree as follows:

         1. Agilent hereby transfers and assigns to PENAC all of its rights
under the Agreement, including without limitation the registration rights set
forth in Section 3 of the Agreement, effective as of and from August 1, 2001.

         2. Agilent, Philips and PENAC acknowledge and agree that the Agreement
is an Assumed Contract, as defined in the Asset Purchase Agreement, dated as of
November 17, 2000, between Agilent and Philips (the "Purchase Agreement").

         3. PENAC hereby assumes all of the obligations of Agilent under the
Agreement and hereby agrees (for the benefit of the Company and without limiting
the generality of the foregoing assumption) to be bound by Section 2 of the
Agreement, to the extent such Section may from time to time be applicable, in
each case effective as of and from August 1, 2001. Philips hereby guarantees
PENAC's obligations pursuant to this paragraph. The Company is an intended third
party beneficiary of the covenants set forth in this paragraph.

         4. This letter agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Paragraph 4,
provided that receipt of copies of such counterparts is confirmed.

         5. This letter agreement shall be governed in all respects by the
internal laws of the State of New York without regard to conflict of laws
provisions.

         6. Except as expressly set forth in Paragraph 3, this letter agreement
does not contain any rights, claims or benefits inuring to any person that is
not a party hereto nor create or establish any third party beneficiary hereto.


<PAGE>


         7. The provisions of Sections 11.1, 11.2, 11.4, 11.5, 11.8 - 11.10,
11.13 and 11.16 of the Purchase Agreement shall apply mutates mutandis to this
letter agreement.



               [Remainder of this page intentionally left blank.]





<PAGE>



         If you are in agreement with the foregoing, please execute a
counterpart of this letter agreement and deliver it by facsimile transmission to
Daniel Petroff of Sullivan & Cromwell at +1-212-558-3588.


                                            KONINKLIJKE PHILIPS ELECTRONICS N.V.



                                            By: /s/ Roland M. Notermans
                                               ---------------------------------
                                               Name:  Roland M. Notermans
                                               Title:  Authorized Representative



                                            PHILIPS ELECTRONICS NORTH AMERICA
                                            CORPORATION



                                            By: /s/ Belinda Chew
                                                --------------------------------
                                                Name:  Belinda Chew
                                                Title:  Senior Vice President




Accepted and agreed:

AGILENT TECHNOLOGIES, INC.




By: /s/ Marie Oh Huber
    --------------------------------------
    Name:  Marie Oh Huber
    Title:  Vice President



<PAGE>


                                POWER OF ATTORNEY


The undersigned, Mr. A. Westerlaken, General Secretary and Senior Vice-President
of Koninklijke Philips Electronics N.V. ("Philips"), in such capacity authorized
to represent Philips, hereby authorizes


                               MR. R.M. NOTERMANS


to sign and execute in the name and on behalf of Philips the letter agreement to
be entered into between Agilent Technologies, Inc. ("Agilent") on the one side
and Philips and Philips Electronics North America Corporation ("PENAC") on the
other side regarding the transfer and assignment by Agilent to PENAC of all of
Agilent's rights under the Investors' Rights Agreement, dated as of May 27,
1998, between QIC Holding Corp., W.R. Hambrecht/QIC, LLC and a predecessor in
interest to Agilent, as amended, and further to do or cause to be done all such
acts and things as are deemed necessary in connection with the said transaction.

This power of attorney will expire on March 31, 2002

Eindhoven, February 14, 2002


KONINKLIJKE PHILIPS ELECTRONICS N.V.



 /s/ A. Westerlaken
- --------------------------------------------
A. Westerlaken




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>ex-10_3.txt
<DESCRIPTION>INVESTORS' RIGHTS AGREEMENT
<TEXT>
                                  EXHIBIT 10.3

                                QIC HOLDING CORP.

                           INVESTORS' RIGHTS AGREEMENT

This Registration  Rights Agreement (this  "Agreement") is made and entered into
as of the 27th day of May,  1998, by and between QIC Holding Corp., a California
corporation  (the  "Company"),  on the one  part,  and W.R.  Hambrecht/QIC,  LLC
("WRH/QIC"),  a California  limited  liability  corporation and  Hewlett-Packard
Company ("HP"), a Delaware corporation  (collectively the "Purchasers"),  on the
other part.

                                    RECITALS

A. The Company has entered into a Subscription Agreement dated May 27, 1998 with
WRH/QIC and HP (the  "Subscription  Agreement"),  whereby the Company  agreed to
sell 81 shares of its Class A Common Stock and 9,900,000  shares of its Series A
Preferred  Stock to  WRH/QIC,  and 19  shares  of its  Class A Common  Stock and
2,330,000 shares of its Series A Preferred Stock to HP.

B. The  obligations  of the Company and the  Purchasers  under the  Subscription
Agreements are conditioned,  among other things, upon the execution and delivery
of this Agreement by the Company and the Purchasers.

NOW,   THEREFORE,   in  consideration  of  the  mutual  promises  and  covenants
hereinafter set forth, the parties hereto agree as follows:

1. Certain  Definitions.  As used in this  Agreement,  the following terms shall
have the meanings set forth below:

a.  "Agreement"  shall mean this  Registration  Rights  Agreement,  as it may be
amended or supplemented from time to time.

b. "Commission"  shall mean the Securities and Exchange  Commission or any other
federal agency at the time administering the Securities Act.

c.  "Preferred  Stock"  shall mean  shares of Series A Preferred  Stock,  in the
Company.

d. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
any similar successor federal statute and the rules and regulations  thereunder,
all as the same shall be in effect from time to time.

e.  "Holder"  shall  mean the  Purchasers,  to the extent  the  Purchasers  hold
Registrable  Securities,  and any other holder of Registrable Securities to whom
the  registration  rights  conferred by this Agreement have been  transferred in
compliance with Sections 2 and 9 hereof.

<PAGE>

f. "Indemnified  Party" shall mean each party entitled to indemnification  under
Section 6 herein.

g. "Indemnifying Party" shall mean the party required to provide indemnification
pursuant to Section 6 herein.

h.  "Registrable  Securities"  shall mean:  (1) shares of common stock issued or
issuable  pursuant to conversion of the Preferred  Stock;  (2) shares of Class A
Common Stock; and (3) any common stock issued or issuable as a dividend or other
distribution  with respect to or in exchange for or in replacement of the shares
referenced in (1) above;  provided,  however, that Registrable  Securities shall
not include any shares of common stock which have  previously been registered or
which have been sold in a private  transaction in which the  transferors' rights
under this Agreement are not assigned.

i. The  terms  "register,"  "registered"  and  "registration"  shall  refer to a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with  the  Securities  Act  and  applicable  rules  and  regulations
thereunder,  and  the  declaration  or  ordering  of the  effectiveness  of such
registration statement.

j.  "Registration  Expenses"  shall mean all expenses  incurred in effecting any
registration  pursuant to this Agreement,  including,  without  limitation,  all
registration,  qualification,  and filing fees, printing expenses,  escrow fees,
fees and  disbursements of counsel for the Company,  blue sky fees and expenses,
and  expenses  of any regular or special  audits  incident to or required by any
such   registration,   but  shall  not  include  Selling   Expenses,   fees  and
disbursements  of counsel for the Holders;  provided  further that  Registration
Expenses shall not include the compensation of regular employees of the Company,
which shall be paid in any event by the Company.

k. "Restricted  Securities"  shall mean any Registrable  Securities  required to
bear the legend set forth in Section 2 hereof.

l. "Rule 144" shall mean Rule 144 as  promulgated  by the  Commission  under the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
successor rule that may be promulgated by the Commission.

m. "Rule 145" shall mean Rule 145 as  promulgated  by the  Commission  under the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
successor rule that may be promulgated by the Commission.

n. "Rule 415" shall mean Rule 415 as  promulgated  by the  Commission  under the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
successor rule that may be promulgated by the Commission.

                                        2

<PAGE>

o.  "Securities  Act" shall mean the Securities Act of 1933, as amended,  or any
similar successor federal statute and the rules and regulations thereunder,  all
as the same shall be in effect from time to time.

p. "Selling Expenses" shall mean all underwriting discounts, selling commissions
and stock  transfer taxes  applicable to the sale of Registrable  Securities and
fees and  disbursements  of counsel  for any  Holders  (other  than the fees and
disbursements of counsel included in Registration Expenses).

