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                                                                   EXHIBIT 10.32

February 17, 2004

Mr. John R. Serino
7910 224th Street SE
Woodinville, Washington  98072

Dear Jack,

This letter sets forth the substance of the Transition Agreement ("Agreement")
to aid in your employment transition. If you execute this agreement, the Company
agrees to provide you with the following transition benefits, after the
expiration of the seven-day revocation period described in Paragraph 18 below
upon which the Agreement becomes effective (hereinafter "Effective Date"),
provided that you have not revoked this Agreement as described in Paragraphs 15,
18 and 19; and have not resigned from employment on or before the Separation
Date. We refer to you in certain places in this letter as "Employee".

1)       Your last day as an employee of Quinton Cardiology Inc. ("the Company")
         will be Friday, February 27, 2004 ("Separation Date"), pursuant to your
         letter of resignation (Exhibit A hereto).

2)       It is agreed that you will remain employed during a nine-month
         transition period on a substantially reduced work schedule commencing
         March 1, 2004 and ending November 30, 2004 ("Transition Period").
         During the Transition Period you will continue to receive your current
         bi-weekly rate of $5,769.23, less standard withholding taxes and any
         amounts owed by you to the Company, in accordance with the Company's
         regular payroll practices. You agree that said payment will be mailed
         to your home or direct deposited on regularly scheduled payroll date(s)
         through the Transition Period;

3)       The Company will subsidize COBRA continuation coverage under the
         Company's medical and dental insurance plans (collectively "Health
         Plan") for the nine-months beginning March 1, 2004 and ending November
         30, 2004 but coverage subsidy will cease with you and your dependents
         eligibility under a new employers' benefit plan. Information regarding
         your rights and obligations under COBRA will be mailed to you
         separately within 14 days following your separation date. Quinton
         reserves the right to change the monthly amount should the Company
         experience a rate increase during the subsidy period.

         To the extent permitted under terms of the basic and voluntary Life
         Insurance policies, you may be eligible for continued coverage under
         the Company's Life Insurance program for the duration of your
         Transition Period, and if provided under such policies you may elect to
         convert to an individual policy on the coverage cancellation date;

4)       The Company will pay you all accrued and unused vacation earned and
         unused on the customary payroll date following February 27, 2004. You
         will not accrue additional vacation days or sick leave after your
         separation date.

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5)       During the Transition Period you will continue to be eligible to
         participate in the Employee Stock Purchase Plan and the 401k Savings
         Plan.

6)       During the Transition Period of March 1, 2004 through November 30,
         2004:

         a)       You agree to provide from time to time general support
                  services to the Company in the area of your expertise upon the
                  request of the Chief Executive Officer, and will report
                  directly to the Chief Executive Officer, or as otherwise
                  specified by the Chief Executive Officer. You agree to
                  exercise the highest degree of professionalism and utilize
                  your expertise and creative talents in performing these
                  services.

         b)       You will have no responsibility or authority and agree not to
                  represent or purport to represent the Company in any manner
                  whatsoever to any third party unless authorized by the Chief
                  Executive Officer, in writing, to do so.

         c)       Pursuant to regular business practice, the Company will
                  reimburse you for documented business expenses incurred during
                  an authorized engagement, provided that these expenses have
                  been pre-approved by the Chief Executive Officer, in writing,
                  or are expenses which the Company would reasonably expect you
                  to incur in a manner otherwise customary for employees under
                  the Company's standard travel and expense policy.

7)       You acknowledge and agree that through this continued payment, Quinton
         will have satisfied all of its obligations as set forth in your
         employment offer-letter dated February 7, 2000 from the Company to you
         ("Offer Letter") but also as deemed expired on February 7, 2001 as
         agreed and signed by you on February 12, 2002; or any subsequent
         agreements related to your duties as a Vice President, and you have no
         other rights to salary, bonuses, stock options, benefits, or other
         compensation after the Separation Date, except as otherwise noted
         elsewhere in this Agreement. Further, if you engage in any activity
         that is competitive with the Company during the Transition Period, the
         Company shall have no further payment obligations under this Agreement;
         provided however that your engagement as a consultant to a person or
         entity that does not compete or seek to compete with the Company is
         permissible under this Agreement. You agree to notify the Company, in
         writing, upon your acceptance of full time employment or engagement in
         any consultative activity that may be deemed a competitive activity.

