Document:

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                                                                   EXHIBIT 10.12

                      SUPPLY AND DISTRIBUTORSHIP AGREEMENT

        SUPPLY AND DISTRIBUTORSHIP AGREEMENT, dated as of December ___, 1999
(the "Agreement"), between STAIRMASTER SPORTS/MEDICAL PRODUCTS, INC., a Delaware
corporation ("Manufacturer"), and QUINTON INSTRUMENT COMPANY, a Washington
corporation ("New Quinton", and, together with Manufacturer, the "Parties", each
individually a "Party").

                              W I T N E S S E T H:

        WHEREAS, Manufacturer produces certain treadmills and treadmill
components;

        WHEREAS, New Quinton desires Manufacturer to manufacture the ST
Components and the CR/SR Treadmills;

        WHEREAS, New Quinton will use the ST Components as component parts of
the Medical Treadmills and will sell the Finished Goods to end users;

        WHEREAS, customers of New Quinton from time to time desire to purchase
Products, and New Quinton desires to distribute Products to such customers; and

        WHEREAS, Manufacturer desires to sell to New Quinton, and New Quinton
desires to buy from Manufacturer, the Manufactured Goods, and Manufacturer has
offered to appoint New Quinton as non-exclusive distributor of Products in the
Territory, and New Quinton has agreed to accept such appointment, all subject to
the terms and conditions hereinafter set forth.

        NOW, THEREFORE, the Parties hereby agree as follows:

                                    ARTICLE I

                      MANUFACTURED GOOD AND PRODUCT SUPPLY

        1.1. Purchase and Sale of Manufactured Goods and Distributorship of
Products. (a) Purchase and Sale of Manufactured Goods. Subject to the terms and
conditions hereof, Manufacturer shall sell to New Quinton and New Quinton shall
exclusively pur-

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.
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chase from Manufacturer during the term of this Agreement all of New Quinton's
requirements of (i) ST Components, solely for use as a component part of the
Medical Treadmills, and (ii) CR/SR Treadmills. The Parties hereby acknowledge
and agree that (x) New Quinton shall sell the CR/SR Treadmills only in the
Territory, (y) without the prior consent of New Quinton, which consent shall not
be unreasonably withheld, Manufacturer shall not sell any Manufactured Goods to
competitors of New Quinton that primarily manufacture, market or sell cardiac or
cardiopulmonary monitoring equipment, except pursuant to OEM Agreements with
Schiller AG, Nihon Khoden, Esaote and Welch Allyn, and (z) Manufacturer shall
not sell any Manufactured Goods or Finished Goods in the Territory.

        (b) Non-Exclusive Distributorship. Manufacturer hereby appoints New
Quinton as its non-exclusive distributor of the Products, together with upgrades
and additions thereto, in the Territory for the term of this Agreement, and New
Quinton hereby accepts such appointment.

        1.2. Detailed Forecasts, etc. (a) Detailed Forecasts. On the first
business day of each month beginning with the first business day of January
2000, New Quinton shall deliver to Manufacturer a three-month forecast of its
anticipated requirements of Manufactured Goods and Products for the next three
months beginning with the second month following the month in which such
forecast is due (a "Detailed Forecast"). Each Detailed Forecast shall include
frequency of shipments and relevant minimum lots.

        (b) Orders for Each Month to be at Least Seventy Percent (70%) and Not
More Than One Hundred Thirty Percent (130%) of the Most Recent Detailed
Forecast. If New Quinton's Purchase Order (which Purchase Order shall be for
Manufactured Goods and Products for a one-month period as provided in Section
1.3(b)) for a rolling average three-month period (each, an "Order Period")
specifies less than seventy percent (70%) of the minimum requirements of
Manufactured Goods specified in the most recent Detailed Forecast for each such
Order Period, New Quinton shall purchase the difference between (i) 70% of the
requirements of Manufactured Goods specified in such Detailed Forecasts and (ii)
the requirements of Manufactured Goods specified in such Purchase Orders for
such Order Period, and such difference shall be deemed automatically added to
New Quinton's Purchase Order for the next following month. If New Quinton's
Purchase Order for a month specifies more than one hundred thirty percent (130%)
of the Manufactured Goods or of the Products specified in the most recent
Detailed Forecast for that month, Manufacturer shall not be obligated to sell to
New Quinton during that month the excess over one hundred thirty percent (130%)
of the Manufactured Goods or Products specified in such Detailed Forecast.

        1.3. Purchase Orders, Delivery and Shipments. (a) Initial Purchase
Order. As soon as practicable after the date hereof, New Quinton shall deliver
to Manufacturer a

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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Purchase Order for Manufactured Goods and Products to be delivered in the months
of January and February 2000.

        (b) Subsequent Purchase Orders. On the first business day of each month
beginning with the first business day of March 2000, New Quinton shall deliver
to Manufacturer a Purchase Order for Manufactured Goods and Products to be
delivered in the next succeeding month.

        (c) Fulfillment of Orders. Manufacturer shall fill Purchase Orders in
accordance with the provisions of this Agreement. The Manufactured Goods and the
Products shall be packed by Manufacturer and shall be F.O.B. at Manufacturer's
plant. Manufacturer shall (upon instruction from New Quinton) arrange for, and
New Quinton shall pay for, shipping. New Quinton shall arrange for and pay for
insurance. Title and risk of loss shall pass to New Quinton upon delivery to
shipper at Manufacturer's plant. Manufacturer shall use reasonable efforts to
ship all Manufactured Goods and Products within four (4) weeks of its acceptance
of New Quinton's Purchase Order, provided that both Parties understand and agree
that (i) no delivery date can be guaranteed and (ii) Manufacturer shall not be
liable for damages resulting from late shipments, provided, however, that if
Manufacturer fails for three consecutive Order Months to have ready for shipping
within four (4) weeks of its acceptance of New Quinton's Purchase Order at least
ninety percent (90%), for a rolling average three-month period, of the
Manufactured Goods ordered by New Quinton, (x) Manufacturer shall credit to the
account of New Quinton the sum of $150 for each Manufactured Good not ready for
such shipping during such rolling average three-month period and (y) New Quinton
shall have the right to purchase equivalents of, or substitutes for, the ST
Components and the CR/SR Treadmills from other sellers (provided that the
license granted pursuant to the Technology License Agreement shall not thereby
come into effect.

        (d) Storage of Inventory. Upon the request and at the sole expense of
New Quinton, Manufacturer shall store on its premises as inventory of New
Quinton, Manufactured Goods and Products purchased by New Quinton, provided that
upon delivery of such goods to storage, title and risk of loss shall pass to New
Quinton.

        1.4. Price and Payment. (a) Prices. (i) Manufactured Goods. The price to
New Quinton of each Manufactured Good shall be (i) the Designated Percentage of
the Cost of Manufacture of such Manufactured Good, plus (ii) the Cost of
Manufacture of such Manufactured Good.

        (ii)  Products.  The price to New Quinton of each Product shall be [*].