2.   Restrictions on Transfer.

a. Each Holder agrees not to make any  disposition  of all or any portion of the
Registrable Securities unless and until the transferee has agreed in writing for
the benefit of the Company to be bound by this  Section 2,  provided  and to the
extent such Section is then applicable, and:

b. There is then in effect a  registration  statement  under the  Securities Act
covering such proposed  disposition  and such  disposition is made in accordance
with such registration statement; or

c. The Holder has (i) notified the Company of the proposed  disposition  and has
furnished the Company with a detailed statement of the circumstances surrounding
the proposed  disposition,  and (ii) if reasonably requested by the Company, has
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company,  that such  disposition  will not require  registration  of such shares
under  the  Securities  Act.  It is agreed  that the  Company  will not  require
opinions of counsel for transactions made pursuant to Rule 144 except in unusual
circumstances

d.  Notwithstanding  the  provisions  of paragraphs  (b) and (c) above,  no such
registration  statement or opinion of counsel  shall be necessary for a transfer
by a Holder which is (i) a  partnership  to its partners or retired  partners in
accordance with partnership interests, (ii) a corporation to its shareholders in
accordance  with their interest in the  corporation,  (iii) a limited  liability
company to its members or former  members in accordance  with their  interest in
the limited liability  company,  (iv) to the Holder's family member or trust for
the benefit of an individual Holder,  provided the transferee will be subject to
the terms of this  Section 2 to the same  extent as if such  transferee  were an
original Holder hereunder, or (v) to a wholly-owned subsidiary of HP.

e. Each certificate  representing Registrable Securities shall (unless otherwise
permitted by the provisions of this Agreement) be stamped or otherwise imprinted
with a legend substantially  similar to the following (in addition to any legend
required under applicable state securities laws):

         THE  SHARES  REPRESENTED  HEREBY  HAVE NOT BEEN  REGISTERED  UNDER  THE
         SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED,
         ASSIGNED, PLEDGED OR

                                        3

<PAGE>

         HYPOTHECATED  UNLESS AND UNTIL  REGISTERED UNDER SUCH ACT OR UNLESS THE
         COMPANY  HAS  RECEIVED  AN  OPINION  OF  COUNSEL  OR  OTHER   EVIDENCE,
         SATISFACTORY TO THE COMPANY AND ITS COUNSEL,  THAT SUCH REGISTRATION IS
         NOT REQUIRED.

         f. The  Company  shall be  obligated  to  reissue  promptly  unlegended
         certificates  at the request of any holder  thereof if the holder shall
         have  obtained an opinion of counsel at such  Holder's  expense  (which
         counsel may be counsel to the  Company)  reasonably  acceptable  to the
         Company to the effect  that the  securities  proposed to be disposed of
         may lawfully be so disposed of without  registration,  qualification or
         legend.

g. Any legend endorsed on an instrument  pursuant to applicable state securities
laws and the stop-transfer instructions with respect to such securities shall be
removed  upon  receipt by the  Company of an order of the  appropriate  blue sky
authority authorizing such removal.

3. Company Registration.

a. If the Company shall determine to register any of its securities,  other than
its initial  public  offering,  or a  registration  relating  solely to employee
benefit plans, or a registration relating to a corporate reorganization or other
transactions  under Rule 145, or a registration  on any  registration  form that
does not permit secondary sales, the Company will:

              (1) promptly give to each Holder written notice thereof; and

              (2) use its best efforts to include in such  registration (and any
              related  qualification  under blue sky laws or other  compliance),
              except as set forth in Section 3(b) below, and in any underwriting
              involved therein,  all the Registrable  Securities  specified in a
              written  request or  requests,  made by any Holder and received by
              the Company within ten (10) days after the written notice from the
              Company  described  in clause (1) above is mailed or  delivered by
              the Company.  Such written  request may specify all or a part of a
              Holder's Registrable Securities.

b. If the  registration  of which the Company  gives  notice is for a registered
public  offering  involving  an  underwriting,  the Company  shall so advise the
Holders as a part of the written  notice given pursuant to Section  3(a)(1).  In
such event,  the right of any Holder to registration  pursuant to this Section 3
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  proposing to distribute  their securities
through such underwriting shall (together with the Company and the other holders
of securities of the Company with  registration  rights to  participate  therein
distributing  their  securities   through  such  underwriting)   enter  into  an
underwriting  agreement  in  customary  form  with  the  representative  of  the
underwriter or underwriters selected by the Company.

              (1)  Notwithstanding any other provision of this Section 3, if the
              representative of the underwriters  advises the Company in writing
              that marketing factors

                                        4

<PAGE>

require  a  limitation  on  the  number  of  shares  to  be  underwritten,   the
representative  may (subject to the  limitations  set forth  below)  exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting.  The Company shall so advise all
holders  of  securities  requesting  registration,  and the  number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated  first to the Company for  securities  being sold for its own
account and  thereafter as set forth in Section 11. If any person does not agree
to the terms of any such underwriting, he shall be excluded therefrom by written
notice from the Company or the underwriter.  Any Registrable Securities or other
securities  excluded or withdrawn from such underwriting shall be withdrawn from
such registration.

              (2) If shares are so  withdrawn  from the  registration  or if the
              number of shares of Registrable  Securities to be included in such
              registration  was  previously  reduced  as a result  of  marketing
              factors,  the  Company  shall then offer to all  persons  who have
              retained the right to include  securities in the  registration the
              right to include  additional  securities in the registration in an
              aggregate amount equal to the number of shares so withdrawn,  with
              such  shares  to  be  allocated   among  the  persons   requesting
              additional inclusion in accordance with Section 11 hereof.

4. Expenses of Registration.  All Registration  Expenses  incurred in connection
with any registration,  qualification or compliance pursuant to Section 3 hereof
shall be borne by the Company.  All Selling  Expenses  relating to securities so
registered  shall be borne by the  holders  of such  securities  pro rata on the
basis of the number of shares of securities  so  registered on their behalf,  as
shall any other  expenses in  connection  with the  registration  required to be
borne by the Holders of such securities.

5. Registration  Procedures.  In the case of each  registration  effected by the
Company pursuant to this Agreement, the Company will keep each Holder advised in
writing  as to the  initiation  of each  registration  and as to the  completion
thereof. At its expense, the Company will use its best efforts to:

a. Keep such  registration  effective  for a period of one hundred  twenty (120)
days or until the Holder or Holders have completed the distribution described in
the registration statement relating thereto,  whichever first occurs;  provided,
however,  that (i) such  120-day  period  shall be extended for a period of time
equal to the period the Holder refrains from selling any securities  included in
such  registration  at the request of an  underwriter  of common stock (or other
securities)  of the  Company;  and  (ii)  in the  case  of any  registration  of
Registrable  Securities  on Form S-3  which  are  intended  to be  offered  in a
continuous  or  delayed  basis,  such  120-day  period  shall  be  extended,  if
necessary,  to  keep  the  registration  statements  effective  until  all  such
Registrable  Securities  are sold,  provided  that if Rule 415, or any successor
rule under the  Securities  Act,  permits an offering on a continuous or delayed
basis and  provided  further  that  applicable  rules under the  Securities  Act
governing the obligation to file a post- effective  amendment permit, in lieu of
filing a post-effective  amendment that (I) includes any prospectus  required by
Section  10(a)(3)  of the  Securities  Act;  or (II)  reflects  facts or  events
representing a material or fundamental  change in the  information  set forth in
the  registration  statement,  the  incorporation  by reference  to  information
required to be included in (I) and (II)

                                        5

<PAGE>

 ABOVE TO BE CONTAINED IN PERIODIC REPORTS FILED PURSUANT TO SECTION 13 OR 15(D)
of the Exchange Act in the registration statement;

b. Prepare and file with the Commission  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
Securities Act with respect to the disposition of all securities covered by such
registration statement;

c. Furnish such number of  prospectuses  and other documents  incident  thereto,
including any amendment of or  supplement  to the  prospectus,  as a Holder from
time to time may reasonably request;

d. Notify each seller of  Registrable  Securities  covered by such  registration
statement  at any time when a  prospectus  relating  thereto is  required  to be
delivered  under the Securities 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 or incomplete in the light of the  circumstances  then existing,
and at the  request of any such  seller,  prepare  and  furnish to such seller a
reasonable  number  of  copies  of a  supplement  to or  an  amendment  of  such
prospectus  as  may  be  necessary  so  that,  as  thereafter  delivered  to the
purchasers of such shares, 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 not misleading or incomplete
in the light of the circumstances then existing;

e. In  connection  with any  underwritten  offering  pursuant to a  registration
statement  filed  pursuant to this  Agreement,  the  Company  will enter into an
underwriting agreement in form reasonably necessary to effect the offer and sale
of stock, provided such underwriting  agreement contains customary  underwriting
provisions,  and  provided  further  that if the  underwriter  so  requests  the
underwriting agreement will contain customary contribution provisions;

f. Cause all such Registrable  Securities  registered  pursuant  hereunder to be
listed on each  securities  exchange on which similar  securities  issued by the
Company are then listed;

g.  Provide  a  transfer  agent and  registrar  for all  Registrable  Securities
registered  pursuant  hereunder  and a CUSIP  number  for all  such  Registrable
Securities, in each case not later than the effective date of such registration;
and

h. Furnish,  at the request of any Holder  requesting  registration  pursuant to
Section 3 hereof, on the date that such Registrable  Securities are delivered to
the underwriters for sale in connection with a registration  pursuant to Section
3 hereof,  if such securities are being sold through  underwriters,  or, if such
securities  are not  being  sold  through  underwriters,  on the  date  that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the

                                        6

<PAGE>

purposes of such registration,  in form and substance as is customarily given to
underwriters in an underwritten public offering,  addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company,  in form and substances as is  customarily  given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed  to  the  underwriters,   if  any,  and  to  the  Holders   requesting
registration of Registrable Securities.

