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                                                                   EXHIBIT 10.42


                             COLORADO MEDTECH, INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN

                     AS AMENDED AND RESTATED ON MAY 24, 2001

1)       Purpose

         This Employee Qualified Stock Purchase Plan (the "Plan") is intended to
serve as an incentive and to encourage stock ownership by all eligible employees
of Colorado MEDtech, Inc. (the "Company") and participating subsidiaries (as
defined in Section 17 hereof) so that they may share in the fortunes of the
Company by acquiring or increasing their proprietary interest in the Company.
The Plan is designed to encourage eligible employees to remain in the employ of
the Company. It is intended that options issued pursuant to the Plan shall
constitute options issued pursuant to an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code").

2)       Eligible Employees

         All employees of the Company or any of its participating subsidiaries
("Employees") prior to the beginning of any Payment Period (as defined below)
shall be eligible to receive options under the Plan to purchase the Company's
Common Stock, no par value (the "Stock"). In no event may an Employee be granted
an option if such Employee, immediately after the option is granted, owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of its parent corporation or
subsidiary corporation, as the terms "parent corporation" and "subsidiary
corporation" are defined in Section 424(d) of the Code shall apply and all stock
which the Employee may purchase under outstanding options (notwithstanding that
such options may not be presently exercisable) shall be treated as stock owned
by the Employee.

         For purposes of this Article 2, the term "Employee" shall not include
an employee whose customary employment by the Company or participating
subsidiary is twenty (20) hours or less per week or is for not more than five
(5) months in any calendar year.

3)       Stock Subject to the Plan

         The stock subject to the options issued under the Plan shall be shares
of the Company's authorized but unissued shares of Stock or shares of Stock
reacquired by the Company. The aggregate number of shares which may be issued
pursuant to the Plan is 540,000 subject to increase or decrease as provided
herein by reason of stock split-ups, reclassifications, stock dividends, changes
in par value and the like. The maximum number of shares available during each
Annual Payment Period ending prior to January 1, 2000 shall not exceed 80,000
shares and the maximum


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number of shares available during each subsequent Annual Payment Period shall be
as follows: (1) the maximum number of shares available during the Annual Payment
Period beginning January 1, 2000 and ending December 31, 2000 shall not exceed
100,031, (2) the maximum number of shares available during the Annual Payment
Period beginning January 1, 2001 and ending December 31, 2001 (the "2001 Plan
Year") shall not exceed 150,000 and (3) the maximum number of shares available
during the Annual Payment Period beginning January 1, 2002 and ending December
31, 2002 shall not exceed 259,587 minus the number of shares issued during the
2001 Plan Year. If the total number of shares to be purchased by all
Participants on any exercise date exceeds the number of shares then available
for issuance under the Plan, a pro rata allocation of the shares available shall
be made in a uniform and equitable manner.

4)       Payment Periods and Stock Options

         The annual period, January 1 to December 31 is a payment period during
which payroll deductions will be accumulated under the Plan ("Annual Payment
Periods"). The Plan will be implemented in three (3) Annual Payment Periods
beginning January 1, 1997. Thereafter, it will be continued for three (3)
additional Annual Payment Periods beginning January 1, 2000. Each Annual Payment
Period consists of four (4) separate payment periods (each, a "Quarterly Payment
Period"), beginning on January 1, April 1, July 1 and October 1, as applicable,
and each ending on December 31. Each Payment Period includes only regular pay
days falling within it.

         On the first business day of each Payment Period, the Company will
grant to each Employee who has elected to participate in the Plan (a
"Participant") an option to purchase on the last day of such Payment Period, at
the Option Price (defined below), such number of shares of Stock as his/her
accumulated payroll deductions during such Payment Period will pay for at the
Option Price, provided that such employee remains eligible to participate in the
Plan throughout such Payment Period. If the Payment Period terminates on a
Saturday, Sunday or legal holiday, then the last day of the Payment Period shall
be the last business day prior to December 31.

