Document:

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                                                                    Exhibit 10.3

                        QUINTON CARDIOLOGY SYSTEMS, INC.

                        2002 EMPLOYEE STOCK PURCHASE PLAN

                               SECTION 1. PURPOSE

            The purposes of the Quinton Cardiology Systems, Inc. 2002 Employee
Stock Purchase Plan (the "Plan") are (a) to assist employees of Quinton
Cardiology Systems, Inc., a California corporation (the "Company"), and its
designated subsidiaries in acquiring a stock ownership interest in the Company
pursuant to a plan that is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended, and
(b) to encourage employees to remain in the employ of the Company and its
subsidiaries.

                             SECTION 2. DEFINITIONS

            In the Plan:

            "ADDITIONAL SHARES" has the meaning set forth in Section 6.

            "BOARD" means the Board of Directors of the Company.

            "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.

            "COMMITTEE" means the Company's Compensation Committee or any other
Board committee appointed by the Board to administer the Plan.

            "COMMON STOCK" means the common stock, no par value, of the Company.

            "COMPANY" means Quinton Cardiology Systems, Inc., a California
corporation.

            "COMPANY TRANSACTION" means consummation of either:

            (a) a merger or consolidation of the Company with or into any
another company, entity or person or

            (b) a sale, lease, exchange or other transfer in one transaction or
a series of related transactions of all or substantially all the Company's
outstanding securities or all or substantially all the Company's assets;

provided, however, that a Company Transaction shall not include a Related Party
Transaction.

            "DESIGNATED SUBSIDIARY" means any domestic Subsidiary Corporation or
any other Subsidiary Corporation designated as such by the Board or the
Committee.
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            "ELIGIBLE COMPENSATION" means all base gross earnings, including
commissions and such amounts of gross earnings as are deferred by an Eligible
Employee (a) under a qualified cash or deferred arrangement described in Section
401(k) of the Code or (b) to a plan qualified under Section 125 of the Code.
Eligible Compensation does not include overtime, cash bonuses, severance pay,
hiring and relocation bonuses, pay in lieu of vacations, sick leave, gain from
stock option exercises or any other special payments.

            "ELIGIBLE EMPLOYEE" means any employee of the Company or a
Designated Subsidiary who is in the employ of the Company or any Designated
Subsidiary on one or more Offering Dates and who meets the following criteria:

            (a) the employee does not, immediately after the Option is granted,
own stock (as defined by the Code) possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of a Parent or
Subsidiary Corporation;

            (b) the employee's customary employment is for 20 hours or more per
week or any lesser number of hours established by the Plan Administrator for a
future Offering Period;

            (c) if specified by the Plan Administrator for a future Offering
Period, the employee customarily works a minimum of five months per year or any
lesser number of months established by the Plan Administrator; and

            (d) the employee has been employed for a minimum of one year as of
[an Offering] [a Purchase] Date or any lesser or greater minimum employment
period not to exceed two years that is established by the Plan Administrator for
a future Offering Period.

If the Company permits any employee of a Designated Subsidiary to participate in
the Plan, then all employees of that Designated Subsidiary who meet the
requirements of this paragraph shall also be considered Eligible Employees.

            "ENROLLMENT PERIOD" has the meaning set forth in Section 7.1.

            "ESPP BROKER" has the meaning set forth in Section 10.1.

            "FAIR MARKET VALUE" shall be as established in good faith by the
Plan Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the closing sales price for the Common Stock as reported by that market
for regular session trading on the Offering Date or the Purchase Date, as
applicable, unless the Plan Administrator determines otherwise for a future
Offering Period or (b) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, the closing sales price for the Common
Stock as such price is officially quoted in the composite tape of transactions
on such exchange for regular session trading on the Offering Date or the
Purchase Date, as applicable, unless the Plan Administrator determines otherwise
for a future Offering Period; provided, however, that for the first Offering
Date under the Plan that occurs on the IPO Date, Fair Market Value shall be
equal to the Common Stock's initial public offering price as set forth in
Section 6(a).

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If there is no such reported price for the Common Stock for the date in
question, then such price on the last preceding date for which such price exists
shall be determinative of Fair Market Value.

            "IPO DATE" means the day on which shares of Common Stock are first
offered to the public in an underwritten initial public offering of the Common
Stock pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission (such day being the first trading day for
the Common Stock on the Nasdaq National Market, the New York Stock Exchange or
other applicable trading market).

            "OFFERING PERIOD" has the meaning set forth in Section 5.1.

            "OFFERING DATE" means the first day of an Offering Period.

            "OPTION" means an option granted under the Plan to an Eligible
Employee to purchase shares of Common Stock.

            "PARENT CORPORATION" means any corporation, other than the Company,
in an unbroken chain of corporations ending with the Company, if, at the time of
the granting of the Option, each of the corporations, other than the Company,
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

            "PARTICIPANT" means any Eligible Employee who has elected to
participate in an Offering Period in accordance with the procedures set forth in
Section 7 and who has not withdrawn from the Plan or whose participation in the
Plan is not otherwise terminated.

            "PLAN" means the Quinton Cardiology Systems, Inc. 2002 Employee
Stock Purchase Plan, as it may be amended from time to time.