6.   Indemnification.

a. The Company will indemnify each Holder,  each of its officers,  directors and
partners, legal counsel, and accountants and each person controlling such Holder
within the meaning of Section 15 of the  Securities  Act,  with respect to which
registration,  qualification,  or compliance has been effected  pursuant to this
Agreement, and each underwriter, if any, and each person who controls within the
meaning  of  Section  15 of the  Securities  Act any  underwriter,  against  all
expenses, claims, losses, damages, and liabilities (or actions,  proceedings, or
settlements in respect  thereof) arising out of or based on any untrue statement
(or alleged untrue  statement) of a material fact  contained in any  prospectus,
offering  circular,  or  other  document  (including  any  related  registration
statement,  notification,  or  the  like)  incident  to any  such  registration,
qualification,  or compliance, or based on any 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 any violation by the Company of the
Securities  Act or any rule or regulation  thereunder  applicable to the Company
and relating to action or inaction  required of the Company in  connection  with
any such  registration,  qualification,  or compliance,  and will reimburse each
such Holder,  each of its officers,  directors,  partners,  legal  counsel,  and
accountants and each person controlling such Holder, each such underwriter,  and
each  person  who  controls  any such  underwriter,  for any legal and any other
expenses  reasonably  incurred in connection with investigating and defending or
settling  any claim,  loss,  damage,  liability,  or action,  provided  that the
Company  will not be liable in any such case to the extent  that any such claim,
loss,  damage,  liability,  or  expense  arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein.  It is
agreed that the  indemnity  agreement  contained  in this Section 6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage,  liability,
or action if such  settlement  is  effected  without  the consent of the Company
(which consent has not been unreasonably withheld).

b. Holder will, if  Registrable  Securities  held by such Holder are included in
the securities as to which such  registration,  qualification,  or compliance is
being  effected,  indemnify  the  Company,  each  of  its  directors,  officers,
partners,  legal counsel,  and accountants and each underwriter,  if any, of the
Company's securities covered by such a registration  statement,  each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, each other such Holder, and each of its officers, directors, and
partners,  and each person controlling such Holder,  against all claims, losses,
damages and liabilities (or actions in respect  thereof) arising out of or based
on any untrue  statement  (or  alleged  untrue  statement)  of a  material  fact
contained in any such registration statement,  prospectus, offering circular, or
other document, or any omission (or alleged

                                        7

<PAGE>

omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the statements therein not misleading,  and will reimburse the
Company and such Holders,  directors,  officers,  partners,  legal counsel,  and
accountants,  persons,  underwriters,  or control  persons  for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage,  liability, or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or  omission  (or  alleged  omission)  is made in such  registration  statement,
prospectus,  offering  circular,  or  other  document  in  reliance  upon and in
conformity with written information  furnished to the Company by such Holder and
stated  to  be  specifically  for  use  therein;  provided,  however,  that  the
obligations  of such  Holder  hereunder  shall  not  apply  to  amounts  paid in
settlement of any such claims,  losses,  damages,  or liabilities (or actions in
respect  thereof) if such  settlement  is  effected  without the consent of such
Holder (which consent shall not be unreasonably withheld);  and provided that in
no event shall any indemnity under this Section 6 exceed the gross proceeds from
the offering received by such Holder.

c. The "Indemnified  Party" shall give notice to the Indemnifying Party promptly
after  such  Indemnified  Party has  actual  knowledge  of any claim as to which
indemnity may be sought,  and shall permit the Indemnifying  Party to assume the
defense of such  claim or any  litigation  resulting  therefrom,  provided  that
counsel for the Indemnifying  Party, who shall conduct the defense of such claim
or any  litigation  resulting  therefrom,  shall be approved by the  Indemnified
Party (whose approval shall not  unreasonably be withheld),  and the Indemnified
Party may  participate  in such  defense at such party's  expense,  and provided
further  that the  failure of any  Indemnified  Party to give notice as provided
herein shall not relieve the  Indemnifying  Party of its obligations  under this
Section 6, to the extent such failure is not prejudicial. No Indemnifying Party,
in the defense of any such claim or litigation,  shall,  except with the consent
of each  Indemnified  Party,  consent to entry of any judgment or enter into any
settlement that does not include as an unconditional  term thereof the giving by
the  claimant  or  plaintiff  to such  Indemnified  Party of a release  from all
liability in respect to such claim or litigation.  Each Indemnified  Party shall
furnish  such  information  regarding  itself  or the  claim in  question  as an
Indemnifying  Party may reasonably request in writing and as shall be reasonably
required  in  connection  with  defense of such claim and  litigation  resulting
therefrom.

d. If the  indemnification  provided for in this Section 6 is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect to
any loss,  liability,  claim,  damage, 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 loss, liability,  claim, damage, 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 loss, liability, claim, damage, 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.

                                        8

<PAGE>

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.

7.  Information  by  Holder.  Each  Holder  shall  furnish to the  Company  such
information  regarding such Holder and the distribution  proposed by such Holder
as the Company  may  reasonably  request in writing  and as shall be  reasonably
required in  connection  with any  registration,  qualification,  or  compliance
referred to in this Agreement.

8. Rule 144 Reporting.  With a view to making  available the benefits of certain
rules  and  regulations  of the  Commission  that  may  permit  the  sale of the
Restricted Securities to the public without registration,  the Company agrees to
use its best efforts to:

a. Make and keep public  information  regarding  the Company  available as those
terms are understood  and defined in Rule 144 under the  Securities  Act, at all
times  commencing  ninety  (90)  days  after  the  effective  date of the  first
registration  statement  filed by the Company for the offering of its securities
to the general public;

b. File with the  Commission in a timely manner all reports and other  documents
required of the Company under the Securities Act and the Exchange Act;

c. So long as a Holder  owns any  Restricted  Securities,  furnish to the Holder
forthwith upon written request: (i) a written statement by the Company as to its
compliance with the reporting  requirements of Rule 144 (within ninety (90) days
after the Company's  initial public  offering) and of the Securities Act and the
Exchange Act (after it becomes subject to reporting  requirements),  (ii) a copy
of the most recent  annual or quarterly  report of the  Company,  and (iii) such
other  reports  and  documents  so filed as a Holder may  reasonably  request in
availing itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration.

9. Transfer or Assignment of Registration  Rights.  The rights granted to Holder
under Section 3 to cause the Company to register securities under this Agreement
may be  transferred  or assigned by a Holder only to a transferee or assignee of
not  less  than  1,200,000  shares  of  Registrable   Securities  (as  presently
constituted and calculated  based upon the then effective  conversion  price for
the Preferred  Stock,  and subject to subsequent  adjustments  for stock splits,
stock dividends,  reverse stock splits, and the like), provided that the Company
is given  written  notice at the time of or within a reasonable  time after said
transfer  or  assignment,  stating  the name and  address of the  transferee  or
assignee and identifying the securities with respect to which such  registration
rights are being  transferred  or  assigned,  and,  provided  further,  that the
transferee or assignee of such rights assumes in writing the obligations of such
Holder under this Agreement.

10. "Market Stand-Off" Agreement. If requested by an underwriter of common stock
(or other  securities)  of the  Company,  a Holder  shall not sell or  otherwise
transfer

                                        9

<PAGE>

or dispose of any common stock (or other securities) of the Company held by such
Holder (other than those  included in the  registration)  during the one hundred
eighty (180) day period following the effective date of a registration statement
of the Company filed under the Securities Act. The obligations described in this
Section 10 shall not apply to a registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar  forms that may be  promulgated  in the
future.

11. Allocation of Registration  Opportunities.  In any circumstance in which all
of the  Registrable  Securities  requested to be included in a  registration  on
behalf of the Holders  cannot be so included as a result of  limitations  of the
aggregate  number of shares of Registrable  Securities  that may be so included,
the number of shares of Registrable  Securities that may be so included shall be
allocated among the Holders requesting inclusion of shares pro rata on the basis
of the  number of shares of  Registrable  Securities  that would be held by such
Holders, assuming conversion;  provided, however, that such allocation shall not
operate to reduce the aggregate number of Registrable  Securities to be included
in such  registration.  If any Holder does not request  inclusion of the maximum
number of shares of  Registrable  Securities  allocated  to him  pursuant to the
above-described  procedure,  the remaining  portion of his  allocation  shall be
reallocated  among those  requesting  Holders whose  allocations did not satisfy
their  requests  pro rata on the basis of the  number  of shares of  Registrable
Securities which would be held by such Holders,  assuming  conversion,  and this
procedure  shall be repeated until all of the shares of  Registrable  Securities
which may be included in the  registration on behalf of the Holders have been so
allocated.

12. Delay of Registration.  No Holder shall have any right to take any action to
restrain,  enjoin,  or  otherwise  delay any  registration  as the result of any
controversy   that  might   arise  with   respect  to  the   interpretation   or
implementation of this Agreement.

13.  Termination  of  Registration  Rights.  The right of the  Holder to request
inclusion  in any  registration  pursuant  to Section 3 shall  terminate  on the
earlier of (i) five years from the date hereof and (ii) as of such date that all
of the shares of Registrable  Securities  held by such Holder may immediately be
sold under Rule 144 during any 90-day period.

14. Basic Financial Information.  The Company will furnish the following reports
to each Holder:

a. As soon as practicable  after the end of each fiscal year of the Company,  in
any event within ninety (90) days  thereafter,  a consolidated  balance sheet of
the Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated  statements  of  income  and  cash  flows  of the  Company  and its
subsidiaries,  if any,  for such year,  prepared in  accordance  with  generally
accepted accounting  principles  consistently  applied and setting forth in each
case in  comparative  form the figures  from the previous  fiscal  year,  all in
reasonable  detail and certified by  independent  certified  public  accountants
selected by the Company.

b. As soon as practicable after the end of the first, second and third quarterly
accounting  periods in each fiscal year of the Company,  and in any event within
forty-

                                       10

<PAGE>

five (45) days thereafter,  a consolidated  balance sheet of the Company and its
subsidiaries,  if  any,  as of the  end  of  each  such  quarterly  period,  and
consolidated  statements  of  income  and  cash  flows  of the  Company  and its
subsidiaries,  if any, for such period and for the current  fiscal year to date,
prepared  in  accordance   with   generally   accepted   accounting   principles
consistently  applied and  setting  forth in each case in  comparative  form the
figures for the  corresponding  periods of the previous fiscal year,  subject to
changes  resulting  from normal  year-end audit  adjustments,  all in reasonable
detail and  certified by the principal  financial or  accounting  officer of the
Company,  except  that such  financial  statements  need not  contain  the notes
required by generally accepted accounting principles.

c. At the  request  of a  Holder,  copies of annual  operating  budgets  for the
upcoming  fiscal year that have been  provided to Silicon  Valley Bank under the
terms of its loan and security agreement.

d. From the date the Company  becomes  subject to the reporting  requirements of
the Exchange Act (which shall include any  successor  federal  statute),  and in
lieu of the financial information required pursuant to Sections 14(a) and 14(b),
the  Company  shall  file  copies  of its  annual  reports  on Form 10-K and its
quarterly reports on Form 10-Q, respectively.