         The "Option Price" for each Payment Period shall be the lesser of (i)
85% of the fair market value (as defined below) of the Stock on the first
business day of the applicable Payment Period in which the Participant entered
the Plan (or, with respect to increased contributions, the Payment Period when
such increase takes place);or (ii) 85% of the fair market value of the Stock on
the last day of the Annual Payment Period, in either case rounded up to the
nearest whole cent. In the event of an increase or decrease in the number of
outstanding shares of Stock through stock split-ups, reclassifications, stock
dividends, changes in par value and the like, an appropriate adjustment shall be
made in the number of shares and Option Price per share provided for under the
Plan, either by a proportionate increase in the number of shares and a
proportionate decrease in the Option Price per share, or by a proportionate
decrease in the number of shares and proportionate increase in the Option Price
per share, as may be required to enable a Participant in the Plan as to whom an
option is exercised on the last day of any then current Payment Period to
acquire such number of full shares as his/her accumulated payroll deduction on
such date will pay for at the adjusted Option Price. The


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determination of what constitutes an "appropriate adjustment" shall be made by
the Board of Directors, whose determination thereof shall be final.

         For purposes of this Plan the term "fair market value" means, if the
Stock is listed on a national securities exchange, the average of the high and
low prices of the Stock on such exchange or if the Stock is traded in the
over-the-counter securities market, the mean between the closing bid and asked
prices of the Stock.

         No employee shall be granted an option which permits his/her rights to
purchase Stock under the Plan and any other employee stock purchase plans of the
Company or any parent or subsidiary corporations to accrue at a rate which
exceeds $25,000 in fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding at
any time. A right to purchase Stock under the Plan "accrues" on the last day of
the Payment Period. The purpose of the limitation in the preceding sentence is
to comply with Section 423(b)(8) of the Code.

5)       Exercise of Option

         Each Participant who fails to withdraw from participation in the Plan
on or prior to the last business day of an Annual Payment Period shall be deemed
to have exercised his/her option on such date and shall be deemed to have
purchased from the Company such number of full shares of Stock reserved for the
purpose of the Plan as his/her accumulated payroll deductions on such date will
pay for at such Option Price. If a Participant is not an employee on the last
day of a Payment Period, he/she shall not be entitled to exercise his/her
option.

6)       Unused Payroll Deductions

         Only full shares of Stock may be purchased. Any balance remaining in a
Participant's account after a purchase will be reported to the employee and, at
the Participant's option, will be returned to the Participant or will be carried
in the Participant's account towards the purchase of additional shares in the
next Payment Period.

7)       Authorization for Entering Plan

         An Eligible Employee may elect to participate in the Plan by
completing, signing and delivering to the Company's Human Resources department
an authorization:

         (a) stating the amount to be deducted regularly from his/her pay;

         (b) authorizing the purchase of Stock for him/her in each Payment
Period in accordance with the terms of the Plan; and


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         (c) specifying the exact name in which stock purchased for him/her is
to be issued as provided under Article 11 hereof.

         Such Authorization must be received by the Human Resources department
at least ten (10) days before the beginning date of a Payment Period to be
effective for that Payment Period.

         Unless a Participant files a new Authorization or withdraws from the
Plan, his/her deductions and purchases under the Authorization he/she has on
file under the Plan will continue as long as the Plan remains in effect.

         The Company will accumulate and hold for the Participant's account the
amounts deducted from his/her pay. Interest earned, if any, will be credited to
the Participant's account for the purchase of additional shares.

8)       Maximum Amount of Payroll Deductions

         An employee may authorize payroll deductions spread evenly over a
Payment Period in any even dollar amount up to, but not more than, ten percent
(10%) of his/her regular base pay in any payroll period, over that Payment
Period, or may make lump sum contributions (but not later than the first day of
a Payment Period); provided, however, that the aggregate of lump sum
contributions and payroll deductions may not be greater than ten percent (10%)
of a Participant's base pay over the applicable Annual Payment Period. The
minimum deduction in respect of any payroll period shall be Five Dollars ($5.00)
(or such lesser amount as the Board shall establish).

9)       Increase or Decrease in Payroll Deductions.