8)       Stock Options: Stock Vesting, Cancellations

         a)       You hereby agree, as of the commencement of your Transition
                  Period, that you are vested in 45,454 shares of your initial
                  stock option grant dated August 14, 2000, 2,982 shares of your
                  stock option grant dated May 10, 2001, 2,708 shares of your
                  stock option grant dated June 27, 2002, and 1,875 shares of
                  your stock option grant dated February 10, 2003, for a total
                  vested stock option grant holding of 53,019 (split adjusted)
                  shares.

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         b)       In addition, provided that you continue to comply with the
                  terms of this Agreement through the Transition Period, your
                  existing stock option grants will continue vesting through the
                  completion of the Transition Period in accordance with the
                  normal vesting schedule.

         c)       Based upon (a) and (b), above, and unless you exercise some or
                  all of your vested stock options between now and November 30,
                  2004, as of November 30, 2004 you will be vested in 45,454
                  shares, 3,409 shares, 3,645 shares and 3,281 shares of your
                  respective August 14, 2000, May 10, 2001, June 27, 2002 and
                  February 10, 2003 option grants, respectively. All remaining
                  unvested options at November 30, 2004 will be cancelled.

         d)       In accordance with the terms of the related stock option
                  plans, the vested options must be exercised within 90 days of
                  the end of your Transition Period, or the options will
                  automatically cancel.

9)       Employee specifically acknowledges and agrees that this consideration
         exceeds the amount he would otherwise be entitled to receive upon
         termination of his employment, and that these payments and other
         benefits are in exchange for entering into this Agreement. Employee
         agrees that he will not at any time seek consideration from the Company
         other than what is set forth in this Agreement. Employee specifically
         acknowledges and agrees that the Company has made no representations to
         him regarding the tax consequences of any amounts received by him or
         for his benefit pursuant to this Agreement. In consideration for the
         mutual promises and agreements contained herein, and for other valuable
         consideration, Employee agrees to pay all federal or state taxes, if
         any, which are required by law to be paid with respect to this
         Agreement, save and except those amounts withheld by the Company in
         satisfaction of such taxes as provided in customary payroll deductions,
         including supplement income tax if applicable. Employee further agrees
         to indemnify and hold the Company, its predecessors, officers,
         directors, employees, attorneys, representatives, successors and
         assigns harmless from any claims, demands, deficiencies, levies,
         assessments, executions, judgments or recoveries by any governmental
         entity against the Company, or any of the foregoing persons or
         entities, for any amounts claimed due on account of this Agreement or
         pursuant to claims made under any federal or state tax laws, and any
         costs, expenses or damages sustained by them by reason of any such
         claims, including any amounts paid by the Company, its predecessors,
         officers, directors, employees, attorneys, representatives, successors
         and assigns as taxes, attorneys' fees, deficiencies, levies,
         assessments, fines, penalties, interest or otherwise.

10)      Employee represents that he has not filed, and will not file, any
         complaints, lawsuits, administrative complaints or charges arising from
         or relating to his employment with, or termination of employment from,
         the Company. Notwithstanding the provisions of any law stating that a
         general release does not extend to claims which the creditor does not
         know of or suspect to exist in his favor at the time of executing the
         release, Employee agrees to release the Company, its Board of
         Directors, officers, employees, agents and assigns, from any and all
         claims, charges, complaints, causes of action or demands of whatever
         kind or nature that Employee now has or has ever had against the
         Company, whether known or unknown, arising from or relating to
         Employee's employment with or discharge from the Company, including but
         not limited to: wrongful or tortious termination, specifically
         including actual or constructive termination in violation of public
         policy; implied or express employment contracts and/or estoppel;
         discrimination and/or retaliation under any federal, state or local
         statute or regulation, specifically including any claims Employee may
         have

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         under the Fair Labor Standards Act, Age Discrimination in Employment
         Act, the Older Workers Benefit Protection Act, the Americans with
         Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended,
         the Family and Medical Leave Act, the Washington Minimum Wage Act, and
         the Washington Law Against Discrimination; any and all claims brought
         under any applicable state employment discrimination or other statutes;
         any claims brought under any federal or state statute or regulation for
         non-payment of wages or other compensation (including bonuses due after
         the Separation Date), and libel, slander, or breach of contract other
         than the breach of this Agreement. This release specifically excludes
         claims, charges, complaints, causes of action or demands of whatever
         kind or nature that post-date the Separation Date or the Effective
         Date, whichever is later, and that are based on factual allegations
         that do not arise from or relate to Employee's present employment with
         or discharge from the Company