15.  Inspection Rights.

a. The Company  will permit any holder,  so long as they own at least  1,200,000
shares of the  Series A  Preferred  Stock,  or such  number of shares of Class A
Common  Stock  issued  upon  conversion  of  1,200,000  shares  of the  Series A
Preferred  Stock,  or any  combination  thereof (as  presently  constituted  and
subject to subsequent  adjustment  for stock splits,  stock  dividends,  reverse
stock splits and the like) (a "Significant  Holder") (or a representative of any
Significant  Holder) to visit and inspect any of the  properties of the Company,
including  its books of account and other  records (and make copies  thereof and
take extracts therefrom), and to discuss its affairs, finances and accounts with
the  Company's  officers and its  independent  public  accountants,  all at such
reasonable times and as often as any such person may reasonably request.

b. Notwithstanding any of the provisions in Section 15, no Holder or Significant
Holder shall have access to any trade secrets or classified  information  of the
Company by reason of this agreement.  Each  Significant  Holder hereby agrees to
hold  in  confidence  and  trust  and not to  misuse  or  disclose  confidential
information  provided  pursuant to this  Section  15. The  Company  shall not be
required to comply with this Section 15 in respect of any Holder of  Significant
Holder whom the Company reasonably determines to be a competitor or any officer,
employee,   director  or  greater  than  ten  percent  (10%)  stockholder  of  a
competitor.

16. Right of First  Refusal.  The Company  hereby grants to each Holder who owns
any shares of Series A Preferred Stock or any shares of Common Stock issued upon
conversion of Series A Preferred  Stock the right of first refusal to purchase a
pro rata  share of New  Securities  (as  defined in this  Section  16) which the
Company may, from time to time,  propose to sell and issue.  A Holder's pro rata
share, for purposes of this right of first refusal, is

                                       11

<PAGE>

the  ratio of the  number  of  shares  of  Common  Stock  owned  by such  Holder
immediately prior to the issuance of New Securities, assuming full conversion of
the Class A Preferred Stock and exercise of all outstanding rights,  options and
warrants to acquire Common Stock of the Company.  Each Holder shall have a right
of over-allotment  such that if any Holder fails to exercise its right hereunder
to purchase its pro rata share of New Securities, the other Holders may purchase
the  non-purchasing  Holder's  portion on a pro rata basis  within ten (10) days
from the date such  non-purchasing  Holder fails to exercise its right hereunder
to purchase its pro rata share of New  Securities.  This right of first  refusal
shall be subject to the following provisions:

a. "New Securities"  shall mean any capital stock (including Common Stock and/or
Preferred  Stock) of the Company  whether  now  authorized  or not,  and rights,
options and warrants to purchase such capital stock,  and securities of any type
whatsoever  that are, or may become,  convertible  into capital stock;  provided
that the term "New  Securities"  does not  include  (i)  securities  issued upon
conversion of the Series A Preferred Stock;  (ii) securities  issued pursuant to
the bona fide  acquisition of another business entity or business segment of any
such entity by the Company by merger,  purchase of substantially  all the assets
or other  reorganization  whereby the Company  will own more than fifty  percent
(50%) of the voting  power of such  business  entity or business  segment of any
such entity; (iii) any borrowings,  direct or indirect, from entities other than
institutional  lenders  by the  Company,  whether or not  presently  authorized,
including any type of loan or payment  evidenced by any type of debt instrument,
provided such  borrowings do not have any equity  features  including  warrants,
options or other rights to purchase  capital stock and are not convertible  into
capital stock of the Company;  (iv) securities  issued or issuable upon exercise
of  options  issued  to  institutional  lenders  in  connection  with  financing
commitments  to the Company;  (v) securities  issued to employees,  consultants,
officers  or  directors  of the  Company  pursuant  to any stock  option,  stock
purchase or stock bonus plan,  agreement,  or arrangement approved by a majority
of the Board of Directors;  (vi) securities issued to vendors or customers or to
other  persons in  similar  situations  with the  Company  if such  issuance  is
approved by the Board of Directors;  (vii) securities  issued in connection with
obtaining  lease  financing,  whether  issued  to a lessor,  guarantor  or other
person; (viii) securities issued in a public offering pursuant to a registration
under the  Securities  Act with an aggregate  offering price to the public of at
least  $10,000,000;  (ix) securities  issued in connection with any stock split,
stock dividend or  recapitalization  of the Company;  (x)  securities  issued in
connection  with  corporate  partnering  transactions  on  terms  approved  by a
majority of the Board of Directors,  provided such  issuances are for other than
primarily equity financing  purposes;  and (xi) any right,  option or warrant to
acquire  any  security   convertible  into  the  securities  excluded  from  the
definition of New Securities pursuant to subsections (i) through (x) above.

b. In the event the company proposes to undertake an issuance of New Securities,
it shall give each Holder written  notice of its intention,  describing the type
of New Securities,  and their price and the general terms upon which the Company
proposes to issue the same.  Each Holder  shall have twenty (20) days after such
notice is mailed or delivered to agree to purchase  such Holder's pro rata share
of such New Securities for the price and upon the terms  specified in the notice
by giving written notice to the Company and stating  therein the quantity of New
Securities to be purchased.

                                       12

<PAGE>

c. In the event the Holders  fail to exercise  fully the right of first  refusal
within said twenty (20) day period and after the expiration of the 10-day period
for the exercise of the over-allotment provision of this Section 16, the Company
shall have one hundred  twenty  (120) days  thereafter  to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed,  if at all,  within one hundred  twenty (120) days from the date of said
agreement) to sell the New  Securities  respecting  which the Holders'  right of
first refusal option set forth in this Section 16 was not exercised,  at a price
and upon terms no more favorable to the purchasers thereof than specified in the
Company's  notice to Holders pursuant to Section 16(b). In the event the Company
has not sold within said  120-day  period,  or entered into an agreement to sell
the New  Securities in accordance  with the foregoing  within one hundred twenty
(120) days from the date of said  agreement,  the Company  shall not  thereafter
issue or sell any New  Securities,  without first again offering such securities
to the Holders in the manner specified in Section 16(b) above.

d. The right of first refusal  granted under this  Agreement  shall expire upon,
and shall not be applicable to, the first sale of Common Stock of the Company to
the public  effected  pursuant  to a  registration  statement  filed  with,  and
declared effective by, the Securities and Exchange Commission (the "Commission")
under the Securities  Act, with proceeds of more than  $10,000,000  and shall in
any event expire on June 1, 2005.

e. The right of first  refusal set forth in this  Section 16 may not be assigned
or  transferred,  except that (i) such right is assignable by each Holder to any
wholly-owned  subsidiary or parent of, or to any  corporation or entity that is,
within the meaning of the Securities  Act,  controlling,  controlled by or under
common control with, any such Holder,  and (ii) such right is assignable between
and among any of the Holders.

17.  Termination.  The covenants set forth in Sections 14 and 15 shall terminate
and be of no further force and effect after the closings of the Company's  first
firm commitment underwritten public offering registered under the Securities Act
in which all shares of Series A Preferred Stock are converted to Common Stock is
consummated  or where the  Company  becomes  subject to the  periodic  reporting
requirements  of Section  12(g) or 15(d) of the Exchange  Act,  whichever  event
shall first occur.

18.  Governing  Law.  This  Agreement  shall be governed in all  respects by the
internal  laws of the State of  California  without  regard to  conflict of laws
provisions.

19. Successors and Assigns.  Except as otherwise  expressly provided herein, the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors, assigns, heirs, executors and administrators of the parties hereto.

20. Entire Agreement; Amendment; Waiver. This Agreement constitutes the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subject  hereof No party  shall be  liable  or bound to any  other  party by any
warranties,  representations  or  covenants  except as  specifically  herein set
forth.  This  Agreement  supersedes  any  prior  written  or oral  agreement  or
understanding  with respect to the subject  matter  hereof.  Except as expressly
provided  herein,  neither  this  Agreement  nor any term hereof may be amended,
waived,

                                       13

<PAGE>

discharged or terminated other than by a written  instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.

21.  Notices.  All  notices,  requests  and  other  communications  to any party
hereunder  shall be in writing and  addressed to the  respective  parties at the
following  addresses  (or at such address for a party as shall be specified in a
notice given in accordance with this Section 17):

              a. If to WRH/QIC, to:

              W.R. Hambrecht/QIC, LLC 550 15th Street San Francisco, CA 94103
              ATTN: J.D. Delafield

              b. If to HP, to:

              Hewlett-Packard Company 3000 Hanover Street Palo Alto, CA 94304
              Mailstop 20 BT ATTN: Director, Corporate Development

              With a copy to:

              Hewlett-Packard Company 3000 Hanover Street Palo Alto, CA 94304
              Mailstop 20 BQ ATTN: General Counsel

              c. If to the Company, to:

              QIC Holding Corp. 550 15th Street San Francisco, CA 94103 ATTN: J.
              D. Delafield

              All notices under this Section 21 shall be deemed to have been
              given upon receipt if delivered in person and shall be deemed to
              have been given (a) two (2) business days after transmission of a
              facsimile, telegram, telex, or (b) four (4) business days after
              deposit in United States registered or certified mail (postage
              prepaid, return receipt requested) or (c) two (2) business days
              after delivery to a reputable overnight courier.