            "PLAN ADMINISTRATOR" has the meaning set forth in Section 3.1.

            "PURCHASE DATE" means the last day of each Purchase Period.

            "PURCHASE PERIOD" has the meaning set forth in Section 5.2.

            "PURCHASE PRICE" has the meaning set forth in Section 6.

            "RELATED PARTY TRANSACTION" means (a) a merger or consolidation of
the Company in which the holders of the outstanding voting securities of the
Company immediately prior to the merger or consolidation hold at least a
majority of the outstanding voting securities of a successor company (as defined
in Section 20.3) immediately after the merger or consolidation; (b) a sale,
lease, exchange or other transfer of the Company's assets to a majority-owned
subsidiary company; (c) a transaction undertaken for the principal purpose of
restructuring the capital of the Company, including but not limited to,
reincorporating the

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Company in a different jurisdiction or creating a holding company; or (d) a
corporate dissolution or liquidation.

            "SECURITIES ACT" means the Securities Act of 1933, as amended.

            "SUBSCRIPTION" has the meaning set forth in Section 7.1.

            "SUBSIDIARY CORPORATION" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company, if, at
the time of the granting of the Option, each of the corporations, other than the
last corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

                           SECTION 3. ADMINISTRATION

3.1         PLAN ADMINISTRATOR

            The Plan shall be administered by the Board or the Committee or, if
and to the extent the Board or the Committee designates an executive officer of
the Company to administer the Plan, by such executive officer (each, the "Plan
Administrator"). Any decisions made by the Plan Administrator shall be
applicable equally to all Eligible Employees.

3.2         ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR

            Subject to the provisions of the Plan, the Plan Administrator shall
have the authority, in its sole discretion, to determine all matters relating to
Options granted under the Plan, including all terms, conditions, restrictions
and limitations of Options; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and privileges within
the meaning of Code Section 423. The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, unless reserved to the Board or the
Committee, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's other officers or employees as the Plan Administrator so determines.

                        SECTION 4. STOCK SUBJECT TO PLAN

            Subject to adjustment from time to time as provided in Section 20.1,
the maximum number of shares of Common Stock that shall be available for
issuance under the Plan shall be:

            (a) 500,000 shares, plus

            (b) an annual increase to be added as of the first day of the
Company's fiscal year beginning in 2003 equal to the least of (i) 500,000 shares
and (ii) 2% of the outstanding

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shares of Common Stock of the Company as of the end of the Company's immediately
preceding fiscal year on a fully diluted basis (assuming exercise of all
outstanding options and warrants and conversion of all outstanding convertible
securities) and (iii) a lesser amount determined by the Board; provided,
however, that any shares from any increases in previous years that are not
actually issued shall continue to be added to the aggregate number of shares
available for issuance under the Plan.

            Shares issued under the Plan shall be drawn from authorized and
unissued shares or shares subsequently acquired by the Company.

                    SECTION 5. OFFERING AND PURCHASE PERIODS

5.1         OFFERING PERIODS

            (a) Except as otherwise set forth below, the Plan shall be
implemented pursuant to twelve month offering periods (an "Offering Period").
Each Offering Period shall commence on December 1 of each year and shall end on
the following November 30; provided, however, that the first Offering Period
shall begin on the IPO Date and shall end on [___________], 2003.

            (b) Notwithstanding the foregoing, the Plan Administrator may
establish (i) a different term for the initial Offering Period or for one or
more future Offering Periods and (ii) different commencing and ending dates for
such future Offering Periods; provided, however, that an Offering Period may not
exceed five years; and provided, further, that if the Purchase Price may be less
than 85% of the Fair Market Value of the Common Stock on the Purchase Date, the
Offering Period may not exceed 27 months.

            (c) In the event the first or the last day of an Offering Period is
not a regular business day, then the first day of the Offering Period shall be
deemed to be the next regular business day and the last day of the Offering
Period shall be deemed to be the last preceding regular business day.

5.2         PURCHASE PERIODS

            (a) Each Offering Period shall consist of four consecutive purchase
periods of three months' duration (each, a "Purchase Period"). The last day of
each Purchase Period shall be the Purchase Date for such Purchase Period. Except
as otherwise set forth below, a Purchase Period shall commence on December 1,
March 1, June 1 and September 1 of each year and shall end three months later on
the next November 30, February 28, May 31 and August 31, respectively, occurring
thereafter; provided, however, that the Purchase Period for the first Offering
Period shall commence on the IPO Date and shall end on [_____________], 2002.

            (b) Notwithstanding the foregoing, the Plan Administrator may
establish for a future Offering Period (i) a different term for the initial
Purchase Period or for one or more

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future Purchase Periods and (ii) different commencing and ending dates for any
such Purchase Period.

            (c) In the event the first or last day of a Purchase Period is not a
regular business day, then the first day of the Purchase Period shall be deemed
to be the next regular business day and the last day of the Purchase Period
shall be deemed to be the last preceding regular business day.

5.3         GOVERNMENTAL APPROVAL; SHAREHOLDER APPROVAL

            Notwithstanding any other provision of the Plan to the contrary, an
Option granted pursuant to the Plan shall be subject to (a) obtaining all
necessary governmental approvals and qualifications for the Plan and (b)
obtaining shareholder approval of the Plan.