        (b) Periodic Changes in Price. If the Cost of Manufacture of a
Manufactured Good or Product after January 1, 2001 increases or decreases by
more than ten percent

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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(10%) from the Cost of Manufacture of such Manufactured Good or Product for the
previous month (and "Excess Expense"), then, upon 60 days notice thereof by
Manufacturer to New Quinton, the Cost of Manufacture of such Manufactured Good
or Product shall be deemed increased or decreased, as applicable, by such Excess
Expense. New Quinton agrees that all Purchase Orders received by Manufacturer
later than 60 days after the date of such notice shall be for the purchase of
Manufactured Goods and Products at a price (calculated pursuant to Section
1.4(a)) that reflects such adjusted Cost of Manufacture. Manufacturer shall
promptly furnish New Quinton with or permit reasonable access to reasonable
supporting documentation and records evidencing such Excess Expense. Within 30
days after receipt of such supporting documents, New Quinton may (but without
deferring New Quinton's obligation to pay such Excess Expense) object to such
Excess Expense and the parties agree to act in good faith to resolve any
disputes regarding such Excess Expenses.

        (c) Payment. Payment of the purchase price for each Manufactured Good
and Product purchased by New Quinton hereunder shall be due and payable [*] days
after delivery of such Manufactured Good or Product in accordance with New
Quinton's Purchase Order. In addition, at the end of any Agreement Year,
Manufacturer shall notify New Quinton of any Additional Charges, and New Quinton
shall pay Manufacturer within [*] days after such notice any such Additional
Charges.

        1.5. Governmental and Regulatory Requirements. Manufacturer warrants
that, during the Term of this Agreement, all Manufactured Goods and Products
will meet all federal governmental and regulatory requirements in the United
States with which Manufacturer is legally required to comply. The Parties hereby
acknowledge and agree that, except as otherwise provided herein, New Quinton
shall be responsible for complying with any governmental and regulatory
requirements relating exclusively to the Finished Goods imposed by any
jurisdiction of the United States or by any jurisdiction located outside of the
United States. New Quinton shall also be responsible for complying with all
governmental and regulatory requirements relating to Finished Goods and Products
sold prior to the date of this Agreement.

                                   ARTICLE II

                              INTELLECTUAL PROPERTY

        2.1. License. Manufacturer hereby grants to New Quinton, during the term
of this Agreement and subject to the terms hereof, the right to (a) incorporate
the ST Components solely in the Medical Treadmills and (b) sell the Finished
Goods and the Products in the Territory. New Quinton may not incorporate the ST
Components in any product other than the Medical Treadmills or modify, sell,
offer for sale or otherwise use the Manufactured Goods or Products, except as
expressly provided herein.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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        2.2. Intellectual Property Rights. All intellectual property rights
relating to the Manufactured Goods and the Products, including all trademarks,
copyrights, patents, mask works, trade secrets and other intellectual property
rights, purchased by Manufacturer pursuant to the Asset Purchase Agreement are
and shall remain the property of Manufacturer. New Quinton shall not reverse
engineer any Product or misappropriate any proprietary or confidential
information embodied therein.

        2.3. Trademarks. Without limiting the foregoing, New Quinton agrees not
to use any of Manufacturer's trademarks or trade names or any names or marks
confusingly similar thereto (the "Trademarks"). All trademarks and trade names
of Manufacturer shall remain the exclusive property of Manufacturer, and New
Quinton shall not acquire any rights thereunder or thereto. Without limiting the
foregoing, New Quinton shall not use the Trademarks on any Finished Goods or in
any advertising, marketing or promotional materials, packaging or documentation
relating to the Finished Goods, the Products or the ST Components, except upon
Manufacturer's prior written consent, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, to the extent Manufacturer delivers to
New Quinton Products or Manufactured Goods or packaging material in connection
with this Agreement which contain Trademarks, Manufacturer hereby grants to New
Quinton a royalty-free right to use such Trademarks solely as contained in such
Products or Manufactured Goods or packaging material and only as hereby
authorized by Manufacturer to the extent necessary for New Quinton to sell or
use such items without infringing such marks, whether before or, pursuant to
Section 7.3(a), after termination of this Agreement.

        2.4. Documentation. Manufacturer may from time to time provide New
Quinton with certain brochures, pamphlets or other documentation relating to the
Manufactured Goods or Products (the "Documentation"). Manufacturer shall not
independently distribute manuals, brochures, and other labeling which contain
medical device claims for use with the Finished Goods or Products. As between
New Quinton and Manufacturer, Manufacturer owns all right, title and interest in
and to the copyrights and other intellectual property rights to such
Documentation. New Quinton may not reproduce, distribute, modify or display the
Documentation, except as authorized by Manufacturer. New Quinton shall have the
right to use such Documentation solely in the manner directed by Manufacturer.

        2.5. License for "Medtrack" Mark. New Quinton grants to Manufacturer a
nonexclusive, royalty-free license to use the mark "Medtrack" on Finished Goods
supplied to New Quinton or its designees in connection with this Agreement.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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                                   ARTICLE III

                                    COVENANTS

        3.1. Certain Covenants of New Quinton. During the Term of this
Agreement, New Quinton agrees:

            (a) to ensure that any sub-agent or sub-distributor appointed by New
        Quinton pursuant to the terms of this Agreement has trained sales
        personnel capable of representing the Finished Goods and the Products in
        a fair and accurate manner:

            (b) to make no use of the Products or Manufactured Goods that would
        reasonably be expected to harm the reputation of the Products, the
        Manufactured Goods or Manufacturer; and

            (c) to cease sales of Finished Goods and Products to any purchaser
        of Finished Goods or Products that New Quinton reasonably believes has
        altered any Finished Good in a manner that converts such Finished Good
        into a treadmill to be used for purposes the same as those of the
        Products, unless New Quinton assures Manufacturer to its reasonable
        satisfaction that the situation has been properly addressed and such
        purchaser will not continue to so alter Finished Goods.

        3.2. Certain Covenants of Manufacturer. During the Term of this
Agreement, Manufacturer agrees:

            (a) to provide and maintain manufacturing facilities and personnel
        for the timely and quality production of the Manufactured Goods;

            (b) to ensure that the quality standards and specifications for the
        Manufactured Goods set forth on Schedule 1 (as may be amended by New
        Quinton from time to time with reasonable notice and details to
        Manufacturer) are met in production;

            (c) to make available to New Quinton, to the extent that
        Manufacturer so makes available to other distributors of the Products,
        instructional manuals and qualified sales personnel able to assist New
        Quinton in providing instructions and general information with respect
        to the Products and the repair and maintenance thereof; and

            (d) to cease sales of Products to any purchaser of Products that
        Manufacturer reasonably believes has altered any Product in a manner
        that

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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        converts such Product into a treadmill to be used for purposes the same
        as those of the Medical Treadmills.

            (e) Manufacturer will not change the design of the Manufactured
        Goods without the consent of New Quinton, which consent shall not be
        unreasonably withheld.

                                   ARTICLE IV

                           REPORTING AND CONSULTATION

        4.1. Reporting. (a) Manufacturer. Manufacturer agrees to furnish to New
Quinton promptly:

            (i) Any information concerning the Manufactured Goods and Products
        generally furnished by Manufacturer to customers or other distributors
        of the Products;

            (ii) Notification of any claim asserted or threatened by any third
        party that the Manufactured Goods or Products infringe or misappropriate
        any intellectual property right of a third party; and

            (iii) Notification with regard to changes in design of the
        Manufactured Goods.