         (a) Increases. Once an employee is a Participant in the Plan during an
Annual Payment Period (by making payroll deductions or a lump sum contribution),
a Participant may increase deductions or make a lump sum contribution only once
during the remainder of the applicable Annual Payment Period. An authorization
to increase deductions or make a lump sum contribution in a Payment Period must
be received by the Human Resources department at least ten (10) days before the
beginning of such Payment Period.

         (b) Price for Increases and Lump Sum Contributions. If a Participant
makes a lump sum contribution or increases his or her deductions to the Plan,
only such lump sum contribution or increased deductions will have an Option
Price calculated pursuant to Section 4 using as measurement dates: (i) the first
business day of the Payment Period in which the increase in deductions or lump
sum payment was made, and (ii) the last business day of the applicable Annual
Payment Period.

         (c) Decreases in Deductions. Deductions may be decreased only once in
an Annual Payment Period. An authorization to decrease deductions will be
required and must be received by


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the Human Resources department at least ten (10) days before the end of the
payroll period for which it is to become effective.

10)      Withdrawal from the Plan

         A Participant may withdraw from the Plan in whole but not in part, at
any time prior to the fifteenth (15th) calendar date prior to the end of each
Annual Payment Period or, if such day is not a business day, then the next
succeeding business day, by delivering a Withdrawal Notice to the Human
Resources department, in which event the Company will promptly refund the entire
balance of the Participant's deductions not theretofore used to purchase Stock
under the Plan.

         A Participant who has withdrawn from the Plan shall be treated as an
employee who has never elected to participate in the Plan. To re-enter the Plan
a new Authorization must be filed at least ten (10) days before the beginning
date of the next Annual Payment Period, which Authorization will not become
effective before the beginning of the next Annual Payment Period.

11)      Issuance of Stock

         Certificates for Stock issued to Participants will be delivered as soon
as practicable after each Payment Period.

         Stock purchased under the Plan will be issued only in the name of the
Participant, or if his/her Authorization so specified, in the name of the
Participant and another person of legal age as joint tenants with rights of
survivorship.

12)      No Transfer or Assignment of Employee's Rights

         An employee's rights under the Plan may not be transferred to, assigned
to, or availed of by, any other person. Any option granted to an employee under
this Plan may be exercised only by him/her during his/her lifetime.

13)      Termination of Employee's Rights

         An employee's rights to participate in, and a Participant's rights
under, the plan will terminate when he/she ceases to be an employee because of
retirement, resignation, layoff, discharge, death, change of status, or for any
other reason. A Withdrawal Notice will be considered as having been received
from a Participant on the day his/her employment ceases, and all payroll
deductions not used to purchase Stock will be refunded to him/her.

         If a Participant's payroll deductions are interrupted by any legal
process, a Withdrawal Notice will be considered as having been received from
him/her on the day the interruption occurs.


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14)      Termination and Amendments to Plan

         The Plan may be terminated at any time by the Company's Board of
Directors. It will terminate in any case when all or substantially all the
unissued shares of Stock reserved for the purposes of the Plan have been
purchased. If at any time shares of Stock reserved for the purposes of the Plan
remain available for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be apportioned among
participants in proportion to their options and the Plan shall terminate. Upon
such termination or any other termination of the Plan, all payroll deductions
not used to purchase Stock will be refunded.

         The Board of Directors also reserves the right to amend the Plan from
time to time, in any respect; provided, however, that no amendment shall be
effective without prior approval of the shareholders entitled to vote thereon,
which would (a) except as provided in Articles 3 and 4, increase the number of
shares of Stock to be offered under the Plan or (b) change the class of
employees eligible to participate in the Plan. Further, no amendment shall be
made without prior approval of the shareholders of the Company if such amendment
would cause the Plan to no longer comply with Rule 16b-3 under the Securities
Exchange Act of 1934 or with Section 423 of the Internal Revenue Code.