                            SECTION 6. PURCHASE PRICE

            (a) The purchase price (the "Purchase Price") at which Common Stock
may be acquired in an Offering Period pursuant to the exercise of all or any
portion of an Option shall be 85% of the lesser of (i) the Fair Market Value of
the Common Stock on the Offering Date of such Offering Period and (ii) the Fair
Market Value of the Common Stock on the Purchase Date; provided, however, that
the Purchase Price for the first Offering Period that begins on the IPO Date
shall be the lesser of (A) 100% of the initial public offering price per share
of Common Stock, before underwriters' discounts or concessions, set forth in
that certain underwriting agreement between the Company and the representatives
of the underwriters and executed in connection with the Company's initial public
offering of its Common Stock and (B) 85% the Fair Market Value of the Common
Stock on the Purchase Date.

            (b) Notwithstanding the foregoing, if an increase in the number of
shares authorized for issuance under the Plan (other than an annual increase
pursuant to Section 4) is approved and all or a portion of such additional
shares are to be issued during one or more Offering Periods that are underway at
the time of shareholder approval of such increase (the "Additional Shares"),
then, if as of the date of such shareholder approval, the Fair Market Value of a
share of Common Stock is higher than the Fair Market Value on the Offering Date
for any such Offering Period, the Purchase Price for the Additional Shares shall
be 85% of the lesser of (i) the Common Stock's Fair Market Value on the date of
such shareholder approval and (ii) the Fair Market Value of the Common Stock on
the Purchase Date.

                      SECTION 7. PARTICIPATION IN THE PLAN

7.1         INITIAL PARTICIPATION

            Except for the first Offering Period that begins on the IPO Date, an
Eligible Employee shall become a Participant on the first Offering Date after
satisfying the eligibility requirements and delivering to the Plan Administrator
during the enrollment period

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established by the Plan Administrator (the "Enrollment Period") a subscription
(the "Subscription"):

            (a) indicating the Eligible Employee's election to participate in
the Plan;

            (b) authorizing payroll deductions and stating the amount to be
deducted regularly from the Participant's Eligible Compensation; and

            (c) authorizing the purchase of Common Stock for the Participant in
each Purchase Period.

            An Eligible Employee who does not deliver a Subscription as provided
above during the Enrollment Period shall not participate in the Plan for that
Offering Period or for any subsequent Offering Period unless such Eligible
Employee subsequently enrolls in the Plan by filing a Subscription with the
Company during the Enrollment Period for such subsequent Offering Period. The
Company may, from time to time, change the Enrollment Period for a future
Offering Period as deemed advisable by the Plan Administrator, in its sole
discretion, for the proper administration of the Plan.

            An employee who becomes eligible to participate in the Plan after an
Offering Period has commenced shall not be eligible to participate in such
Offering Period but may participate in any subsequent Offering Period, provided
that such employee is still an Eligible Employee as of the commencement of any
such subsequent Offering Period. Eligible Employees may not participate in more
than one Offering Period at a time.

7.2         FIRST OFFERING PERIOD UNDER THE PLAN

            For the first Offering Period that begins on the IPO Date, all
Eligible Employees shall automatically be enrolled in the Plan in an amount
equal to 15% of such Eligible Employees' Eligible Compensation. For the first
Purchase Period under the Plan, (a) the 15% amount shall be determined only with
respect to the number of full payroll periods within such Purchase Period and
(b) the Participant shall be obligated to pay such amount to the Company by cash
or certified, cashier's or personal check (if a personal check is acceptable to
the Company) on or prior to the first Purchase Date under the Plan. For
subsequent Purchase Periods in the first Offering Period, Participants'
purchases of shares of Common Stock shall be made with accrued payroll
deductions, equal to 15% of such Participants' Eligible Compensation, at the
times and in the manner provided in the Plan. During a specified period
following the first Offering Date, Participants shall have the right to change
certain terms of their participation in the Plan, including withdrawing from the
Plan, reducing their level of participation in the Plan or authorizing payment
through payroll deductions, subject to such terms as may be required by the
Company.

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7.3         CONTINUED PARTICIPATION

            A Participant shall automatically participate in the next Offering
Period until such time as such Participant withdraws from the Plan pursuant to
Section 11.3 or terminates employment as provided in Section 13.

               SECTION 8. LIMITATIONS ON RIGHT TO PURCHASE SHARES

8.1         NUMBER OF SHARES PURCHASED

            (a) No Participant shall be entitled to purchase Common Stock under
the Plan (or any other employee stock purchase plan that is intended to meet the
requirements of Code Section 423 sponsored by the Company, a Parent Corporation
or a Subsidiary Corporation) with a Fair Market Value exceeding $25,000 (such
value determined as of the Offering Date for each Offering Period or such other
limit as may be imposed by the Code) in any calendar year in which a Participant
participates in the Plan (or any other employee stock purchase plan described in
this Section 8.1).

            (b) No Participant shall be entitled to purchase more than 1,500
shares of stock (or such other number as the Plan Administrator shall specify
for a future Offering Period) under the Plan in any Purchase Period.