        (b) New Quinton. New Quinton agrees to furnish to Manufacturer promptly:

            (i) Quarterly reports showing post-sale servicing of the Finished
        Goods performed by New Quinton;

            (ii) Periodic reports showing all recorded complaints or suggestions
        received from customers regarding the performance or quality of the
        Manufactured Goods or the service provided by New Quinton;

            (iii) (a) Notification of any claim asserted or threatened by any
        third party that the Manufactured Goods or Products infringe or
        misappropriate any intellectual property right and (b) any information
        relating to a third party's infringement or misappropriation of any
        intellectual property rights relating to the Products or Manufactured
        Goods; and

            (iv) Notification of any demands, claims, actions, suits or
        proceedings brought in connection with the Manufactured Goods or the
        Products.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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           (v) Full reports of any event that may be required to be submitted to
        the FDA under the Medical Device Reporting regulations, and full reports
        of any event that may constitute a complaint within the meaning of the
        FDA's Quality System Regulations or comparable foreign regulations.

        (c) Consultation. Each Party agrees: (i) to be available on reasonable
notice and reasonable terms for consultations concerning the progress of New
Quinton's efforts with respect to the sale of the Products and the Finished
Goods and Manufacturer's quality control and production schedule, and (ii) to
provide to the other on reasonable notice and reasonable terms access to all
necessary facilities for inspections reasonably necessary to verify compliance
with any of the terms of this Agreement. The Parties agree to consult on the
pricing of the Manufactured Goods annually, or at such other time as
subsequently agreed, following review of the Cost of Manufacture and other
relevant factors.

                                    ARTICLE V

                    MANUFACTURER'S WARRANTY: INDEMNIFICATION

        5.1. Manufacturer's Warranty. Manufacturer warrants to be free of
defects in material and workmanship each of the (i) Products for two (2) years
and (ii) Manufactured Goods for thirteen (13) months (the "Warranty").
Manufacturer shall be responsible for reasonable shipping costs of the defective
Manufactured Goods, Products or parts thereof and their return or replacement
during such warranty period. If upon an actual approved warranty claim of a
customer, Manufacturer or New Quinton deviates from the warranty limitations in
favor of the customer, this act in no way shall materially change or set
precedent for future claims.

        5.2. After-Sales Service. (a) Manufactured Goods. New Quinton shall
establish in the Territory an after-sales service network for the Manufactured
Goods adequate to support customer needs for both warranty and post-warranty
service for the Manufactured Goods. Manufacturer shall reasonably assist New
Quinton in qualifying personnel for certification in the repair of each type of
Manufactured Good. Manufacturer shall provide New Quinton, at the Cost of
Manufacture, with a stock of a sufficient number of spare parts to meet
anticipated warranty repair needs for the Manufactured Goods. Any non-warranty
part for Manufactured Goods shall be sold at (i) the Designated Percentage of
the Cost of Manufacture of such part, plus (ii) the Cost of Manufacture of such
part. Manufacturer agrees to reimburse New Quinton at the rate of [*] (subject
to increase in accordance with any increase in Manufacturer's regular labor
rate) for any labor reasonably performed by New Quinton on any Manufactured Good
under warranty.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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        (b) Products. Manufacturer shall be responsible for both warranty and
post-warranty service for the Products.

        5.3. Manufacturer's Obligations for Failure of Manufactured Goods or
Products to Conform to Manufacturer's Warranty. Manufacturer's obligations to
New Quinton shall be limited to repair or replacement of such defective
Manufactured Good or Product as provided in Section 5.1. Manufacturer shall not
be obligated to repair or replace Manufactured Goods or Products to the extent
damaged after delivery by Manufacturer pursuant to Section 1.3(c): (i) by
improper storage by New Quinton or third parties, including, but not limited to,
shippers and end-users of the Manufactured Goods or Products; (ii) by misuse,
including damage due to: (A) modifications by New Quinton not authorized in
advance in writing by Manufacturer or modifications by any third party to the
original conditions of the Manufactured Goods or Products obtained through any
type of intervention, and (B) failure and/or misrepresentation by New Quinton
and/or third parties in furnishing instructions on installation and use of the
Manufactured Goods or Products to the end user, except to the extent the result
of acts or omissions of Manufacturer, but only to the extent that New Quinton's
or such third party's acts or omissions did not exacerbate or fail to mitigate
such damage; or (iii) damaged in shipment after delivery. On or before the last
day of each month, New Quinton shall deliver to Manufacturer a list of
complaints received during the previous month concerning Manufactured Goods and
Products for which New Quinton seeks repair or replacement, it being understood
and acknowledged that such delivery shall not relieve New Quinton of its
regulatory obligations relating to the handling of complaints. Any Manufactured
Good or Product or part thereof on such list shall, at Manufacturer's sole
option, be returned, at New Quinton's cost, to Manufacturer for inspection and
testing. If such Manufactured Good or Product or part thereof is found to fail
to conform to the Warranty, Manufacturer shall refund the cost of returning the
Manufactured Good or Product or part thereof to Manufacturer, as well as the
cost of delivering repaired or replacement Manufactured Goods or Products to New
Quinton and shall, pursuant to Section 5.1, pay the cost of any such
Manufactured Good or Product or part thereof. If such Manufactured Good or
Product or part thereof is found to conform to the Warranty, then Manufacturer
will return such item to New Quinton or to New Quinton's designee at New
Quinton's expense.

        5.4. Third Party Manufactured Good and Product Liability Claims. Subject
to Section 5.3, Manufacturer shall indemnify, defend and hold harmless New
Quinton from and against any demands, claims, actions, suits and proceedings,
together with costs and expenses relating thereto, asserted or brought by a
third party for (i) injury to person or property (except to the extent caused by
New Quinton) (collectively, "Claims") to the extent that such Claims arise out
of or result from (A) any product liability claim with respect to the
Manufactured Goods or the Products relating to occurrences of injuries occurring
or arising after the date hereof or (B) the failure of Manufacturer to meet all
of the specifications set forth in Schedule 1, but only to the extent that New
Quinton (1)

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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could not reasonably be expected to have discovered such failure prior to the
time of such demand, claim, action, suit or proceeding or (2) provided
Manufacturer with reasonable written notice of such failure; or (ii)
infringement or misappropriation of intellectual property of such third party,
provided that Manufacturer shall be responsible only for claims of infringement
or misappropriation with respect to changes made by Manufacturer to the Products
or Manufactured Goods after the date hereof, and provided, however, that New
Quinton shall be solely responsible for claims of infringement or
misappropriation to the extent related to changes made by Manufacturer to the
Products or Manufactured Goods in accordance with and at the request of New
Quinton. Manufacturer shall obtain, and maintain during the terms of this
Agreement, insurance against liabilities arising out of Manufacturer's
obligations under this paragraph in amounts and against such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business and shall name New Quinton as an additional insured
on all such policies. Manufacturer shall provide New Quinton evidence of such
insurance within ten (10) days after execution of this Agreement, including an
endorsement or certificate issued in the name of New Quinton.