22.  Delays or  Omissions.  Except as  expressly  provided  herein,  no delay or
omission to exercise any right,  power or remedy accruing to any party, upon any
breach or

                                       14

<PAGE>

default of another  party  under this  Agreement,  shall  impair any such right,
power or remedy of such  party nor shall it be  construed  to be a waiver of any
such  breach of default,  or an  acquiescence  therein,  or of or in any similar
breach or  default  thereafter  occurring;  nor shall any  waiver of any  single
breach or default be deemed a waiver of any other breach or default  theretofore
or thereafter occurring.  Any waiver, permit, consent or approval of any kind or
character  on the  part  of any  party  of any  breach  or  default  under  this
Agreement,  or any  waiver  on  the  part  of any  party  of any  provisions  or
conditions of this Agreement,  must be in writing and shall be effective only to
the extent  specifically set forth in such writing.  All remedies,  either under
this  Agreement  or by  law  or  otherwise  afforded,  to any  party,  shall  be
cumulative and not alternative.

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

24.  Severability.  In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void,  this  Agreement  shall  continue  in full force and effect  without  said
provisions,  which shall be replaced with an  enforceable  provision  closest in
intent and  economic  effect as the  severed  provision;  provided  that no such
severability shall be effective if it materially changes the economic benefit of
this Agreement to any party.

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

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

                                QIC HOLDING CORP.

                             By: /s/ J.D. Delafield
                             -----------------------------------
                             Name: J.D. Delafield
                             -----------------------------------
                             Title: President
                             -----------------------------------

                             W.R. HAMBRECHT/QIC, LLC
                             By: W.R. Hambrecht/QIC
                                Management, LLC
                                    Manager

                             By: /s/ J.D. Delafield
                             -----------------------------------
                             Name: J.D. Delafield
                             -----------------------------------
                             Title: Manager
                             -----------------------------------

                             HEWLETT-PACKARD COMPANY

                             By: /s/ Stephen H. Rusckowski
                             -----------------------------------
                             Name: General Manager
                             -----------------------------------
                             Title: Cardiology Products Division
                             -----------------------------------

                                   Stephen H. Rusckowski

                                       15



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>ex-10_4.txt
<DESCRIPTION>MANUFACTURER AND DISTRIBUTOR AGREEMENT
<TEXT>
                                  EXHIBIT 10.4

            ORIGINAL EQUIPMENT MANUFACTURER AND DISTRIBUTOR AGREEMENT

This document and attached exhibits establish an Agreement between Zymed, Inc.
(referred to herein as "Zymed") and Quinton Instrument Company (referred to
herein as Quinton).

Zymed desires to appoint Quinton as an authorized, exclusive Distributor of
certain medical Products, accessories and related goods ("Products") to be
supplied by Zymed, and Quinton desires to accept such appointment.

Quinton agrees to purchase and Zymed agrees to sell such Products upon the
following terms and conditions:

1.   DEFINITIONS

     a)   "Commencement Date" is July 1, 1998.

     b)   "Anniversary Date" is 12 months following the Commencement Date.

     c)   "Ordering Period" is the initial 1 month period following the
          Commencement Date and any 12 month ordering period thereafter.

     d)   "Forecasted Purchases" are the mutually agreed quantity of Products
          which Quinton plans to order during each ordering period (12 months).

     e)   "Exhibits" are documents attached to, incorporated by reference in, or
          added to this Agreement at a later date, by mutual agreement, which
          describes Products or Quinton Locations.

     f)   "Territories" are defined as follows:

          1)   "Quinton Territory" shall mean the United States, its possessions
               and Canada

          2)   "Zymed Territory" shall mean the countries of the Asia Pacific as
               set forth on Appendix A attached hereto

          3)   "Rest of World" or "ROW" shall mean all countries of the world
               other than those countries in the Quinton Territory or the Zymed
               Territory.

2.   APPOINTMENT

a.   Zymed hereby appoints Quinton as its exclusive distributor for the
     promotion, sale and support in the Quinton Territory of the products listed
     on the attached Exhibits (the "Products"), such Exhibits hereinafter
     referred to as Product Exhibits, upon the terms and conditions set forth in
     this Agreement and the Product Exhibits. Quinton accepts such appointment
     upon such terms and under such conditions. Zymed retains the exclusive
     right to promote, sell and support the Products in the Zymed Territory. The
     parties agree and acknowledge that both parties can promote, sell or
     support the Products in the ROW until such time as, by mutual agreement of
     the parties and on a country-by-country basis, the countries of the ROW are
     added to the Quinton Territory or the Zymed Territory, as applicable.

                                      -1-

<PAGE>

b.   Zymed agrees to provide existing sales literature for the Products listed
     in exhibit A. Quinton will be responsible for the creation of new sales
     literature for the Products it is promoting in the Quinton Territory. Zymed
     will contribute 30% of the cost of printing sales literature, mutually
     agreed upon, for Products listed in Exhibit A.

c.   Quinton agrees to maintain trained sales staff capable of demonstrating the
     Products. Zymed will offer, at Zymed's sole expense, and as part of Zymed's
     Distributor program, Product training and arrhythmia recognition classes.
     Quinton agrees to participate in Product training classes that are mutually
     defined and agreed upon by both parties.

d.   Zymed and Quinton agree to exert commercially reasonable efforts to
     promote, stock, merchandise, sell and support the Products to ultimate
     users of the Products. Quinton understands and agrees that Quinton's
     commitment to pre-sale and post-sale support for the Products is essential
     to Quinton's responsibility under this Agreement. Quinton agrees that the
     Purchasing Schedule set forth in the attached Product Exhibits is a
     reasonable approximate forecast of the performance to be expected from
     Quinton and that Zymed considers such standards in determining whether to
     renew this Agreement or exercise its rights under section 18 herein.

e.   Both Zymed and Quinton will exchange information on the status of inventory
     held for Quinton at Zymed's facilities. Quarterly reconciliation of the
     inventory status will be conducted by both parties. Zymed will provide
     weekly finished goods reports of all Products held for Quinton.

f.   Zymed shall provide Quinton with the same written materials (for example,
     service bulletins) that Zymed provides its own field service personnel and
     which is applicable to any of the Products. Additionally, Zymed shall
     provide to Quinton technical service updates regarding preventive
     maintenance, circumvention of bugs and notification of common failure modes
     with respect to all Products.

3.   RELATIONSHIP

a.   The relationship of Quinton to Zymed shall apply to only the Products in
     Exhibit A. This contract supersedes the OEM Agreement dated May 20, 1994
     and the Medical Products Distributor Agreement dated January 1, 1998.

b.   Any commitments Quinton makes with respect to unusual quantities, delivery
     times, a special modification, suitability of software, or suitability of
     Products to a particular hardware interface, in specific applications or
     otherwise, shall be Quinton's sole responsibility unless prior written
     authorization is obtained from Zymed.

c.   Quinton shall have no power or authority to enlarge or modify the user
     warranty defined in Section 10 or to make any warranty or commitment on
     behalf of Zymed. Quinton shall indemnify Zymed from any liability for any
     such warranty or commitment made by Quinton, unless prior written
     authorization is obtained from Zymed.

                                      -2-

<PAGE>

d.   Neither the making nor the performance of this Agreement shall be construed
     in any manner to have established a joint venture or partnership.

4.   TERM AND RENEWAL

a.   This agreement will commence on the Commencement Date and will remain in
     effect for 5 years ("Initial Term"), unless terminated as provided herein.

b.   Forecasted Purchases will be reviewed and revised, as appropriate, prior to
     each Anniversary Date. Prices will be reviewed and revised, as appropriate,
     prior to each Anniversary Date, or more frequently as provided in paragraph
     6. Any other changes for a renewal term must be mutually agreed in writing.

c.   This Agreement is renewable for an additional 5 years after the end of the
     5th year of the initial term, if mutually agreed by Quinton and Zymed.

d.   Forecasted Purchases will be based on sales commencing 07/01/98 and shall
     be calculated based on the Exhibit(s).

5.   DELIVERY

a.   Deliveries under this Agreement shall be initiated by written orders.

b.   Quinton shall comply with all Food and Drug Administration requirements
     pertaining to the Distributor of Products including reporting, tracking and
     listing as set forth in 21 CFR 800 and following.

c.   Zymed will commit to exerting its best effort towards product availability
     at the time Quinton's order is received. If Zymed fails to deliver Products
     for 30 days beyond the agreed delivery date, Quinton may cancel such orders
     at no charge and/or reduce the fixed purchasing schedule by the order
     amount.

d.   Products shipped under Quinton's shipping instructions, title and risk of
     loss and damage will pass to Quinton at Zymed's shipping dock.

e.   Zymed will ship according to Zymed standard commercial practice, second day
     delivery, at Quinton's expense, to locations as specified by Quinton.
     Quinton requested special packaging or shipping instructions must be
     mutually agreed, and charges will be billed separately to Quinton.

f.   Together with or immediately upon shipment of any Products, Zymed shall
     maintain and, if requested, provide Quinton with a copy of all test
     certifications and device history records with respect to such Products.