            (c) For a future Offering Period, the Board or the Committee may
specify a different maximum number of shares that may be purchased by any
Participant, as well as a maximum aggregate number of shares that may be
purchased by all Participants, pursuant to such Offering Period.

8.2         PRO RATA ALLOCATION

            In the event the number of shares of Common Stock that might be
purchased by all Participants exceeds the number of shares of Common Stock
available in the Plan, in a Purchase Period or in an Offering Period, the Plan
Administrator shall make a pro rata allocation of the remaining shares of Common
Stock in as uniform a manner as shall be practicable and as the Plan
Administrator shall determine to be equitable. Fractional shares may not be
issued under the Plan unless the Plan Administrator determines otherwise for a
future Offering Period.

                      SECTION 9. PAYMENT OF PURCHASE PRICE

9.1         GENERAL RULES

            Subject to Section 7.2 and Section 9.11, Common Stock that is
acquired pursuant to the exercise of all or any portion of an Option may be paid
for only by means of payroll deductions from the Participant's Eligible
Compensation. Except as set forth in this Section 9, the amount of compensation
to be withheld from a Participant's Eligible Compensation during each pay period
shall be determined by the Participant's Subscription.

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9.2         PERCENT WITHHELD

            The amount of payroll withholding for each Participant for purchases
pursuant to the Plan during any pay period shall be at least 1% but shall not
exceed 15% of the Participant's Eligible Compensation for such pay period (or
such other higher percentage as the Plan Administrator may establish from time
to time for a future Offering Period). Amounts shall be withheld in whole
percentages only.

9.3         PAYROLL DEDUCTIONS

            Payroll deductions shall commence on the first payday following the
Offering Date and shall continue through the last payday of the Offering Period
unless sooner altered or terminated as provided in the Plan.

9.4         MEMORANDUM ACCOUNTS

            Individual accounts shall be maintained for each Participant for
memorandum purposes only. All payroll deductions from a Participant's
compensation shall be credited to such account but shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.

9.5         NO INTEREST

            No interest shall be paid on payroll deductions received or held by
the Company.

9.6         ACQUISITION OF COMMON STOCK

            On each Purchase Date of an Offering Period, each Participant shall
automatically acquire, pursuant to the exercise of the Participant's Option, the
number of shares of Common Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase Period by the
Purchase Price; provided, however, that the number of shares of Common Stock
purchased by the Participant shall not exceed the number of whole shares of
Common Stock so determined, unless the Plan Administrator has determined for a
future Offering Period that fractional shares may be issued under the Plan; and
provided, further, that the number of shares of Common Stock purchased by the
Participant shall not exceed the number of shares for which Options have been
granted to the Participant pursuant to Section 8.1.

9.7         REFUND OF EXCESS AMOUNTS

            Any cash balance remaining in the Participant's account at the
termination of a Purchase Period that is not sufficient to purchase a whole
share of Common Stock shall be applied to the purchase of Common Stock in the
new Purchase Period, provided the Participant participates in the next Purchase
Period and the purchase complies with Section 8.1. All other amounts remaining
in a Participant's account after a Purchase Date

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shall be refunded to the Participant as soon as practical after the Purchase
Date without the payment of any interest.

9.8         WITHHOLDING OBLIGATIONS

            At the time the Option is exercised, in whole or in part, or at the
time some or all the Common Stock is disposed of, the Participant shall make
adequate provision for local, state, federal and foreign withholding obligations
of the Company, if any, that arise upon exercise of the Option or upon
disposition of the Common Stock. The Company may withhold from the Participant's
compensation the amount necessary to meet such withholding obligations.

9.9         TERMINATION OF PARTICIPATION

            No Common Stock shall be purchased on behalf of a Participant on a
Purchase Date if his or her participation in a current Offering Period or the
Plan has terminated on or before such Purchase Date or if the Participant has
otherwise terminated employment prior to a Purchase Date.

9.10        PROCEDURAL MATTERS

            The Company may, from time to time, establish (a) limitations on the
frequency and/or number of any permitted changes in the amount withheld during
an Offering Period, as set forth in Section 11.1, (b) an exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, (c)
payroll withholding in excess of the amount designated by a Participant in order
to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, and (d) such other limitations or procedures as
deemed advisable by the Company in the Company's sole discretion that are
consistent with the Plan and in accordance with the requirements of Code Section
423.

9.11        LEAVES OF ABSENCE

            During leaves of absence approved by the Company and meeting the
requirements of the applicable treasury regulations promulgated under the Code,
a Participant may elect to continue participation in the Plan by delivering cash
payments to the Company on the Participant's normal paydays equal to the amount
of his or her payroll deduction under the Plan had the Participant not taken a
leave of absence. Currently, the treasury regulations provide that a Participant
may continue participation in the Plan only during the first 90 days of a leave
of absence unless the Participant's reemployment rights are guaranteed by
statute or contract.

