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                                                                   EXHIBIT 10.26

                                  July 20, 1999

Mr. Michael Blomeyer
Chief Executive Officer
Quinton Instrument Company
3303 Mont Villa Parkway
Bothell, WA  98021-8906

Dear Michael:

We are pleased to confirm our arrangement under which W.R. Hambrecht & Co., LLC
("WRH") is engaged by Quinton Instrument Company (the "Company") to act as its
exclusive financial advisor with respect to the evaluation and consideration of
a potential Sale (as defined below), of its subsidiary, Quinton Fitness, Inc.
(the "Division").

1.    SCOPE OF DUTIES. WRH will, where appropriate, perform the following tasks
      in connection with this effort:

      (a)   Undertake an analysis of the business, operations, financial
            condition and prospects of the Division;

      (b)   Make recommendations to prepare the Division for proper
            investigation by potential acquirers and other interested parties;

      (c)   Assist with the identification and contacting of potential
            prospective acquirers; provided that, only the prospective acquirers
            which the Company has determined it wishes WRH to contact will be
            contacted by WRH ("Sale Candidates");

      (d)   Along with the Company, evaluate proposals from Sale Candidates
            regarding a possible Sale of the Division and assist in negotiations
            regarding such proposals; and

      (e)   If requested, assist and advise the Company on the preparation of
            any documents relating to a Sale, including without limitation, any
            Registration Statement on Form S-4, Proxy Statement, Form 8-K or
            other SEC related documents; provided that, in any event, WRH shall
            have the right to review and approve the form and content of any
            reference to WRH in any such documentation.


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2.    CERTAIN DEFINITIONS. For purposes of this Agreement,

      (a)   "Sale" shall be defined to include any (i) merger or consolidation
            of the Division, (ii) sale of substantially all of the assets of the
            Division, or (iii) sale or exchange by the Company of a majority of
            the equity securities of the Division or any transaction by the
            Division in which the Company owns less than 50% of the surviving
            entity after the transaction.

      (b)   "Aggregate Transaction Value" shall mean the amount of consideration
            received by the Company and/or its shareholders (treating any shares
            issuable upon exercise of options, warrants or other rights of
            conversion as outstanding), plus the amount of any debt assumed,
            acquired, remaining outstanding, retired or defeased or preferred
            stock redeemed or remaining outstanding in connection with the
            Transaction, including, in the case of a sale or other disposition
            by the Division of assets, the net value of any assets not sold by
            the Division.

            In the event that a Sale is structured so as to provide for the
            Company to retain all or part of the equity securities of the
            Division, such retained securities shall be deemed to constitute
            part of the Aggregate Transaction Value and shall be valued
            immediately following the closing of the Sale. In the event that a
            Sale takes the form of a sale of substantially all the assets of the
            Division, any assets retained by the Company shall be deemed to be
            part of the Aggregate Transaction Value received in connection with
            the Sale and valued (i) with respect to investments, in an amount
            equal to the market value of such investments; (ii) with respect to
            inventories and receivables, in an amount equal to the book value
            thereof; and (iii) with respect to any other assets, in an amount to
            be reasonably determined by the parties.

            For purposes of computing the Aggregate Transaction Value, equity
            securities traded on a national securities exchange or quoted on the
            National Association of Securities Dealers National Market System
            shall be valued at the last closing price thereof prior to the
            closing of the Sale. Equity securities which are traded over the
            counter shall be valued at the mean between the latest bid and asked
            prices prior to such date. Any other unmarketable equity securities
            or interests or non-cash forms of consideration shall be assumed to
            have a value equal to their fair market value at the time of the
            closing, as determined by mutual agreement between WRH and the
            Company.

3.    FEES. As compensation for the services to be provided by WRH hereunder, if
      during the Term (as defined below) of this Agreement, the Company
      consummates a Sale or enters into a definitive agreement or letter of
      intent or other evidence of commitment

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      which subsequently results in a Sale being consummated, the Company agrees
      to pay WRH a Transaction Fee equal to $500,000. The entire Transaction Fee
      shall be payable in cash to WRH at the closing of the Sale.