15)      Limitations on Sale of Stock Purchased Under the Plan; Tax Matters

         Each Participant who is subject to Section 16(a) promulgated under the
Securities Exchange Act of 1934 (i.e., officers of the Company), will agree upon
entering the Plan to hold the Stock for a period of six (6) months after its
acquisition. Because of certain federal tax law requirements, each Participant
will agree upon entering the Plan, promptly to give the Chief Financial Officer
of the Company notice of any Stock disposed of within two (2) years after the
date of the first day of the Payment Period during which the Stock was purchased
under the Plan showing the number of such shares disposed of. The employee
assumes the risk of any fluctuations in the price of such Stock.

         Satisfaction of Withholding Obligations. The Company or participating
subsidiary may take such steps as it may deem necessary or appropriate for the
withholding of any taxes or funds which the Company or the participating
subsidiary is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with any Company stock received hereunder (collectively, "Withholding
Obligations"). Such steps may include, by way of example only and not
limitation, (i) requiring a Participant to remit to the Company in cash an
amount sufficient to satisfy such Withholding Obligations; (ii) allowing the
Participant to tender to the Company shares of Company stock, the fair market
value of which at the tender date the Committee determines to be sufficient to
satisfy such Withholding Obligations; (iii) withholding shares of Company stock
otherwise issuable upon the exercise of a stock option and which have a fair
market value at the exercise date sufficient to satisfy such Withholding
Obligations; or (iv) any combination of the foregoing.


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         Notification of Inquiries and Agreements. Each Participant shall notify
the Company in writing within 10 days after the date such Participant (i) first
obtains knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value of
Company stock or options purchased or granted hereunder; (ii) includes or agrees
(including, without limitation, in any settlement, closing or other similar
agreement) to include in gross income with respect to any Company stock or
option received under this Plan (A) any amount in excess of the amount reported
on Form 1099 or Form W-2 to such Participant by the Company, or (B) if no such
Form was received, any amount; (iii) exercises, sells, disposes of, or otherwise
transfers an option acquired pursuant to this Plan; or (iv) sells, disposes of,
or otherwise transfers stock acquired pursuant to the Plan within the
Disqualified Period. Upon request, a Participant shall provide to the Company
any information or document relating to any event described in the preceding
sentence which the Company (in its sole discretion) requires in order to
calculate and substantiate any change in the Company's Tax liability or
withholding obligations as a result of such event.

16)      Company's Payment of Expenses Related to Plan

         The Company will bear all costs of administering and carrying out the
Plan.

17)      Participating Subsidiaries

         The term "participating subsidiaries" shall mean any subsidiary of the
Company which is designated by the Board of Directors to participate in the
Plan. The Board of Directors shall have the power to make such designation
before or after the plan is approved by the stockholders.

18)      Administration of the Plan

         The Plan shall be administered by the Board of Directors of the Company
or by a committee composed solely of two or more directors (the "Committee")
each of whom is a Non-Employee Director. A "Non-Employee Director" is a person
who satisfies the definition of a "non-employee director" set forth in Rule
16b-3, as in effect from time to time, under the Securities Exchange Act of
1934, as amended. The Board of Directors may from time to time, remove members
from, or add members to, the Committee. Vacancies on the Committee, however
caused, shall be filled by the Board of Directors. The Committee shall select
one of its members as Chairman, and shall hold meetings at such times and places
as it may determine. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee.

         The interpretation and construction of any provision of the Plan and
adoption of rules and regulations for administering the Plan will be made by the
Committee, subject, however, at all times to the final jurisdiction which shall
rest in the Board. Determinations made by the Committee and approved by the
Board with respect to any matter or provision contained in the Plan will be
final, conclusive and binding upon the Company and upon all Participants, their
heirs or legal


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representatives. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under it. No member of the Committee shall be
eligible to participate in the Plan while serving as a member of the Committee.

19)      Optionees Not Stockholders

         Neither the granting of an option to an employee nor the deductions
from his/her pay shall constitute such employee a stockholder of the shares
covered by an option until such shares have been purchased by a certificate
representing such shares has been issued to him/her.

20)      Governmental Regulation

         The Company's obligation to sell and deliver shares of the Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such stock.

21)      Effectiveness of the Plan

         The Plan became effective September 27, 1996, the date of its adoption
by the Board of Directors, and was approved within twelve (12) months thereafter
by the holders of a majority of the securities of the Company entitled to vote.


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