                SECTION 10. COMMON STOCK PURCHASED UNDER THE PLAN

10.1        ESPP BROKER

            If the Plan Administrator designates or approves a stock brokerage
or other financial services firm (the "ESPP Broker") to hold shares purchased
under the Plan for the accounts of

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Participants, the following procedures shall apply. Promptly following each
Purchase Date, the number of shares of Common Stock purchased by each
Participant shall be deposited into an account established in the Participant's
name with the ESPP Broker. Each Participant shall be the beneficial owner of the
Common Stock purchased under the Plan and shall have all rights of beneficial
ownership in such Common Stock. A Participant shall be free to undertake a
disposition of the shares of Common Stock in his or her account at any time,
but, in the absence of such a disposition, the shares of Common Stock must
remain in the Participant's account at the ESPP Broker until the holding period
set forth in Code Section 423 has been satisfied. With respect to shares of
Common Stock for which the holding period set forth above has been satisfied,
the Participant may move those shares of Common Stock to another brokerage
account of the Participant's choosing or request that a stock certificate be
issued and delivered to him or her. Dividends paid in the form of shares of
Common Stock with respect to Common Stock in a Participant's account shall be
credited to such account. A Participant who is not subject to payment of U.S.
income taxes may move his or her shares of Common Stock to another brokerage
account of his or her choosing or request that a stock certificate be delivered
to him or her at any time, without regard to the Code Section 423 holding
period.

10.2        NOTICE OF DISPOSITION

            By entering the Plan, each Participant agrees to promptly give the
Company notice of any Common Stock disposed of within the later of one year from
the Purchase Date and two years from the Offering Date for such Common Stock,
showing the number of such shares disposed of and the Purchase Date and Offering
Date for such Common Stock. This notice shall not be required if and so long as
the Company has a designated ESPP Broker.

                 SECTION 11. CHANGES IN WITHHOLDING AMOUNTS AND
                              VOLUNTARY WITHDRAWAL

11.1        CHANGES IN WITHHOLDING AMOUNTS

            (a) Unless the Plan Administrator establishes otherwise for a future
Offering Period, during a Purchase Period, a Participant may elect to reduce
payroll contributions to 0% by completing and filing with the Company an amended
Subscription authorizing cessation of payroll deductions. The change in rate
shall be effective as of the beginning of the next payroll period following the
date of filing the amended Subscription, provided the amended Subscription is
filed prior to any date required by the Company, and, if not, as of the
beginning of the next succeeding payroll period. All payroll deductions accrued
by a Participant as of a Change Notice Date shall continue to be applied toward
the purchase of Common Stock on the Purchase Date, unless a Participant
withdraws from an Offering Period or the Plan, pursuant to Section 11.2 or
Section 11.3 below. An amended Subscription shall remain in effect until the
Participant changes such Subscription in accordance with the terms of the Plan.

            (b) Unless the Plan Administrator determines otherwise for a future
Offering Period, a Participant may elect to increase or decrease the amount to
be withheld from his or

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her compensation for future Purchase Periods by filing with the Plan
Administrator an amended Subscription; provided, however, that notice of such
election must be delivered to the Plan Administrator at least ten days prior to
such Purchase Period in such form and in accordance with such terms as the Plan
Administrator may establish for an Offering Period. An amended Subscription
shall remain in effect until the Participant changes such Subscription in
accordance with the terms of the Plan.

            (c) Notwithstanding the foregoing, to the extent necessary to comply
with Code Section 423 and Section 8.1, a Participant's payroll deductions may be
decreased to 0% during any Purchase Period if the aggregate of all payroll
deductions accumulated with respect to one or more Purchase Periods ending
within the same calendar year exceeds $25,000 of Fair Market Value of the Common
Stock determined as of the first day of an Offering Period ($21,250 to the
extent the Purchase Price may be 85% of the Fair Market Value of the Common
Stock on the Offering Date of the Offering Period). Payroll deductions shall
re-commence at the rate provided in such Participant's Subscription at the
beginning of the first Purchase Period that is scheduled to end in the following
calendar year, unless the Participant terminates participation in an Offering
Period or the Plan as provided in Section 11.2 or Section 11.3 or indicates
otherwise in an amended Subscription. Also notwithstanding the foregoing, a
Participant's payroll deductions may be decreased to 0% at such time that the
aggregate of all payroll deductions accumulated with respect to a Purchase
Period exceeds the amount necessary to purchase (i) 1,500 shares of Common Stock
in such Purchase Period (or such other number as the Plan Administrator shall
specify for a future Offering Period) or (ii) the aggregate number of shares of
Common Stock available for purchase by all Participants in any single Purchase
Period or Offering Period as set forth in Section 8.1. Payroll deductions shall
re-commence at the rate provided in such Participant's Subscription at the
beginning of the next Purchase Period, provided the Participant continues to
participate in the Plan and such participation complies with Section 8.1.

11.2        WITHDRAWAL FROM AN OFFERING PERIOD

            A Participant may withdraw from an Offering Period by completing and
delivering to the Plan Administrator a written notice of withdrawal on a form
provided by the Company for such purpose. Such notice must be delivered prior to
the end of the Purchase Period for which such withdrawal is to be effective.
Unless otherwise indicated by a Participant, withdrawal from an Offering Period
shall not result in a withdrawal from the Plan or any succeeding Offering Period
therein, provided that such Participant is still an Eligible Employee upon
commencement of such succeeding Offering Period. A Participant may not resume
participation in the same Offering Period at any time following withdrawal from
such Offering Period.