11)      Subject to certain exceptions noted below and elsewhere within this
         Agreement, on the Separation Date, you agree to return to the Company
         all Company documents (and copies thereof) and other Company property
         that you have in your possession or control, including, but not limited
         to, Company files, notes, drawings, records, business plans and
         forecasts, financial information, specifications, training materials,
         computer-recorded information, tangible property including, but not
         limited to, entry cards, identification badges and keys, and any
         materials of any kind that contain or embody any proprietary or
         confidential information of the Company (and all reproductions
         thereof).

         a.       You may retain the use of certain property, including office
                  computer, software, e-mail access, cell phone, and documents
                  or materials necessary to supporting your Transition Period.
                  You agree to return the aforementioned property immediately
                  upon the conclusion of your Transition Period or upon written
                  request from the Company, whichever occurs first.

12)      Employee acknowledges and affirms that he has previously executed a
         Non-Disclosure Agreement (confidentiality agreement) on February 9,
         2000, that his obligations not to use or disclose the Company's
         confidential information are ongoing, and that the terms and conditions
         of said confidentiality agreement are not affected by this Agreement.
         Employee represents that he will return all property belonging to the
         Company prior to the Separation Date.

13)      Communications

         a)       You and the Company shall draft and agree upon the content of
                  any announcement regarding your separation.

         b)       Both you and the Company agree not to disparage the other
                  party, and the other party's officers, directors, employees,
                  shareholders, affiliates and agents, in any manner likely to
                  be harmful to them and their business reputation or personal
                  reputation; provided that both you and the Company shall
                  respond accurately and fully to any question, inquiry or
                  request for information when required by law or legal process.

14)      The provisions of this Agreement will be held in strictest confidence
         by you and the Company and will not be publicized or disclosed in any
         manner whatsoever, provided, however, that: (a) you may disclose this
         Agreement to your immediate family, attorney, accountant and financial
         advisor, and as necessary in seeking consulting work or employment; (b)
         the Company may disclose this Agreement as may be necessary in the

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         conduct of its business, including but not limited to, required filings
         with the Securities and Exchange Commission, and other public
         announcements required as a publicly-traded company; and (c) the
         parties may disclose this Agreement as may be necessary to enforce its
         terms or as otherwise required by law. In particular, and without
         limitation, you will not disclose the provisions of this Agreement to
         any current or former employee of the Company, except as required by
         law.

15)      Employee warrants that no promise or inducement has been offered for
         this Agreement other than as set forth herein and that this Agreement
         is executed without reliance upon any other promises or
         representations, oral or written. Any modification of this Agreement
         must be made in writing and be signed by Employee and the Company. This
         Agreement supersedes all prior understandings between the Parties and
         represents the entire Agreement between the Parties with respect to all
         matters involving Employee's employment with or termination from the
         Company, except as stated herein.

16)      If any provision of this Agreement or compliance by Employee or the
         Company with any provision of this Agreement constitutes a violation of
         any law, or is or becomes unenforceable or void, then such provision,
         to the extent only that it is in violation of law, unenforceable or
         void, will be deemed modified to the extent necessary so that it is no
         longer in violation of law, unenforceable or void, and such provision
         will be enforced to the fullest extent permitted by law. If such
         modification is not possible, said provision, to the extent that it is
         in violation of law, unenforceable or void, will be deemed severable
         from the remaining provisions of this Agreement, which provisions will
         remain binding on both Employee and the Company. This Agreement is
         governed by the laws of the State of Washington.