      If within 12 months following the Term of this Agreement: (i) a Sale
      occurs which involves a Sale Candidate identified to the Company by WRH or
      with whom the Company or WRH had a discussion involving an expression of
      interest regarding a Sale during the Term (whether or not such discussions
      were initiated by WRH) or (ii) the Company enters into a definitive
      agreement, letter of intent or other evidence of commitment with any such
      party that results in a Sale, WRH shall be entitled to the Transaction Fee
      described above.

4.    EXPENSES. In addition to the Transaction Fee, and regardless of whether
      the Sale contemplated by this letter agreement is consummated, the Company
      agrees, upon request from time to time, to promptly reimburse WRH for all
      reasonable out of pocket expenses, including the reasonable fees and
      disbursements of WRH's legal counsel, if any, up to a maximum of $10,000.

5.    EXCLUSIVITY AND DISCLOSURE. During the Term of this Agreement, the Company
      will inform WRH if it wishes to initiate any discussions with respect to a
      Sale and will work exclusively with WRH in such regard. In the event that
      the Company or the Division or any of their respective directors or
      management receive any inquiry or are otherwise aware of the interest of
      any third party concerning a Sale, the Company agrees to promptly inform
      WRH of the prospective acquirer and its interest. The Company agrees that,
      except as required by applicable law or in connection with the
      consummation of a Sale, any advice to be provided by WRH under this
      engagement letter shall not be disclosed publicly or made available to
      third parties without the prior approval of WRH.

6.    TERM. This Agreement shall terminate upon the earliest of (i) the date
      twelve months following the date first set forth above, (ii) the mutual
      written agreement of WRH and Company or (iii) thirty days following the
      delivery of written notice by either party terminating the agreement.

7.    INDEMNIFICATION. To the extent permitted by law, the Company hereby agrees
      to indemnify and hold harmless WRH, its affiliates, and each of their
      directors, officers, agents advisors, consultants employees and
      controlling persons (within the meaning of the Securities Act) (the
      "Indemnified Parties") against any losses, claims, damages, or liabilities
      (joint or several), including, without limitation, all reasonable legal
      fees and other expenses incurred in connection with investigating,
      preparing, defending, paying, settling or compromising any such loss,
      claim, damage or liability, whether or not in connection with any pending
      or threatened litigation in which any Indemnified


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      Party is a named party, to which any Indemnified Party becomes subject and
      which is related to or arises out of any act, omission, transaction or
      event contemplated by this Agreement. The Company will promptly reimburse
      any Indemnified Party for all expenses as reasonably incurred in
      connection with the investigation of, preparation for or defense of any
      such pending or threatened loss, claim, damage or liability; provided,
      however, that each Indemnified Party so reimbursed shall repay such
      expenses in the event that it is ultimately determined that such
      Indemnified Party is not entitled to indemnification for such loss, claim,
      damage or liability pursuant to this Section 7. Notwithstanding the
      foregoing, the indemnity contained herein shall not apply to amounts paid
      in settlement of any such loss, claim, damage or liability if such
      settlement is effected without the consent of the Company (which consent
      shall not be unreasonably withheld), nor shall the Company be liable in
      any such case for any loss, claim, damage or liability to the extent that
      a court of competent jurisdiction shall have determined by final judgment
      that such loss, claim, damage or liability resulted from an Indemnified
      Party's gross negligence or bad faith.