11.3        WITHDRAWAL FROM THE PLAN

            A Participant may withdraw from the Plan by completing and
delivering to the Plan Administrator a written notice of withdrawal on a form
provided by the Plan Administrator for such purpose. Such notice must be
delivered prior to the end of the Purchase Period for

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which such withdrawal is to be effective, or by any other date specified by the
Plan Administrator for a future Offering Period.

11.4        NOTICE OF WITHDRAWAL; EFFECT OF WITHDRAWAL ON PRIOR PURCHASE
            PERIODS; RE-ENROLLMENT IN THE PLAN

            (a) The Company may, from time to time, impose a requirement that
any notice of withdrawal be on file with the Company for a reasonable period
prior to the effectiveness of the Participant's withdrawal.

            (b) In the event a Participant voluntarily elects to withdraw from
the Plan, the Participant may participate in any subsequent Offering Periods
under the Plan by again satisfying the definition of Eligible Employee and
re-enrolling in the Plan in accordance with Section 7.

11.5        RETURN OF PAYROLL DEDUCTIONS

            Upon withdrawal from an Offering Period pursuant to Section 11.2 or
from the Plan pursuant to Section 11.3, the withdrawing Participant's
accumulated payroll deductions that have not been applied to the purchase of
Common Stock shall be returned as soon as practical after the withdrawal,
without the payment of any interest, to the Participant and the Participant's
interest in the Offering Period shall terminate. Such accumulated payroll
deductions may not be applied to any other Offering Period under the Plan.

                        SECTION 12. AUTOMATIC WITHDRAWAL

            For any future Offering Periods with multiple Purchase Periods, if
the Fair Market Value of the Common Stock on any Purchase Date of an Offering
Period is less than the Fair Market Value of the Common Stock on the Offering
Date for such Offering Period, then every Participant shall automatically (a) be
withdrawn from such Offering Period at the close of such Purchase Date and after
the acquisition of the shares of Common Stock for such Purchase Period and (b)
be enrolled in the Offering Period commencing on the first business date
subsequent to such Purchase Period, provided the Participant is eligible to
participate in the Plan and has not elected to terminate participation in the
Plan.

                      SECTION 13. TERMINATION OF EMPLOYMENT

            Termination of a Participant's employment with the Company for any
reason, including retirement, death or the failure of a Participant to remain an
Eligible Employee, shall immediately terminate the Participant's participation
in the Plan. The payroll deductions credited to the Participant's account since
the last Purchase Date shall, as soon as practical, be returned to the
Participant or, in the case of a Participant's death, to the Participant's legal
representative or designated beneficiary as provided in Section 14.2, and all
the Participant's rights under the Plan shall terminate. Interest shall not be
paid on sums returned to a Participant pursuant to this Section 13.

                                      -13-
<PAGE>
                     SECTION 14. RESTRICTIONS ON ASSIGNMENT

14.1        TRANSFERABILITY

            An Option granted under the Plan shall not be transferable and such
Option shall be exercisable during the Participant's lifetime only by the
Participant. The Company will not recognize, and shall be under no duty to
recognize, any assignment or purported assignment by a Participant of the
Participant's interest in the Plan, of his or her Option or of any rights under
his or her Option.

14.2        BENEFICIARY DESIGNATION

            A Participant may designate on a Company-approved form a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event the Participant dies after the Purchase Date for an
Offering Period but prior to delivery to such Participant of such shares and
cash. In addition, a Participant may designate on a Company-approved form a
beneficiary who is to receive any cash from the Participant's account under the
Plan in the event that the Participant dies before the Purchase Date for an
Offering Period. Such designation may be changed by the Participant at any time
by written notice to the human resources director or other individual performing
similar functions.

            SECTION 15. NO RIGHTS AS SHAREHOLDER UNTIL SHARES ISSUED

            With respect to shares of Common Stock subject to an Option, a
Participant shall not be deemed to be a shareholder of the Company, and he or
she shall not have any of the rights or privileges of a shareholder. A
Participant shall have the rights and privileges of a shareholder of the Company
when, but not until, a certificate or its equivalent has been issued to the
Participant for the shares following exercise of the Participant's Option.

                 SECTION 16. LIMITATIONS ON SALE OF COMMON STOCK
                            PURCHASED UNDER THE PLAN

            The Plan is intended to provide Common Stock for investment and not
for resale. The Company does not, however, intend to restrict or influence any
Participant in the conduct of his or her own affairs. A Participant, therefore,
may sell Common Stock purchased under the Plan at any time he or she chooses
subject to compliance with Company policies and any applicable federal and state
securities laws. A Participant assumes the risk of any market fluctuations in
the price of the Common Stock.

               SECTION 17. AMENDMENT, SUSPENSION OR TERMINATION OF
                                    THE PLAN

            (a) The Board may amend the Plan in such respects as it shall deem
advisable; provided, however, that, to the extent required for compliance with
Code Section 423 or any applicable law or regulation, shareholder approval will
be required for any amendment that

                                      -14-
<PAGE>
(i) increases the total number of shares as to which Options may be granted
under the Plan, (ii) modifies the class of employees eligible to receive
Options, or (iii) otherwise requires shareholder approval under any applicable
law or regulation; and provided further, that except as provided in this Section
17, no amendment to the Plan shall make any change in any Option previously
granted which adversely affects the rights of any Participant.