17)      The King County Superior Court of Washington shall have exclusive
         jurisdiction of any lawsuit arising from or relating to Employee's
         employment with, or termination from, the Company, or arising from or
         relating to this Agreement. Employee consents to such venue and
         personal jurisdiction. The prevailing party in any such lawsuit will be
         entitled to an award of attorneys' fees and reasonable litigation
         costs. Employee agrees that he will indemnify and hold the Company
         harmless from any breach of this Agreement by Employee. EMPLOYEE
         FURTHER AGREES THAT IF HE CHALLENGES THIS AGREEMENT OR FILES ANY CLAIMS
         AGAINST THE COMPANY ARISING FROM OR RELATING TO HIS EMPLOYMENT WITH, OR
         TERMINATION FROM, THE COMPANY, EXCLUDING ANY CLAIM CHALLENGING THE
         VALIDITY OF HIS WAIVER OF RIGHTS UNDER THE AGE DISCRIMINATION IN
         EMPLOYMENT ACT, HE WILL RETURN ALL MONIES AND BENEFITS RECEIVED BY HIM
         FROM THE COMPANY PURSUANT TO THIS AGREEMENT. In the event Employee
         challenges the validity of his waiver of rights under the Age
         Discrimination in Employment Act, he agrees that the Company may
         recover money and benefits paid under this Agreement if Employee's
         challenge and subsequent Age Discrimination in Employment Act claim are
         successful and he obtains a monetary award.

18)      Employee specifically agrees and acknowledges: (A) that his waiver of
         rights under this Agreement is knowing and voluntary as required under
         the Older Workers Benefit Protection Act; (B) that he understands the
         terms of this Agreement; (C) that he has been advised in writing by the
         Company to consult with an attorney prior to executing this Agreement;
         (D) that the Company has given him a period of up to twenty-one (21)
         days within which to consider this Agreement; (E) that, following his
         execution of this Agreement he has seven (7) days in which to revoke
         his agreement to this Agreement and that, if he chooses not to so

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         revoke, the Agreement shall then become effective and enforceable and
         the payment and extension of benefits listed above shall then be made
         to him in accordance with the terms of this Agreement; and (F) nothing
         in this Agreement shall be construed to prohibit Employee from filing a
         charge or complaint, including a challenge to the validity of the
         waiver provision of this Agreement, with the Equal Employment
         Opportunity Commission or participating in any investigation conducted
         by the Equal Employment Opportunity Commission. However, he has waived
         any right to monetary relief. To cancel this Agreement, Employee
         understands that he must give a written revocation to Company
         headquarters either by hand delivery or certified mail within the
         seven-day period. If he revokes the Agreement, it will not become
         effective or enforceable and he will not be entitled to any of the
         benefits set forth above.

19)      Employee further specifically agrees that modifications to this
         Agreement, whether material or immaterial, do not restart the running
         of the twenty-one (21) day period referenced in Paragraph 18.

20)      This Agreement shall be binding upon the parties hereto and upon their
         heirs, administrators, representatives, executors, successors,
         employees, agents and assigns, and shall inure to the benefit of said
         parties and each of them and to their heirs, administrators,
         representatives, executors, successors, employees, agents and assigns.
         Employee expressly warrants that he has not transferred to any person
         or entity any rights, causes of action, or claims released in this
         Agreement.

21)      This Agreement in no way alters the at-will nature of Employee's
         employment with the Company through and including the Separation Date.

22)      EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS CAREFULLY READ AND
         VOLUNTARILY SIGNED THIS AGREEMENT, THAT HE HAS HAD AN OPPORTUNITY TO
         CONSULT WITH AN ATTORNEY OF HIS CHOICE, AND THAT HE SIGNS THIS
         AGREEMENT WITH THE INTENT OF RELEASING THE COMPANY AND ITS OFFICERS,
         DIRECTORS, EMPLOYEES AND AGENTS FROM ANY AND ALL CLAIMS.

ACCEPTED AND AGREED TO:

/s/ John R. Hinson                          /s/ John R. Serino
----------------------------------------    ------------------------------------
John Hinson, Chief Executive Officer        John R. Serino
Quinton Cardiology, Inc.                    Employee's Signature

Dated:  February 17, 2004                   Dated:  February 19, 2004

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                                                                  [QUINTON LOGO]

                                    EXHIBIT A

To       Chief Executive Officer
         Quinton Cardiology, Inc.

         I, John R. Serino, hereby tender my resignation as a full-time officer
         and employee of Quinton Cardiology Inc., and its subsidiaries,
         effective February 27, 2004, and agree to accept a modified work
         schedule through November 30, 2004 subject to the terms set forth in
         the Severance and Transition Agreement.

         /s/ John R. Serino                              February 19, 2004
         -----------------------------------         ---------------------------
         John R. Serino                                        Date

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