      Promptly after receipt by an Indemnified Party of notice of the
      commencement of any action, such Indemnified Party shall deliver to the
      Company a written notice of the commencement thereof and the Company shall
      have the right to participate in, and, to the extent the Company so
      desires, to assume the defense thereof with counsel satisfactory to the
      Indemnified Parties; provided, however, that an Indemnified Party shall
      have the right to retain its own counsel, with the fees and expenses to be
      paid by the Company, if representation of such Indemnified Party by the
      counsel retained by the Company would be inappropriate due to actual or
      potential differing interests between such Indemnified Party and any other
      party represented by such counsel in such proceeding. The failure to
      deliver written notice to the Company within a reasonable time of the
      commencement of any such action, if materially prejudicial to its ability
      to defend such action, shall relieve the Company of any liability to the
      Indemnified Party under this Section 7 but the omission to so deliver
      written notice to the Company will not relieve it of any liability that it
      may have to an Indemnified Party otherwise than under this Section 7.
      Without prior written consent of the Indemnified Party, the Company shall
      not effect any settlement of any pending or threatened proceeding unless
      such settlement includes an express, complete release of such Indemnified
      Party from all liability as to all asserted or potential claims against
      the Indemnified Party.

      If the indemnification provided for in this Section 7 is held by a court
      of competent jurisdiction to be unavailable to an Indemnified Party with
      respect to any losses, claims, damages, or liabilities referred to herein,
      the Company, in lieu of indemnifying such Indemnified Party thereunder,
      shall, to the extent permitted by applicable law, contribute to the amount
      paid or payable by such Indemnified Party as a result of such loss, claim,
      damage or liability (i) in proportion to the relative benefit


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      received by each such Indemnified Party, respectively, on the one hand and
      the Company, on the other hand, or (ii) if the measurement referred to in
      (i) above is not permitted by applicable law, in proportion not only to
      the benefits described above but also the relative fault of each
      Indemnified Party on the one hand and the Company on the other as well as
      other relevant equitable considerations. In no event shall the
      contribution of the Indemnified Parties exceed the fees received by WRH.
      The relative benefit received by WRH in connection with any Sale shall be
      deemed to be in the same proportion as the aggregate fee bears to the
      Aggregate Transaction Value while the relative fault of WRH and the
      Company shall be determined by reference to, among other things, whether
      the actions or omissions to act were by the Indemnified Party or the
      Company, the parties' relative intent, knowledge, access to information
      and opportunity to correct or prevent such act or omission.

      The obligations of the Company referred to in this Section 7 shall be in
      addition to any rights that any Indemnified Party may have otherwise. The
      obligations of the Company under this Section 7 shall survive completion
      of any Sale and the termination of this Agreement.

8.    MISCELLANEOUS. The representations, warranties and covenants of the
      Company set forth in this Agreement shall remain in force regardless of
      any investigation made by or on behalf of WRH or any prospective
      Participant and will survive completion of the Sale. The provisions of
      sections 3, 4, 5, and 7, shall survive any termination of this Agreement.
      This Agreement shall be governed by and construed in accordance with the
      internal laws of the state of California without giving effect to any
      conflict of laws principles. This Agreement contains the entire agreement
      between the Company and WRH concerning the subject matter hereof and
      supersedes any prior understanding or agreement. Any amendment hereto or
      waiver of any right or obligation hereunder must by in writing and signed
      by both parties. This Agreement shall be binding upon and inure to the
      benefit of any successors, assigns, heirs and personal representatives of
      WRH and the Company. Any notices hereunder must be in writing and if
      addressed to (i) the Company, delivered to the address or facsimile number
      set forth on the first page of this Agreement or (ii) WRH, delivered to
      the address or facsimile number set forth below the signature block below.



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This Agreement is effective as of the date first set forth above. Please confirm
that the foregoing correctly sets forth our understanding by signing and
returning the enclosed duplicate of this Agreement.

                                          Sincerely yours,

                                          W.R. HAMBRECHT & CO. LLC


                                          By   /s/ Michael K. Ackrell
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                                               Michael K. Ackrell
                                               Director, Investment Banking

Accepted and Agreed to
This ___ day of ___________, 19___:

Quinton Instrument Company

By:  /s/ Michael Blomeyer
   -----------------------------------
Name:  Michael Blomeyer
     ---------------------------------
Title:  President/CEO
      --------------------------------