            (b) The Plan shall continue in effect for ten years after the date
of its adoption by the Board. Notwithstanding the foregoing, the Board may at
any time and for any reason suspend or terminate the Plan. During any period of
suspension or upon termination of the Plan, no Options shall be granted.

            (c) Except as provided in Section 20, no such termination of the
Plan may affect Options previously granted, provided that the Plan or an
Offering Period may be terminated by the Board on a Purchase Date or by the
Board's setting a new Purchase Date with respect to an Offering Period and a
Purchase Period then in progress if the Board determines that termination of the
Plan and/or the Offering Period is in the best interests of the Company and the
shareholders or if continuation of the Plan and/or the Offering Period would
cause the Company to incur adverse accounting charges as a result of a change
after the effective date of the Plan in the generally accepted accounting rules
applicable to the Plan.

                      SECTION 18. NO RIGHTS AS AN EMPLOYEE

            Nothing in the Plan shall be construed to give any person (including
any Eligible Employee or Participant) the right to remain in the employ of the
Company or a Parent or Subsidiary Corporation or to affect the right of the
Company or a Parent or Subsidiary Corporation to terminate the employment of any
person (including any Eligible Employee or Participant) at any time with or
without cause.

                       SECTION 19. EFFECT UPON OTHER PLANS

            The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Parent or Subsidiary
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company, any Parent Corporation or Subsidiary Corporation to (a) establish any
other forms of incentives or compensation for employees of the Company, a Parent
Corporation or Subsidiary Corporation or (b) grant or assume options otherwise
than under the Plan in connection with any proper corporate purpose, including,
but not by way of limitation, the grant or assumption of options in connection
with the acquisition, by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, firm or association.

                             SECTION 20. ADJUSTMENTS

20.1        ADJUSTMENT OF SHARES

            In the event that, at any time or from time to time after board
approval of the Plan, a stock dividend, stock split, spin-off, combination or
exchange of shares, recapitalization,

                                      -15-
<PAGE>
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or kind of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock, then (subject to any required action
by the Company's shareholders), the Board or the Committee, in its sole
discretion, shall make such equitable adjustments as it shall deem appropriate
in the circumstances in (i) the maximum number and kind of shares of Common
Stock subject to the Plan as set forth in Section 4, (ii) the number and kind of
securities that are subject to any outstanding Option and the per share price of
such securities and (iii) the maximum number of shares of Common Stock that may
be purchased by a Participant in a Purchase Period, or by all Participants in a
single Purchase Period. The determination by the Board or the Committee as to
the terms of any of the foregoing adjustments shall be conclusive and binding.
Notwithstanding the foregoing, a dissolution or liquidation of the Company or a
Company Transaction shall not be governed by this Section 20.1 but shall be
governed by Sections 20.2 and 20.3, respectively.

20.2        DISSOLUTION OR LIQUIDATION OF THE COMPANY

            In the event of the dissolution or liquidation of the Company, the
Offering Period then in progress shall be shortened by setting a new Purchase
Date and shall terminate immediately prior to the consummation of such
dissolution or liquidation, unless provided otherwise by the Board. The new
Purchase Date shall be a specified date before the date of the Company's
proposed dissolution or liquidation. The Board shall notify each Participant in
writing prior to the new Purchase Date that the Purchase Date for the
Participant's Option has been changed to the new Purchase Date and that the
Participant's Option shall be exercised automatically on the new Purchase Date,
unless prior to such date the Participant has withdrawn from an Offering Period
then in progress or the Plan as provided in Section 11.

20.3        COMPANY TRANSACTION

            In the event of a Company Transaction, each outstanding Option shall
be assumed or an equivalent option substituted by the successor company or
parent thereof (the "Successor Company"). In the event that the Successor
Company refuses to assume or substitute for the Option, any Offering Period then
in progress shall be shortened by setting a new Purchase Date. The new Purchase
Date shall be a specified date before the date of the Company Transaction. The
Board shall notify each Participant in writing, prior to the new Purchase Date,
that the Purchase Date for the Participant's Option has been changed to the new
Purchase Date and that the Participant's Option shall be exercised automatically
on the new Purchase Date, unless prior to such date the Participant has
withdrawn from an Offering Period then in progress or the Plan as provided in
Section 11.

                                      -16-
<PAGE>
20.4        LIMITATIONS

            The grant of Options shall in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

                SECTION 21. REGISTRATION; CERTIFICATES FOR SHARES

            Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue or deliver any shares of Common Stock under the Plan
or make any other distribution of benefits under the Plan unless such issuance,
delivery or distribution would comply with all applicable laws (including,
without limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.

            The Company shall be under no obligation to any Participant to
register for offering or resale or to qualify for exemption under the Securities
Act, or to register or qualify under state securities laws, any shares of Common
Stock, security or interest in a security paid or issued under, or created by,
the Plan, or to continue in effect any such registrations or qualifications if
made. The Company may issue certificates for shares with such legends and
subject to such restrictions on transfer and stop-transfer instructions as
counsel for the Company deems necessary or desirable for compliance by the
Company with federal and state securities laws.