        5.5. New Quinton's Indemnity for Finished Goods Sold by New Quinton. New
Quinton shall indemnify, defend and hold harmless Manufacturer from and against
any and all Claims relating to Finished Goods except to the extent (a) caused by
Manufacturer, (b) relating to the treadmill portion of the Finished Goods or (c)
otherwise covered by Manufacturer's indemnity under Section 5.4; provided, that
New Quinton shall be solely responsible for claims of infringement or
misappropriation to the extent related to changes made by Manufacturer to the
Products or Manufactured Goods in accordance with and at the request of New
Quinton. New Quinton shall obtain, and maintain during the terms of this
Agreement, insurance against liabilities arising out of New Quinton's
obligations under this paragraph in amounts and against such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business and shall name Manufacturer as an additional insured
on all such policies. New Quinton shall provide Manufacturer evidence of such
insurance within ten (10) days after execution of this Agreement, including an
endorsement or certificate issued in the name of Manufacturer.

        5.6. Indemnification Procedures. A Party claiming indemnification under
this Agreement shall follow the procedures set forth in Section 10.5 of the
Asset Purchase Agreement, dated as of the date hereof, among Manufacturer,
Quinton Fitness, Inc. and New Quinton.

        5.7. Recall of Finished Goods. (a) If at any time New Quinton believes
that Finished Goods or Products should be recalled and/or be the subject of a
notification to a governmental authority because the Manufactured Goods or
Products shall have failed to meet specifications or were otherwise
noncompliant, New Quinton shall promptly notify Manufacturer thereof. If at any
time Manufacturer believes that Finished Goods or

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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Products should be recalled and/or be the subject of a notification to a
governmental authority because the Manufactured Goods or Products shall have
failed to meet specifications or were otherwise noncompliant, Manufacturer shall
promptly notify New Quinton thereof. New Quinton shall be responsible for
conducting any recall that is initiated and for complying with any and all
regulatory requirements applicable to any such recall. Manufacturer shall assist
New Quinton by providing information reasonably needed by New Quinton to conduct
such recall and to comply with regulatory requirements.

        (b) If the Manufactured Goods shall fail to meet the specifications set
forth in Schedule 1 and the recall is more likely than not due to such failure,
then Manufacturer shall pay the costs of such recall initially. New Quinton
shall repay such costs to Manufacturer (i) if it is determined that the
Manufactured Goods met such specifications and (ii) to the extent that New
Quinton could reasonably be expected to have discovered such nonconformance to
such specifications prior to the time the recall was initiated.

        (c) If the Manufactured Goods shall meet the specifications set forth in
Schedule 1, then New Quinton shall pay the costs of such recall initially.
Manufacturer shall repay such costs to New Quinton (i) if it is later determined
that the Manufactured Goods (A) failed to meet such specifications and (B) the
recall is more likely than not due to such failure and (ii) to the extent that
New Quinton could not reasonably be expected to have discovered such
nonconformance to such specifications prior to the time the recall was
initiated.

                                   ARTICLE VI

                                  FORCE MAJEURE

        6.1. Force Majeure. If Manufacturer or New Quinton fails to perform or
delays in performing any term, condition or covenant contained herein, other
than to make payments prescribed hereunder in respect of Manufactured Good or
Product shipments for which title and risk of loss have passed from Manufacturer
to New Quinton prior to an event of force majeure, the obligation to perform
such term, condition or covenant shall be suspended for a maximum period of six
(6) months if such failure or delay in performance was caused by an act of God
or the elements, or fire, unavailability of power or water, breakdown of
machinery or facilities at a facility not owned by Manufacturer, inability to
obtain raw materials, operating materials or plant equipment, interruption of
transportation, war or the consequence thereof, insurrection, civil strife or
mob violence, cessation or reduction of operation (including, without
limitation, by reason of strikes and/or lock-outs or other work stoppage) at
Manufacturer's plant, beyond the reasonable control of Manufacturer or New
Quinton (any one or more of such causes, occurring singly or in combination, an
event of "force majeure"), provided that during the

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

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occurrence of any force majeure of Manufacturer, New Quinton shall have the
right to purchase equivalents of, or substitutes for, the ST Components and the
CR/SR Treadmills from other sellers (provided further that the License granted
pursuant to the Technology License shall not thereby come into effect). Except
as otherwise provided in this Article V, upon cessation of an event of force
majeure in question, the Party affected by such event of force majeure shall
perform all obligations the performance of which was suspended during such event
of force majeure. Each Party agrees to use good faith efforts to prevent or
remedy any force majeure that shall affect such Party.

                                   ARTICLE VII

                                TERM; TERMINATION

        7.1. Term. The term of this Agreement (the "Term of this Agreement")
shall begin on the date hereof and end on December 31, 2004 (the "Scheduled
Termination Date"). This Agreement shall be extended automatically for
additional twelve (12) month periods thereafter (the "Extended Date"), unless
this Agreement is terminated under the provisions of Section 7.2 below.

        7.2. Termination. (a) Agreement. This Agreement may be terminated on or
before the Scheduled Termination Date or the Extended Date under the following
conditions:

           (i) Either Party may terminate this Agreement if the other Party
        commits a material breach of its obligations or covenants hereunder and
        such breach is not cured, or not capable of cure, within forty-five (45)
        days following written notice of the breach;

           (ii) Either Party may terminate this Agreement immediately (a) if the
        other Party files or consents to the filing of a petition for
        bankruptcy, reorganization, insolvency or other relief under any law for
        the benefit of debtors or (b) if an involuntary petition is filed under
        any such law against the other Party and is not dismissed within one
        hundred twenty days of filing or (c) if the other Party is dissolved or
        liquidated under applicable law; and

           (iii) Either Party may terminate this Agreement without cause by
        giving written notice to the other Party one (1) year prior to the
        Scheduled Termination Date and thereafter four (4) months prior to any
        anniversary of the Scheduled Termination Date.

        (b) Production of Certain Manufactured Goods or Products. Manufacturer
may cease manufacturing any Manufactured Good or Product at any time upon the
issuance of

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       12
<PAGE>

an injunction in connection with a claim of infringement with respect to such
Manufactured Good or Product.

        7.3. Effect of Termination. Following the expiration or termination of
this Agreement under Section 7.1 or 7.2, the Parties shall have the following
rights and obligations:

        (a) Right to Sell. New Quinton shall have the right (i) to sell
(consistent with past practice) or otherwise dispose of its Products inventory
on hand on the date of termination, and (ii) for as long as necessary, to sell
or otherwise dispose of its Finished Goods inventory on hand on the date of
termination, if any, provided, in any case, that New Quinton shall not sell or
dispose of such inventory in a manner that might damage Manufacturer's trade
name or trademarks or their associated goodwill, and provided further that under
no circumstances shall New Quinton sell any Product or Finished Good in the
event Manufacturer ceases manufacture of such Product or the corresponding
Manufactured Good pursuant to Section 7.2(b) and Manufacturer notifies New
Quinton of such cessation in manufacturing pursuant to Section 7.2(b). Upon the
expiration of four (4) months following the date of such termination,
Manufacturer shall have the right to purchase any remaining Products inventory
at cost by giving New Quinton notice thereof.

        (b) Return of Confidential Information. Each Party shall promptly return
to the other all Confidential Information of the other that may be in the other
Party's possession on the date of termination or expiration. In addition,
Section 8.1 shall survive termination of this Agreement.