                                      -3-

<PAGE>

6.   PRICE AND PAYMENT

a.   The prices which Quinton shall pay Zymed for the Products purchased (net
     Quinton prices) shall be the price appearing on the Product Exhibits.

b.   Prices to Quinton will be reviewed every 3 months to maintain a distributor
     Over All Product Gross Margins of 50% (not including Home Trak). Price
     changes will apply to future orders only. If agreement on price or
     forecasted purchases can not be obtained during these review sessions,
     either party may terminate this agreement with a 180 days written notice.
     Previously existing pricing will remain in effect for the remainder of the
     agreement if the termination option is selected.

c.   Taxes are not included in prices and will be invoiced, if applicable, as
     separate items.

d.   Payment for all orders will be due 30 days from the date of Zymed's
     invoice.

7.   MODIFICATION OF PRODUCTS

a.   All Zymed Products marketed by Quinton shall be sold only in the form as
     packaged by Zymed. Quinton shall not alter, modify, or change any Product
     or its package without Zymed's prior written consent except when necessary
     for service reasons. Zymed will not alter specifications of Products
     without prior notification.

b.   During the term of this Agreement, the parties may revise the
     Specifications by mutual written agreement. After the Effective Date, Zymed
     shall not make any material change to the Specifications without notifying
     Quinton no less than thirty (30) days prior to the effective date of such
     change. No such change shall alter Zymed's obligation to manufacture the
     Products for Quinton under this Agreement. In the event that such change
     would result in the loss of any sale by Quinton of any Product pursuant to
     an agreement between Quinton and its customer entered into prior to
     Quinton's receipt of such notice, Zymed shall honor all of Quinton's orders
     made relating to such sale. Zymed shall immediately notify (both verbally
     and in writing) if Zymed determines that any software anomalies in any of
     the Products can be traced to software provided to Quinton and/or used in
     any Quinton product.

c.   If, during the term of this Agreement Zymed makes any changes to the
     hardware and/or software configurations of its own products, including but
     not limited to any (a) algorithm enhancements for beat detection or
     arrhythmia analysis and classification, or (b) upgrades to the software
     also contained in any Product, Zymed shall notify Quinton of such changes
     no less than thirty (30) days in advance of Zymed's institution of such
     changes. In the event that (1) Quinton determines such changes would
     enhance the current features of any Product and (2) such changes do not
     constitute a new feature for which Zymed is separately charging its own
     customers Zymed shall proceed to update all Products with such changes at
     no charge to Quinton provided that Quinton shall have the right to qualify
     for acceptance any hardware substitutions that Zymed deems necessary

                                      -4-

<PAGE>

     due to obsolescence or cost reduction, such acceptance not to be
     unreasonably withheld by Quinton.

8.   ADVERTISING, TRADEMARKS AND COPYRIGHTED MATERIALS

a.   Zymed will provide, at Zymed's expense, sales literature, advertising
     materials, promotional plans, and other information. programs and sales
     support to assist Quinton in developing its own sales literature,
     advertising materials, promotional plans, and sales support to support the
     selling of the Products in the Quinton Territory.

b.   Zymed hereby grants Quinton a revocable license to use any Zymed trademark
     or trade name associated with the Produces solely in the advertisement and
     promotion of the Products during the term of this Agreement. Except as
     provided in this paragraph, Quinton shall have no right, title or interest
     in or to any patent, trademark or trade name belonging to Zymed.

c.   Quinton shall advertise, promote, market, and sell the Products either
     separately or as part of other products under any of its trademarks
     (including, without limitation, Quinton(R), HolterWorks(TM), and
     HolterWorks Plus(TM)), copyright, tradename, or logo, whether registered or
     unregistered. Zymed shall have no right, title, or interest in or to any
     such trademark, copyright, tradename or logo. So long as Quinton or any
     Affiliate of Quinton shall have any interest in any such trademark,
     copyright, tradename, or logo, whether registered or unregistered, whether
     as proprietor, owner, or licensee in any country of the world, Zymed shall
     not adopt, use, apply for registration, register or own such trademark,
     copyright, tradename, or logo, or any such item confusing similar thereto
     in any country of the world, or take any action which, in Quinton sole
     opinion, weakens or undermines Quinton's proprietary rights.

d.   With Zymed's written consent, one copy of Zymed copyrighted materials
     (software and printed documentation) may be retained for archive purposes,
     to replace a defective copy or for program error verification by Quinton.

9.   TELEMARKETING

a.   Quinton has the option to subcontract Zymed's Telemarketing Department for
     the lead generation of Quinton products. The cost of this service is
     $7,500.00 per telemarketer, per quarter.

10.  WARRANTY

a.   The Products will be covered by a written Warranty in favor of the ultimate
     purchaser and user of such Products (the "User Warrantee") set forth in
     Exhibit B hereto. Such Products shall be referred to as the "Warranty
     Products". The User Warranty covering the Warranty Products is the only
     consumer warranty covering any Product sold herein.

                                      -5-

<PAGE>

b.   Zymed will supply a copy of the User Warranty with each Warranty Product
     sold herein. In addition, Zymed will supply Quinton with point-of-sale
     copies of the User Warranty for pre-sale disclosure to prospective users.

c.   Zymed warrants to Quinton that the Products will conform to and comply with
     all applicable Federal, State and local laws, regulations and codes.

11.  INDEMNIFICATION AND INSURANCE

a.   Zymed shall, at its expense, defend any action or claim instituted against
     Quinton and indemnify and hold harmless Quinton and its Affiliates together
     with their respective officers, directors, employees, agents, and insurers
     for any "Loss" or "Losses": All liability claims, demands, damages,
     actions, suits, and judgments instituted by third parties against each of
     the parties hereunder attributable to bodily injury, sickness, disease,
     death, injury to property, infringement of intellectual property rights or
     otherwise, including, without limitation, attorney's fees and investigation
     and other costs ("Loss") arising out of Zymed's obligations under this
     Agreement, including but not limited to any allegation that a Product is
     defectively or negligently designed, manufactured or tested.
     Notwithstanding the foregoing, Zymed's obligations under this Subsection
     11a shall not apply to any Loss caused by the independent negligence of
     Quinton or its employee for which Quinton shall, at its expense, defend any
     action or claim instituted against Zymed and indemnify and hold harmless
     Zymed and its Affiliates together with their respective officers,
     directors, employees, agents, and Insurers for any "loss" or "losses" as
     previously defined.

b.   In addition to Quinton's remedies for breach of the warranties set forth in
     subsection 10a and 10c hereof, Zymed shall also indemnify, defend, and hold
     harmless Quinton and its Affiliates, together with their respective
     officers, directors, employees, agents, and insurers against all Losses
     arising out of any breach of said warranties, notwithstanding the
     foregoing, Zymed's obligations under subsection 10a and 10c shall not apply
     to any Loss caused by the independent negligence of Quinton or its employee
     for which Quinton shall, at its expense, defend any action or claim
     instituted against Zymed and indemnify and hold harmless Zymed and its
     Affiliates together with their respective officers, directors, employees,
     agents, and Insurers for any "loss" or "losses" as previously defined.

c.   Zymed shall maintain, during the term of this Agreement and such additional
     periods as Quinton may reasonably request (and, in no event, for a period
     not less than five (5) years after any termination of this Agreement),
     Comprehensive General Liability Insurance, including full Products
     Liability coverage, with an insurance carrier reasonably acceptable to
     Quinton, and coverage limits of not less than $5,000,000.00 per occurrence
     and at least $5,000,000.00 aggregate coverage for claims of bodily injury
     and property damage arising out of any Loss. Such policy or policies shall
     extend coverage with respect to occurrences during a policy period,
     regardless of the dates on which claims arising from such an occurrence are
     made, and shall include Quinton as named insured in

                                      -6-

<PAGE>

     such policy or policies. Such policy or policies shall also expressly cover
     any liability Zymed may incur as an indemnitor under this Agreement.

d.   Both parties shall provide notice to the other of any Loss, whether actual
     or threatened, promptly upon receipt of notice thereof.

12.  RECALLS

a.   If either party determines that it is necessary to recall or perform a
     major field correction on any Product, it shall immediately notify the
     other party.

b.   Prior to commencing any recall or major field correction, the parties shall
     review with one another the manner in which the recall or major field
     correction is to be carried out and any instructions or suggestions of the
     applicable regulatory authorities. Zymed and Quinton shall effect the
     recall or mayor field correction in the manner agreed upon between the
     parties in as expeditious a manner as possible and in such a way as to
     cause the least disruption to the sales of any Products and to preserve the
     goodwill and reputation associated with the Products and with all other
     Products manufactured and/or distributed by and the names of Zymed, Quinton
     and their respective Affiliates.

c.   Except for recalls or major field corrections caused by the independent
     negligence of Quinton or its employees, Zymed shall: (i) Reimburse Quinton
     for all of Quinton's costs, losses and expenses incurred as a result of any
     recall or major field correction, but in no event shall Zymed be obligated
     to pay to Quinton more than Zymed received from Quinton as its price for
     the Product plus all other costs and expenses incurred by Quinton in
     connection with the recall or major field correction and the sale for the
     recalled Product and (ii) Defend, indemnify, and hold harmless Quinton and
     its Affiliates, together with their respective officers, directors,
     employees, agents, and insurers from and against all Losses arising out of
     any recall or major field correction.

13.  REPAIR OF QUINTON OWNED DEFECTIVE GOODS

a.   Zymed and Quinton agree that the procedure provided herein for return and
     repair or replacement of defective units shall be Quinton's sole and
     exclusive remedy for any claim by Quinton relating to any alleged defect or
     nonconformity in the Products sold herein. This provision shall not
     otherwise limit the rights and remedies available to Quinton and Zymed set
     forth in sections 11 or 12 hereof.

b.   After Zymed approves the return of the defective unit, Zymed will inform
     Quinton as to the return location.

c.   Zymed shall be entitled to verify the reason for the return set forth in
     the Service Information Card arid to determine at its discretion whether to
     replace (rather than repair) the unit. Zymed shall not repair or replace
     units returned for the following reason:

          i.   Damage from abuse or misuse;

                                      -7-

<PAGE>

          ii. Attempted repair by unauthorized service center;
          iii. Repossession;
          iv. Use by Quinton as demonstration units.