            To the extent that the Plan or any instrument evidencing shares of
Common Stock provides for issuance of stock certificates to reflect the issuance
of such shares, the issuance may be effected on a noncertificated basis, to the
extent not prohibited by applicable law or the applicable rules of any stock
exchange.

                           SECTION 22. EFFECTIVE DATE

            The Plan will become effective on the IPO Date, so long as it is
approved by the Company's shareholders as of such date.

            Adopted by the Board on February 21, 2002 and approved by the
shareholders on February 21, 2002.

                                      -17-
<PAGE>
                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE

<TABLE>
<CAPTION>
                                                             SECTION/EFFECT OF         DATE OF SHAREHOLDER
DATE OF BOARD ACTION            ACTION                       AMENDMENT                 APPROVAL
<S>                             <C>                          <C>                       <C>
February 21, 2002               Approval of Plan                                       February 21, 2002
</TABLE>

                                      R-1<PAGE>

                                                                    Exhibit 10.5

                                QIC HOLDING CORP.

                         2001 MANAGEMENT INCENTIVE PLAN

PLAN OBJECTIVES

Quinton's future depends upon building and maintaining a high-performance
culture. We want our employees to be actively engaged in seeking
customer-focused solutions to grow the business and boost profitability.

All participating managers make decisions that affect Quinton's revenues, costs,
and use of assets. The Management Incentive Plan endeavors to encourage your
commitment to think and act like owners of the business -- and take a direct
stake in that success. The objectives include.

            *     Encouraging focus on specific performance objectives.
            *     Rewarding participants annually based on overall Company
                  performance.
            *     Sharing in Quinton's financial success.

SCOPE & ELIGIBILITY

The Quinton Management Incentive Plan is available to Quinton management
employees, subject to certain eligibility requirements and qualifications.

Regular, full-time members of management and those working part-time holding a
position with significant management responsibility are eligible to participate
in the Plan, if actively employed by June 30th and if actively employed through
December 31st of the Plan Year.

Eligible participants may be deemed actively employed for purposes of this Plan
if as of December 31st the participant is on an approved leave of absence,
retires during the Plan Year after attaining age 55 and ten years of service, or
deceased during the Plan Year.

Sales Management employees participating in a commission or sales bonus plan are
excluded from participation in this Plan.

POLICY

The Management Incentive Plan is adopted and effective January 1, 2001.

The Plan Year for the Management Incentive Plan is the calendar year.

The Plan is a cash only incentive compensation plan. The amount of cash
incentive available for distribution in any given year is entirely
discretionary, and subject to achievement of certain profitability goals.

The Plan is designed to encourage active participation in attainment of Company
goals. While the Plan assumes that achieving operating profit is the primary
measure of attainment, it also recognizes that participants
in this Plan contribute to profit by super or performance in the design,
production and delivery of quality products within planned schedules, and
through controlling expenses.
<PAGE>
PLAN NOT A CONTRACT

The Quinton Management Incentive Plan is not intended to create any contractual
rights between any employee and the Company. The Company reserves the right to
declare any employee ineligible for a distribution under
the Plan at any time. Such disqualification, for example, may be for reasons of
poor performance. The Plan is entirely discretionary, both with respect to
participants who receive a benefit under this Plan and as to the total amount
available for distribution among eligible participants.

INCENTIVE PLAN CRITERIA & PROCEDURE

During the calendar year ending December 31, 2001, in each fiscal quarter that
EBITDA exceeds zero ($0.00) the Company will record an accrual for the
Management Incentive Plan. For each applicable quarter, the
amount accrued for incentives may be up to twenty percent (20%) of the net
positive EBITDA for the quarter. EBITDA is defined as EBIT plus depreciation,
amortization of intangible assets and amortization of deferred stock
compensation expenses for purposes of computing quarterly bonuses. EBITDA will
be computed prior to the inclusion of any amounts accrued for the Management
Incentive Plan.

Incentive payments, if any, will be paid in 2002, after the conclusion of the
audit of financial statements for the year ending December 31, 2001. The audited
financial statements will be used to determine that the total of the quarterly
amounts agrees with the annual profit or loss and to assure the reasonableness
of any quarterly EBITDA amount used in computing accrued bonuses. If the audit
is not completed by March 31, 2002, however, the incentive, if any, will be paid
during the following month.

Any Management Incentive Plan bonus distributions shall be subject to approval
by the Board of Directors.

The total amount available for distribution among eligible participants shall be
allocated to each Department Head as a percentage of the Basic Earnings of all
eligible participants within the Department Basic Earnings
consist of salary paid during the Plan Year (including, holding, vacation and
sick leave pay), but excludes other premium or bonus payments or payments
received under any disability or worker's compensation plan.

The specific dollar amount of cash incentive allocated to each eligible
participant shall be based on the recommendation of the Department Head and
approved by the President. Each recommendation will be based on an assessment of
the participant's individual contribution toward the attainment of Company
goals.

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