        (c) Return of Promotional Materials. New Quinton shall return to
Manufacturer all promotional, sales and other literature relating to the
Products or Manufactured Goods in New Quinton's possession or under its control
on the date of termination, except as may be reasonably necessary in connection
with the disposition of inventory under clause (a) above.

        (d) Parts. During the term of this Agreement plus any extensions
thereof, Manufacturer shall make spare parts for repair of the Manufactured
Goods or Products available to New Quinton on the same terms and conditions as
would be required under Section 5.2(a)(i) if this Agreement were still in
effect, provided that the price of each such spare part shall be the Cost of
Manufacture for such part plus [*]. For a period of five (5) years after the
termination of this Agreement, Manufacturer shall make spare parts for repair of
the Manufactured Goods or Products available to New Quinton, provided that the
price of each such spare part shall be determined by Manufacturer on a
reasonable basis. Notwithstanding the foregoing, Manufacturer's obligation to
make spare parts for repair of any item which has been discontinued shall
terminate on the fifth anniversary of such discontinuance.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       13
<PAGE>

        (e) Accrued Liabilities. Each liability of either Party to the other
accrued on or before the date of termination or expiration shall continue in
full force and effect, unaffected by the termination.

        (f) No Effect on Claims. No claim for damages on the part of either
Party by reason of any breach of this Agreement shall be affected by such
expiration or termination.

        (g) Survival of Indemnification Provisions. The obligations provided in
Sections 5.4, 5.5 and 5.6 shall survive the date of expiration or termination
and be enforceable for a period of six (6) years following the date of
termination or expiration.

                                  ARTICLE VIII

                                 CONFIDENTIALITY

        8.1. Confidential Information. (a) All Confidential Information shall be
held and protected by the recipient in strict confidence, shall be used by the
recipient only as required to render performance under this Agreement, and shall
not be disclosed to any personnel or other person except on a need to know
basis, and the recipient shall use its best efforts to prevent any unauthorized
use or disclosure thereof by the personnel and other persons to whom such
Confidential Information is disclosed by the recipient in accordance with the
foregoing.

        (b) Notwithstanding the foregoing, the terms of this Section 8.1 shall
not apply to Confidential Information that (i) is publicly available or in the
public domain at the time disclosed, (ii) is or becomes publicly available or
enters the public domain through no fault of the recipient, (iii) is already in
the recipient's possession free of any confidentiality obligations with respect
thereto at the time of disclosure, (iv) is independently developed by the
recipient, (v) is approved for release or disclosure by the disclosing Party
without restriction, (vi) is disclosed as reasonably required in response to an
order of a court or other governmental body, provided that the Party making such
disclosure pursuant to such an order shall first have given notice to the other
Party and made a reasonable effort to obtain a protective order, (vii) is
otherwise required by law or regulation to be disclosed, or (viii) is disclosed,
but only to the extent necessary, to establish a Party's rights under this
Agreement.

        (c) The parties acknowledge that any disclosure or misappropriation of
Confidential Information in violation of this Agreement would cause irreparable
harm, the amount of which may be extremely difficult to estimate, thus making
any remedy at law or in damages inadequate. Each Party therefore agrees that the
other Party shall have the right to apply to any court of competent jurisdiction
for an order restraining any

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       14
<PAGE>

breach or threatened breach of this Section 8.1 and for any other relief as such
other Party deems appropriate. This right shall be in addition to any other
remedy available in law or equity.

                                   ARTICLE IX

                                   DEFINITIONS

        "Additional Charge" shall mean, for all Manufactured Goods ordered in
any Agreement Year, the difference between (x) the prices for such Manufactured
Goods adjusted to reflect any increase in the Designated Percentage and (y) the
prices for such Manufactured Goods unadjusted to reflect any increase in the
Designated Percentage.

        "Agreement" is defined in the preamble.

        "Agreement Year" shall mean the period of time that elapses between the
date hereof and December 31, 2000 and thereafter January 1 through December 31
of each year.

        "Asset Purchase Agreement" shall mean the Asset Purchase Agreement,
dated as of November 10, 1999, among Manufacturer, New Quinton and Quinton
Fitness, Inc.

        "Claims" is defined in Section 5.4.

        "Confidential Information" shall consist of (i) any data or information,
oral or written, that relates to either Party's past, present or future
research, development or business activities, including any unannounced
product(s) and service(s), (ii) any algorithms, designs, or specifications
relating to the Products or Manufactured Goods, and (iii) information relating
to services, developments, inventions, processes, plans, financial information,
customer and supplier lists, forecasts and projections. Confidential Information
shall also include the terms and conditions of this Agreement and all charges,
fees, credits and invoices hereunder.

        "Cost of Manufacture" shall mean all of Manufacturer's direct and
indirect costs of manufacture and certain allocated costs in the categories set
forth on Schedule 2, as adjusted by Manufacturer at the end of each calendar
year for the following calendar year.

        "CR/SR Treadmills" shall mean each of the treadmill models SR 60 and CR
60, together with their respective successor models.

        "Designated Percentage" shall mean that percentage equal to (i) [*], in
any Agreement Year in which New Quinton purchases at least [*] of Manufactured
Goods, or (ii) [*] plus, for each [*] less than [*] purchased by New Quinton in
any Agreement Year,

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       15
<PAGE>

[*], determined upon delivery of the Purchase Order for the twelfth month of
such Agreement Year, provided that such numbers of units shall be prorated to
account for any termination of this Agreement prior to the expiration of an
Agreement Year.

        "Detailed Forecast" is defined in Section 1.2(a).

        "Distributorship" shall mean the non-exclusive distributorship granted
by Manufacturer to New Quinton pursuant to Section 1.l(b).

        "Extended Date" is defined in Section 7.1.

        "FDA" shall mean the U.S. Food and Drug Administration.

        "Finished Good" shall mean any Medical Treadmill or CR/SR Treadmill.

        "force majeure" is defined in Article VI.

        "Manufactured Goods" shall mean the ST Components and the CR/SR
Treadmills.

        "Manufacturer" is defined in the preamble.

        "Medical Treadmills" shall mean the ST 5S and ST 65 treadmills that are
part of the stress test system, together with their respective successor models.

        "New Quinton" is defined in the preamble.

        "Order Month" is defined in Section 1.2(a).

        "Parties" and "Party" are defined in the preamble.

        "Products" shall mean the treadmill models ClubTrack, ClubTrack Plus,
ClubTrack H.R. and ClubTrack H.R. Plus, and their respective successor models.

        "Purchase Order" shall mean a purchase order covering a one-month period
issued by New Quinton to Manufacturer specifying (i) the types of Manufactured
Goods or Products to be purchased, (ii) the quantity of each such Manufactured
Good or Product, (iii) the respective delivery dates, and (iv) the shipping
instructions.

        "QIC" shall mean QIC Holding Corp., a California corporation.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       16
<PAGE>

        "Regulatory Approvals" shall mean the consent, approval, authorization,
waiver, permit, clearance, concession, license or certificate of any
governmental body or any entity exercising regulatory functions.

        "Scheduled Termination Date" is defined in Section 7.1.

        "ST Component" shall mean the treadmill portion of each of the Medical
Treadmills.

        "Technology License Agreement" shall mean the Technology License
Agreement, dated as of the date hereof, between Manufacturer and New Quinton.

        "Term of this Agreement" is defined in Section 7.1.