14.  WARRANTY AND PRODUCT SAFETY ISSUES

a.   In order to comply with regulatory bodies and to verify the warranty start
     date, Zymed will utilize the shipping information provided by Quinton to
     Zymed for all Products sold hereunder as well as for warranty Products to
     be used by Quinton as a display or demonstration system.

b.   In the event Quinton learns by any means of an incident involving
     malfunction of a Warranty Product sold by Quinton, Quinton agrees to notify
     Zymed of such incident within three (3) working days in case of serious
     injury or death, and within ten (10) working days otherwise.

c.   Quinton shall comply with all Food and Drug Administration requirements for
     distributors. See 21 CFR 807.

15.  IN-WARRANTY REPAIR

a.   Zymed will provide a thirteen (13) month warranty on Products sold to
     Quinton, with the exception of Digital Recorders which Zymed will provide a
     24 month warranty. The warranty period starts when the Products are shipped
     to Quinton's customer using the shipping date as the starting date.

b.   Field repair service and installation shall be performed by Quinton at
     Quinton's expense for all Products sold by Quinton, provided, however, that
     the Product meets the specifications set forth in Exhibit E.

c.   Products under Warranty are covered by Zymed. Quinton or its customer must
     pay for transportation, insurance, and handling charges in all cases of
     shipment of Product to Zymed for Warranty. Repaired Warranty Products will
     be returned to sender at Zymed's expense.

d.   Quinton shall be responsible for the satisfactory handling and resolution
     of complaints from its customers with Zymed's support.

16.  OUT-OF-WARRANTY REPAIR

a.   Except as provided in section 11 Quinton or its customer shall bear all
     shipping charges for out-of-warranty repairs.

b.   Repairs made by Zymed outside of the warranty period shall be billed at 70%
     of the current Zymed repair charge at the time of repair. Repairs due to
     design flaws will be done at no charge.

                                      -8-

<PAGE>

c.       All repairs will be made by an authorized factory service
         representative or authorized Zymed representative and shall be
         performed at Quinton's customer's site or, at Zymed's option, at a
         Zymed facility depending on specific Product warranty.

d.   An optional service contract will be available to Quinton or Quinton's
     customers.

e.   Yearly service repair charges will not exceed 3% of the total revenue
     generated by Quinton from the cumulative sales of the Products during prior
     years. This figure will be calculated every 12 months and a credit to
     Quinton will be issued for any excess over the 3% during the prior 12 month
     period. Not included in the repair charges calculations are: accessories,
     product configurations changes and billable field support.

17.  SAFE HARBOR REGULATIONS

a.   Quinton shall comply with all requirements of the Safe Harbor regulations
     42 CFR 1001 and following with respect to any discounts, rebates or credits
     offered to its customers.

18.  TERMINATION

a.   Either party may terminate this Agreement without cause at 5 years upon 120
     days prior written notice to the other party.

b.   If either party becomes insolvent, is unable to pay its debts when due,
     files for bankruptcy, is the subject of involuntary bankruptcy, has a
     receiver appointed, the other party may terminate this Agreement upon
     providing written notice and may cancel any unfulfilled obligations.

c.   If a party materially breaches this Agreement, and within sixty (60) days
     of notice of breach from the non-breaching party, the breaching party has
     not initiated good faith efforts to cure such breach to the reasonable
     satisfaction of the non-breaching party, then the non-breaching party may
     terminate this Agreement in writing promptly after expiration of such sixty
     (60) day period. In the event of termination under this Section 18(c),
     either party may set off any amounts owing to such party against any
     amounts owing to the other party under this or any other agreement between
     the parties.

d.   Quinton shall immediately cease to be an authorized Zymed Distributor upon
     the effective date of the termination of this Agreement. Quinton shall
     thereafter refrain from representing itself as an authorized Zymed
     Distributor and from using any Zymed trademark or trade name except as
     required to sell any unsold inventory or to honor and service commitments
     with Quinton customers.

e.   All claims of every kind thereto shall cease and there shall be nothing
     payable by either party except as may be due as a result of prior sales and
     these shall be paid as they fall due.

                                      -9-

<PAGE>

19.  NOTICE

a.   Any notices given hereunder shall be given in writing by mail to the
     addresses of the parties hereinafter set forth in below or to such other
     address for wither party as it may designate by written notice to the
     other.

20.  PATENT INDEMNITY

a.   Zymed shall, except as otherwise provided below, defend or settle any claim
     made or any suit or proceeding brought against Quinton so far as it is
     based on an allegation that any Product furnished herein infringes a patent
     or other proprietary right of a third party, if notified promptly in
     writing and given information, reasonable assistance and the sole authority
     to defend or settle same (at Zymed's expense), and Zymed shall pay all
     damages and costs, including Attorney's fees, finally awarded or reasonably
     incurred, in any such suit or proceeding against Quinton. In case said
     Product is in such suit held to infringe and the use or said Product is
     enjoined, or in the case of a settlement as referred to above, Zymed shall
     have to option at its own expense, to procure for Quinton the right to
     continue using or selling said Product, or replace same with a
     non-infringing Product; or modify same so it becomes non-infringing; or
     grant Quinton a credit for the depreciated value of said Product and accept
     return of same. The foregoing states the entire liability of Zymed for
     patent infringement by Products furnished herein.

21.  EXPORTING

a.   If Quinton exports Products Quinton assumes responsibility for complying
     with applicable laws and regulations and for obtaining required export and
     import authorizations.

22. GENERAL CONDITIONS

a.   Neither party may assign rights or obligations without prior written
     consent of the other party. Quinton shall advise Zymed of any changes in
     control of Quinton or its operating arrangement and such change shall not
     give rise to a right of termination by Zymed. Zymed shall advise Quinton of
     any changes in control of Zymed or its operating arrangement and such
     change shall not give rise to a right of termination by Quinton.

b.   Neither party's failure to exercise any of its rights under this Agreement
     will constitute or be deemed a waiver or forfeiture of those rights.

c.   Any disputes arising in connection with this Agreement will be governed by
     the laws of Washington without regards to any conflicts of law provisions
     thereof.

d.   This Agreement supersedes any previous communication, representations, or
     agreements between the parties, whether oral or written, regarding
     transactions hereunder. Zymed and Quinton's additional or different terms
     and conditions on any order or acceptance

                                      -10-

<PAGE>

     forms will not apply. This Agreement may not be changed except by an
     amendment signed by an authorized representative of each party.

e.   The obligations contained in Sections 10, 11, 12, 13, 14, 15, 16 and 19,
     will survive termination or expiration of this agreement. 15e will
     terminate 12 months following termination or expiration of this agreement

23.  APPENDIX AND EXHIBITS

     The attached Appendix and Exhibits are hereby made a part of this
     Agreement:

          Appendix A: Specific locations referred to as "Asia Pacific"

          Exhibit A:  Pricing
          Exhibit B: Warranty
          Exhibit C: Quinton Locations
          Exhibit D: Supplies
          Exhibit E: Product Specifications

Distributor:                                 Seller:

Quinton Instrument Company                   ZYMED, INC.

3303 Monte Villa Parkway                     20 North Aviador Street

Bothell, WA 98021                            Camarillo, CA 93010

/s Mark Tauscher                             /s/ Hosmel Galan
- ---------------------------------            ---------------------------------
Authorized Representative Signature          Authorized Representative Signature

Name:  Mark Tauscher                         Name:  Hosmel Galan

Title:  Executive V.P. Sales/Marketing       Title:  Executive V.P.

Date:  March 31, 1999                        Date:  3/9/99

                                      -11-

<PAGE>

APPENDIX A:  ASIA PACIFIC COUNTRIES - EXCLUDED

AFGHANISTAN
BANGALADESH
BHUTAN
BRUNEI
CHINA, PEOPLES REPUBLIC OF
HONG KONG
INDIA
INDONESIA
JAPAN
KOREA, SOUTH
KOREA, NORTH
MACAU
MALAYSIA
MALDIVES ISLANDS
MYANMAR
NEPAL
PAKISTAN
PHILIPPINES
SINGAPORE
SRI LANKA
TAIWAN - REPUBLIC OF CHINA
THAILAND
UZBEKISTAN
TURKMENISTAN
VIETNAM
AUSTRALIA
COOK ISLANDS
FIJI ISLANDS
NEW ZEALAND
PAPUA NEW GUINEA

                                      -12-

<PAGE>

EXHIBIT A:  PRICING

The Holter Monitoring System Products listed below are priced in accordance with
the schedules stated on this Exhibit.

ITEM                                  PRODUCT                         PRICE

*2010 Holter                          Holter Workstation              $14,000ea
HomeTrak                              Event Recorder                  $   750ea
HomeTrak (HW & SW)                    Receiving Station               $ 3,500ea
Zybit (Software License)              Server Software                 $ 3,000ea
Zybit (Software License)              Remote Software                 $ 1,000ea
Zybit (Hardware - Server)             Server Hardware & Software      $ 4,750ea
Zybit (Hardware - Remote)             Remote Hardware & Software      $ 3,400ea
*HolterWorks                          Holter Workstation              $ 9,000ea
*HolterWorks Plus                     Holter Workstation              $12,000ea
Zip Drive Option                                                      $   185ea
Jaz Drive Option                                                      $   550ea
Home Trak Plus                        EASI Event Recorder             $   750ea
HomeTrak Plus Receiving Station       Receiving Station               $ 3,500ea
*20/20                                Cassette Recorder               $   690ea
*20/20D                               Digital Recorder                $ 1,025ea
*Fax/Modem Option                                                     $   200ea
HP TraceMaster Interface                                               TBD
(TBD upon final product release)
*NT Holter                                                             TBD
(TBD upon final product release)


* Within the exclusive territories, Quinton is the only authorized dealer for
these products. All other products are non-exclusive.