        "Territory" shall mean medical diagnostic testing and rehabilitation
facilities where subjects are monitored with medical equipment by medical
personnel. These facilities can be a hospital, medical research facility,
doctor's office or rehabilitation center. Hospital wellness centers and
community-based wellness centers are not considered part of the Territory except
for segregated locations within such wellness centers where cardiac or
cardio-pulmonary rehabilitation is monitored with medical equipment by medical
personnel.

        "Warranty" is defined Section 5.1.

                                    ARTICLE X

                                  MISCELLANEOUS

        10.1. Relationship of the Parties. The relationship between the Parties
created by this Agreement shall not be construed as one of agency, partnership,
joint venture or employer/employee. Each Party shall be and remain an
independent contractor and neither shall have the authority to represent or bind
the other.

        10.2. Assignment, Successors and Assigns. This Agreement shall be
assignable by either party in connection with (i) a change of control, merger or
sale of all or substantially all of such party's assets or businesses or (ii)
the sale of all or substantially all of such party's treadmill or stress test
business (provided that such sale may not be to a competitor of the other party
hereto). Other than as set forth in the preceding sentence, this Agreement may
not be assigned, transferred, licensed, pledged or otherwise disposed of by
either party without the other party's prior written consent, and any attempt to
assign this Agreement other than as provided herein shall be void. This
Agreement shall

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       17
<PAGE>

be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.

        10.3. Notices. All notices or other communications required or
contemplated by this Agreement shall be in English and in writing, and shall be
sent by confirmed facsimile, courier or prepaid registered first class airmail
to the address for each Party designated below or to such other address as such
Party may designate in a notice that complies with this paragraph.

        If to Manufacturer:  StairMaster Sports/Medical Products, Inc.
                             12421 Willows Road N.E., Suite 100
                             Kirkland, Washington 98034 U.S.A.
                             Attention: President and Chief Executive Officer
                             Fax: (206) 823-9490

        If to New Quinton:   Quinton Instrument Company
                             3303 Monte Villa Parkway
                             Bothell, WA 98021-8906
                             Attention: President
                             Fax: (425) 402-2001

        with a copy to:      QIC Holding Corp.
                             550 15th Street
                             San Francisco, CA 94103
                             Attention: President
                             Fax: (415) 551-8686

Communications shall be deemed to have been given on the date of receipt.

        10.4. Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.

        10.5. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision. The Parties intend that the provisions herein be enforced to the
fullest extent permitted by applicable law. Accordingly, the Parties agree that
if any provisions are deemed not enforceable, they shall be deemed modified to
the extent necessary to make them enforceable.

        10.6. Waiver. No waiver of any term or condition of this Agreement shall
be valid unless in writing and signed by the appropriate Party, and no such
waiver shall extend to any term or condition or to any breach other than those
specifically described in such waiver. No failure or delay by either Party to
enforce strictly any of the provisions of this Agreement shall be construed as a
waiver of such provision.

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       18
<PAGE>

        10.7. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the Parties with respect to the subject matter hereof, and
supersedes all previous oral or written agreements. No amendment, modification,
change or alteration of this Agreement shall be effective unless made in writing
and signed by a duly authorized officer representative of each of the Parties.

        10.8. No Liability for Certain Damages. Subject to Sections 5.4 and 5.5,
under no circumstances shall either Party have liability (except to the extent
foreseeable) for consequential, indirect, special or punitive damages arising
out or in connection with: (i) this Agreement, (ii) such Party's activities in
connection herewith, or (iii) the failure of Manufactured Goods, Products or
parts thereof to operate properly.

        10.9. Headings. The headings in this Agreement are for purposes of
convenience only and shall not limit or otherwise affect any of the terms or
provisions hereof.

        10.10. Counterparts. This Agreement may be executed by facsimile in one
or more counterparts, each of which shall be an original but all of which shall
constitute one and the same agreement.

        IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers on and as of the date hereof.

STAIRMASTER SPORTS/MEDICAL                 QUINTON INSTRUMENT COMPANY
    PRODUCTS, INC.

By:  /s/ Tom Bryant                        By:  /s/ Michael Blomeyer
   ----------------------------------         ----------------------------------
     H. Tom Bryant
     Chief Executive Officer
     Stairmaster

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       19
<PAGE>

                                   Schedule 1

                      Quality Standards and Specifications

For Finished Goods:

      1.   StairMaster will maintain an internal Quality System that meets or
           exceeds all of the requirements set forth in the Quality Systems
           Regulation, 21 CFR 820 ("Medical Devices; Current Good Manufacturing
           Practice (CGMP)").

      2.   StairMaster's Quality System will also comply with ISO 9000
           standards.

      3.   Workmanship and appearance standards will meet or exceed those
           specified in Quinton's Workmanship Standards Manual 018124 or other
           Quinton approved standards.

      4.   Printed Circuit Boards will be manufactured in compliance with the
           latest revision of the ANSI/IPC-A-600 standards.

      5.   Items shall be suitably packaged for acceptance by common carrier for
           surface transportation, handling and storage without detrimental
           effects to the items.

      6.   StairMaster will assure that devices will comply with all appropriate
           regulations for the country of destination (etc. UI/CSA/CE).

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                        1
<PAGE>

                                   Schedule 2

                            Manufactured Good Prices

<TABLE>
<CAPTION>
Product                                                              Cost
-------                                                              ----
<S>                                                                  <C>
ST 55                raw materials costs:                                 [*]
00378-001            direct manufacturing costs:                          [*]
                     indirect manufacturing costs:                        [*]
                     manufacturing variances:                             [*]
                     FDA costs:                                           [*]
                     maintenance and engineering                          [*]
                     costs associated with Medical
                     Treadmills:
                     administration costs:                           [*]
                                                             Total:       [*]

ST 65                raw materials costs:                            [*]
00383-001            direct manufacturing costs:                     [*]
                     indirect manufacturing costs:                   [*]
                     manufacturing variances:                        [*]
                     FDA costs:                                      [*]
                     maintenance and engineering                     [*]
                     costs associated with Medical
                     Treadmills:
                     administration costs:                           [*]
                                                             Total:  [*]

SR 60                raw materials costs:                            [*]
00390-001            direct manufacturing costs:                     [*]
                     indirect manufacturing costs:                   [*]
                     manufacturing variances:                        [*]
                     FDA costs:                                      [*]
</TABLE>

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                       2
<PAGE>

<TABLE>
<CAPTION>
Product                                                              Cost
-------                                                              ----
<S>                                                                  <C>
                     maintenance and engineering                     [*]
                     costs associated with Medical
                     Treadmills:
                     administration costs:                           [*]
                                                             Total:  [*]

CR 60                raw materials costs:                            [*]
00380-001            direct manufacturing costs:                     [*]
                     indirect manufacturing costs:                   [*]
                     manufacturing variances:                        [*]
                     FDA costs:                                      [*]
                     maintenance and engineering                     [*]
                     costs associated with Medical
                     Treadmills:
                     administration costs:                           [*]
                                                             Total:  [*]
</TABLE>

[*] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE COMMISSION.

                                        3<PAGE>
                                                                  EXECUTION COPY

                                                                   EXHIBIT 10.20

                            ASSET PURCHASE AGREEMENT

                          dated as of November 10, 1999

                                      among

                    STAIRMASTER SPORTS/MEDICAL PRODUCTS, INC.