HOLTER MONITORING SYSTEM PURCHASING SCHEDULE
On July 1, 1998, and subsequently, every "Anniversary Date", the Fixed
Purchasing Schedule will be reviewed and adjusted, if appropriate. The Fixed
Purchasing Schedule can be increased and/or accelerated by mutual agreement.

FIXED PURCHASING SCHEDULE*:
July 1 1998 -September 30, 1998:            20 Units
October 1, 1998 - December 31, 1998:        18 Units
January 1, 1999 - March 31, 1999:           24 Units
April 1, 1999 - June 30, 1999:              24 Units
ESTIMATED PURCHASING SCHEDULE**:
July 1, 1999 - September 30, 1999:          30 Units
October 1, 1999 - December 31, 1999:        35 Units

                                      -13-

<PAGE>

January 1, 2000 - March 31, 2000:           30 Units
April 1, 2000 - June 30, 2000:              30 Units

PAYMENT TERMS:                              Due upon reported on Manufacture Log

* The fixed purchasing schedule can be made of any mix of HolterWorks,
HolterWorks Plus, 2010 and NY Holter product. At the end of every quarter (i.e.
March 31, June 30) title to products held at Zymed's location and risk of loss
or damage to such products will pass to Quinton for any of the fixed purchasing
schedule units ordered but not shipped during that quarter.

** July 1, 1999 - June 30, 2000 is based upon the release of the NT Holter
product to QIC by June 1, 1999. Fixed Purchasing Schedule will be revised to
mutually agreed quantity in the event that NT Holter is not released per
specification by June 1, 1999.




                                      -14-

<PAGE>

                                    WARRANTY

The Zymed Product is warranted against defects in materials and workmanship for
a period of 13 months from the date of shipment (except 20/20D Recorders which
are warranted for a period of 24 months). The product is warranted to meet its
specifications per Exhibit E. During the warranty period, Zymed will, at its
option, either repair or replace Products which prove to be defective. Zymed
does not warrant that the operation of the Product's software, firmware, or
hardware shall be uninterrupted or error free. No other warranty is expressed or
implied. Zymed specifically disclaims the implied warranties of merchantability
and fitness for a particular purpose other than described herein.

                             LIMITATION OF WARRANTY

The foregoing warranty shall not apply to defects resulting from:

1.    Improper or Inadequate maintenance by buyer.
2.    Buyer-supplied software or interfacing.
3.    Unauthorized modification or misuse.
4.    Operation outside of the environment specification for the product.
5.    Improper site preparation and maintenance.





                                      -15-

<PAGE>


EXHIBIT C: QUINTON LOCATIONS

[Locations where Quinton business is conducted]

Address:
                           Quinton Instrument Company
- --------------------------------------------------------------------------------
                           3330 Monte Villa parkway
- --------------------------------------------------------------------------------
                           Bothell, WA 98021
- --------------------------------------------------------------------------------
Phone:                     425/402-2000
      --------------------------------------------------------------------------
Fax:                       425/402-2005
    ----------------------------------------------------------------------------





                                      -16-

<PAGE>

EXHIBIT D:  SUPPLIES

<TABLE>
<CAPTION>
DESCRIPTION                                  PART #           PRICE           EXCHANGE               SUPPLIER
- -----------                                  ------           -----           --------               --------
<S>                                        <C>              <C>               <C>               <C>
Laser Paper                                100000-001         $4.00              N/A                   N/A
Hookup Kit                                 101147-001         $7.00              N/A                  Zymed
Pouch w/Strap                              102066-005         $20.00             N/A               Terra Craft
Test Box                                   102980-001         $95.00             N/A                  Zymed
14" Monitor                                108010-001        $400.00             N/A                   CTX
Tape Deck Assembly                         108040-001       $2,416.00         $1,208.00               Zymed
Acquisition Board                          108050-001       $1,800.00          $900.00                Zymed
Printer Cable                              131018-001         $25.00             N/A                   N/A
Power Strip                                131021-001         $13.00             N/A                   N/A
1 Meg Module                               151006-217         $90.00             N/A                  Intel
8 Meg Module                               151006-200        $100.00             N/A                  Intel
Patient Cable                              163003-005         $28.00             N/A                 Tronomed
Waist Belt                                 164008-005         $5.60              N/A               Terra Craft
17" Monitor                                164021-018        $850.00             N/A                  Arcus
17" Monitor                                164002-045        $850.00             N/A                   CTX
Disk Controller                            164022-056         $40.00             N/A                 Worldnet
Graphite Video Card                        164022-078        $450.00             N/A              Hercules PG420
Dynamite                                   164022-079        $450.00             N/A                 Dynamite
Fax Board                                  164022-087        $170.00             N/A            Karby TMB-240 CTP
Pentium Zappa 120                          164022-200        $900.00             N/A               Zappa Board
Motherboard (486-33)*                      164022-600        $900.00             N/A              Micronics, DTK
Motherboard (486-66)*                      164022-800        $900.00             N/A              Micronics, DTK
DOS 6.2                                    164023-006         $66.00             N/A                Microsoft
Keyboard                                   164024-004         $50.00             N/A                 Fujitsu
Mouse Pad                                  164024-005         $0.00              N/A               Distributor
Mouse                                      164024-001         $50.00             N/A                Microsoft
Laser Toner Cartridge                      164025-014        $150.00             N/A             Hewlett Packard
Laser IV Plus                              164025-050       $1,400.00            N/A             Hewlett Packard
Hard Disk                                  164027-063        $300.00             N/A                  Maxtor
3.5" Floppy Disk                           164035-012         $80.00             N/A                   Teac
Intel Falsh Card (20 Meg)                  164039-020        $275.00             N/A                  Intel
Chassis (tower, bezel, cover, p.s.)        164051-001        $150.00             N/A                Am Enhance
Power Supply                               164051-050         $85.00             N/A                Am Enhance
Recorder Operators Manual                  172003-010         $17.50             N/A                  Zymed
20/20D Recorder Only                       031371-002          $925              N/A                  Zymed
20/20D Recorder w/Accessories              00365-002        $1,025.00            N/A                  Zymed
20/20 Recorder w/Accessories               000365-001        $690.00             N/A                  Zymed
Recorder Chassis                           164060-001        $325.00             N/A
Holterworks Plus Tower                     031285-005       $9,750.00            N/A                  Zymed
Holterworks Plus Tower                     031285-006       $9,750.00            N/A                  Zymed
Holterworks Plus System                    000364-004       $12,000.00           N/A                  Zymed
(Tower, 17" Monitor, Printer)
2010 Holter Tower (110 volts)              35694-001        $11,750.00           N/A                  Zymed
2010 Holter Tower (220 volts)              35694-002        $11,750.00           N/A                  Zymed
HW Tower                                   031282-005       $7,300.00            N/A                  Zymed
Laser Jet 4000                             35695-001        $1,400.00            N/A             Hewlett Packard
Laser Jet 5                                 18842019        $1,400.00            N/A             Hewlett Packard
Laser Jet 5L                                18842017         $850.00             N/A             Hewlett Packard
Card Reader                                164022-087        $170.00             N/A            Karby TMB-240 CTP
</TABLE>

                                      -17-

<PAGE>

* Does not include memory.
ORDERING SUPPLIES
Supply orders can be placed by calling Zymed at:
(800) 235-5941 - or - by contacting Zymed's e-mail address at:  zysales@zmi.com
Monday - Friday, 6:30am - 4:30pm
Pacific Standard Time




                                      -18-

<PAGE>


EXHIBIT E:  PRODUCT SPECIFICATIONS

REFER TO:

2010
DOCUMENT NUMBER                             SRS 172235-000
REVISION:                                   A

HOLTER NT
DOCUMENT NUMBER                             SRS 172285-000
REVISION:                                   --

HOLTER WORKS PLUS:                          SRS 172239-000
REVISION:                                   A





                                      -19-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>7
<FILENAME>ex-99_1.txt
<DESCRIPTION>JOINT FILING AGREEMENT
<TEXT>
                                  EXHIBIT 99.1

                             JOINT FILING AGREEMENT


In accordance with Rule 13-d(k)(1) promulgated under the Securities Exchange Act
of 1934, the undersigned agree to the joint filing of a Statement on Schedule
13D (including any and all amendments thereto) with respect to the Common Stock
of Quinton Cardiology Systems, Inc., and further agree to the filing of this
agreement as an Exhibit thereto. In addition, each party to this Agreement
expressly authorizes each other party to this Agreement to file on its behalf
any and all amendments to such Statement on Schedule 13D.

Dated:

                                            KONINKLIJKE PHILIPS ELECTRONICS N.V.


                                            By: /s/ A. Westerlaken
                                               ---------------------------------
                                               Title:  Senior Vice President and
                                                       General Secretary


                                            PHILIPS HOLDING USA INC.


                                            By: /s/ Belinda W. Chew
                                               ---------------------------------
                                               Title: Senior Vice President


                                            PHILIPS ELECTRONICS NORTH AMERICA
                                            CORPORATION


                                            By: /s/ Belinda W. Chew
                                               ---------------------------------
                                               Title: Senior Vice President

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