                                       and

                           QUINTON INSTRUMENT COMPANY

                                       and

                              QUINTON FITNESS, INC.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
                                    ARTICLE I
                                   DEFINITIONS

Section 1.1.  Definitions .................................................    1
Section 1.2.  Miscellaneous Terms and Usage ...............................    8

                                   ARTICLE II
                                PURCHASE AND SALE

Section 2.1.  Purchased Assets ............................................    9
Section 2.2.  Excluded Assets .............................................    9
Section 2.3.  Assumed Liabilities .........................................    9
Section 2.4.  Excluded Liabilities ........................................    9

                                   ARTICLE III
                                 PURCHASE PRICE

Section 3.1.  Purchase Price ..............................................    9
Section 3.2.  Post-Closing Adjustment to Purchase Price ...................    9
Section 3.3.  Allocation of Purchase Price ................................   10

                                   ARTICLE IV
                                     CLOSING

Section 4.1.  Closing Date ................................................   11
Section 4.2.  Payment on the Closing Date .................................   11

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

Section 5.1.  Authorization, etc. .........................................   11
Section 5.2.  Corporate Status ............................................   12
Section 5.3.  No Conflicts, etc. ..........................................   12
Section 5.4.  Financial Statement, Etc ....................................   13
Section 5.5.  Absence of Undisclosed Liabilities ..........................   13
Section 5.6.  Taxes .......................................................   13
Section 5.7.  Absence of Changes ..........................................   14
Section 5.8.  Litigation ..................................................   16
Section 5.9.  Compliance with Laws; Governmental Approvals and Consents;
              Governmental Contracts ......................................   16
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
Section 5.10. Operation of the Fitness Business ...........................   16
Section 5.11. Purchased Assets ............................................   16
Section 5.12. Contracts ...................................................   17
Section 5.13. Territorial Restrictions ....................................   19
Section 5.14. Inventories .................................................   19
Section 5.15. Customers ...................................................   19
Section 5.16. Products ....................................................   20
Section 5.17. Intellectual Property .......................................   20
Section 5.18. Environmental Matters .......................................   22
Section 5.19. Employees, Labor Matters, etc. ..............................   23
Section 5.20. Employee Benefit Plans and Related Matters ..................   23
Section 5.21. Brokers, Finders, etc. ......................................   24
Section 5.22. Disclosure ..................................................   24
Section 5.23. Receivables .................................................   24
Section 5.24. Purchase of StairMaster Common Stock ........................   24

                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

Section 6.1.  Representations and Warranties of Buyer .....................   26

                                   ARTICLE VII
                        ACTIONS PRIOR TO THE CLOSING DATE

Section 7.1.  Investigation by Buyer ......................................   27
Section 7.2.  Preserve Accuracy of Representations and Warranties .........   27
Section 7.3.  Consents of Third Parties ...................................   27
Section 7.4   Hart-Scott-Rodino Notification ..............................   28

                                  ARTICLE VIII
                              ADDITIONAL AGREEMENTS

Section 8.1.  Use of Trademarks ...........................................   28
Section 8.2.  Confidentiality .............................................   28
Section 8.3.  Taxes .......................................................   29
Section 8.4.  Delivery of Possession ......................................   29
Section 8.5.  Further Assurances ..........................................   30
Section 8.6.  Financing ...................................................   30
Section 8.7.  Non-Solicitation ............................................   30
Section 8.8.  Conduct of Business .........................................   30
Section 8.9.  Covenant Not to Compete .....................................   31
</TABLE>

                                       ii
<PAGE>
<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
                                   ARTICLE IX
                             CONDITIONS PRECEDENT TO
            OBLIGATIONS OF BUYER, MEDICAL QUINTON AND FITNESS QUINTON

Section 9.1.  Conditions to Obligations of Buyer ..........................   32
Section 9.2.  Conditions to Obligations of Sellers ........................   34

                                    ARTICLE X
                                 INDEMNIFICATION

Section 10.1. Indemnification by Sellers ..................................   35
Section 10.2. Sellers' Indemnity Limitations ..............................   36
Section 10.3. Indemnification by Buyer ....................................   36
Section 10.4. Buyer's Indemnity Limitations ...............................   37
Section 10.5. Indemnification Procedures ..................................   37
Section 10.6. Sole and Exclusive Remedy ...................................   38
Section 10.7. Tax Treatment of the Indemnity Payments .....................   39

                                   ARTICLE XI
                                   TERMINATION

Section 11.1. Termination .................................................   39
Section 11.2. Notice of Termination .......................................   39
Section 11.3. Effect of Termination .......................................   39
Section 11.4. Liquidated Damages ..........................................   39

                                   ARTICLE XII
                               GENERAL PROVISIONS

Section 12.1. No Public Announcement ......................................   40
Section 12.2. Notices .....................................................   40
Section 12.3. Successors and Assigns ......................................   42
Section 12.4. Entire Agreement:  Amendments, etc. .........................   42
Section 12.5. Interpretation ..............................................   42
Section 12.6. Waivers .....................................................   42
Section 12.7. Expenses ....................................................   43
Section 12.8. Execution in Counterparts ...................................   43
Section 12.9. Governing Law ...............................................   43
</TABLE>

                                      iii
<PAGE>
EXHIBITS AND SCHEDULES

<TABLE>
<S>                         <C>
Exhibit A                   Form of Assignment
Exhibit B                   Form of Assumption Agreement
Exhibit C                   Form of Note
Exhibit D                   Form of Sublease Agreement
Exhibit E                   Form of Supply Agreement
Exhibit F                   Form of Technology License
Exhibit G                   Form of Trademark License
Exhibit H                   Form of Escrow Agreement
Exhibit I                   Form of Opinion of Greene Radovsky Maloney & Share LLP
Exhibit J                   Form of Opinion of Debevoise & Plimpton
Schedule 1.1-1              Assumed Liabilities
Schedule 1.1-2              Excluded Assets
Schedule 1.1-3              Purchased Assets
Schedule 1.1-4              September 30,1999 Balance Sheet of the Fitness Business
Schedule 5.2(b)             Corporate Status
Schedule 5.3                Conflicts
Schedule 5.5                Liabilities
Schedule 5.7                Changes
Schedule 5.8                Litigation, etc.
Schedule 5.9(a)             Compliance with Laws
Schedule 5.9(b)             Consents
Schedule 5.10               Operation of Fitness Business
Schedule 5.11               Title to Purchased Assets
Schedule 5.12(a)            Contracts
Schedule 5.12(c)            Defaults, Required Consents, etc., under Contracts
Schedule 5.12(d)            Powers of Attorney
Schedule 5.13               Territorial Restrictions
Schedule 5.14               Inventories
Schedule 5.15               Customers
Schedule 5.16(a)            Warranties Product Liability
Schedule 5.16(b)            Product Liability
Schedule 5.17(a)            Owned Intellectual Property
Schedule 5.17(c)            Intellectual Property Infringement
Schedule 5.17(d)            Intellectual Property Litigation
Schedule 5.17(e)            Licensing Arrangements
Schedule 5.17(g)            Use of Name and Mark
Schedule 5.18(a)            Environmental Permits
Schedule 5.18(c)            No Actions with Respect to Environmental Matters
Schedule 5.23               Receivables
</TABLE>

                                       iv
<PAGE>
                            ASSET PURCHASE AGREEMENT

      THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated as of November 10,
1999, among StairMaster Sports/Medical Products, Inc., a Delaware corporation,
as purchaser ("Buyer"), Quinton Instrument Company, a Washington corporation
("Medical Quinton") and Quinton Fitness, Inc., a Delaware corporation and wholly
owned subsidiary of Medical Quinton ("Fitness Quinton"). Medical Quinton and
Fitness Quinton are sometimes referred to herein individually as a "Seller" and
collectively as "Sellers".

                                    RECITALS:

      A. Fitness Quinton is engaged in the business of designing, manufacturing,
and selling certain treadmills and certain related products to the fitness,
rehabilitation, and medical communities;

      B. Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers, substantially all their assets and properties associated with the
Fitness Business, subject to and as more fully described below.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, Buyer, Medical
Quinton and Fitness Quinton hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      Section 1.1. Definitions. In this Agreement, in addition to the defined
terms used elsewhere, the following terms have the following meanings:

      "Adjusted Net Current Assets" means the excess of (i) the sum of the
inventory, receivables, prepaid expenses plus other current assets of the
Fitness Business over (ii) the sum of the following liabilities (excluding,
however, any payables attributable to employee benefits and wage expenses,
intercompany accounts payable, product liability claims or taxes other than
sales taxes and state income taxes relating to sales of products of the Fitness
Business): accounts payable, royalties payable, accrued expenses, deferred
service revenue plus accrued warranty of the Fitness Business computed on an
accrual basis in accordance with GAAP, applied on a consistent basis with the
prior application of GAAP and using the same accounting methods, policies,
practices, principles and classifications as were used in the preparation of the
balance sheet as of September 30, 1999 attached hereto as Schedule 1.1-4.
<PAGE>
      "Adjusted Net Current Assets Computation" has the meaning given such term
in Section 3.2(b).

      "Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.

      "Aggregate Threshold" has the meaning given to such term in Section
10.2(b).

      "Applicable Law" means all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), or Consents, rules,
regulations, ordinances, codes or orders of, with or to any Governmental Body
and (ii) orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Body.

      "Assignment" means the assignment pursuant to which the Purchased Assets
are transferred to Buyer, substantially in the form attached hereto as Exhibit
A.

      "Assumed Liabilities" means those liabilities and obligations to be
assumed by Buyer, as set forth on Schedule 1.1-1, but excluding the Excluded
Liabilities.

      "Assumption Agreement" means the assumption agreement, to be delivered by
Buyer, pursuant to which Buyer assumes the Assumed Liabilities, substantially in
the form attached hereto as Exhibit B.

      "Buyer" has the meaning given to it in the preamble to this Agreement.

      "Buyer Indemnitees" has the meaning given to it in Section 10.1.

      "Buyer Protected Information" means any information concerning the Fitness
Business that is proprietary, confidential, and not otherwise publicly
available, including without limitation Fitness Quinton's or Medical Quinton's
patents, pending patent applications, costs of manufacturing and financial data
relating to treadmill models SR60, CR60, ST55, and ST65, the Products or the
Predecessor Versions, except as such information (x) becomes generally available
to the public other than as a result of a disclosure by Medical Quinton, Fitness
Quinton or any of their Affiliates, or (y) is required to be disclosed by law or
legal process by Medical Quinton, Fitness Quinton or any of their Affiliates,
and except to the extent such information relates to the Excluded Assets.

      "Closing" means the closing of the transfer of the Purchased Assets to
Buyer and the assumption of the Assumed Liabilities by Buyer.

                                       2
<PAGE>
      "Closing Date" means the time and date on which the Closing actually
occurs.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Collateral Documents" means, collectively, the Assignment, the Assumption
Agreement, the Escrow Agreement, the Sublease Agreement, the Supply Agreement,
the Trademark License, the Technology License, the Transition Services Agreement
and any other agreements, instrument and documents being or to be executed and
delivered under this Agreement or in connection herewith, including any
assignment of patents or patent applications or related documents to be filed
with the U.S. Patent and Trademark Office.

      "Computer Systems" has the meaning given to it in Section 5.17(h).

      "Consent" means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Body.

      "Contract" has the meaning given to it in Section 5.12(a).

      "Environmental Laws" means (i) all Applicable Laws relating to the
protection of the environment (including natural resources), to human health and
safety, to natural resources, or to any emission, discharge, generation,
processing, storage, holding, abatement, existence, Release, threatened Release
or transportation of any Hazardous Substances, (ii) all other requirements
pertaining to reporting, licensing, permitting, investigation or remediation of
emissions, discharges, releases or threatened releases of Hazardous Materials,
and (iii) all other requirements pertaining to the protection of the health and
safety of employees or the public.

      "Environmental Permits" means any federal, state and local permit,
license, registration, consent, order, administrative consent order,
certificate, approval or other authorization with respect to either Fitness
Quinton or Medical Quinton necessary for the conduct of the Fitness Business as
currently conducted or previously conducted under any Environmental Law.

      "Escrow Agreement" means the Escrow Agreement in the form attached as
Exhibit H.

      "Excluded Assets" means those assets of Sellers excluded from the
Purchased Assets, as provided in Schedule 1.1-2.

                                       3
<PAGE>
      "Excluded Liabilities" means any liability or obligation of Sellers or any
liability or obligation with respect to the Fitness Business, in each case not
described or set forth on Schedule 1.1-1.

      "Fitness Business" means that portion of the business and operations of
Sellers primarily related to (x) the treadmill and related fitness business
(including the Monark bicycle business) and (y) the manufacture by Fitness
Quinton of components supplied to Medical Quinton.

      "Fitness Quinton" has the meaning given to it in the preamble to this
Agreement.

      "GAAP" means United States generally accepted accounting principles.

      "Governmental Body" means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

      "Hazardous Substances" means any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as "hazardous" or "toxic"
thereunder.

      "Indemnifying Party" has the meaning given to it in Section 10.5.

      "Indemnitee" has the meaning given to it in Section 10.5.

      "Intellectual Property" means any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto; (b)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans, and registrations and applications for registration thereof; (c)
copyrights and registrations thereof; (d) Software and firmware; (e) inventions,
processes, designs, formulae, trade secrets, know-how, industrial models,
confidential, business and technical information, manufacturing, engineering and
technical drawings and product specifications; (f) mask work and other
semiconductor chip rights and registrations thereof; (g) intellectual property
rights similar to any of the foregoing;

                                       4
<PAGE>
(h) copies and tangible embodiments thereof (in whatever form or medium,
including electronic media).

      "Intellectual Property Assets" means all Intellectual Property and all
rights thereunder or in respect thereof primarily relating to (or used or held
for use) in connection with the Fitness Business, including, but not limited to,
rights to sue for and remedies against past, present and future infringements
thereof, and rights of priority and protection of interests therein under the
laws of any jurisdiction worldwide and all tangible embodiments thereof.

      "Inventories" means all inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts,
including inventories held at any location controlled by Fitness Quinton or
Medical Quinton or any of their Affiliates and inventories previously purchased
and in transit to Fitness Quinton or Medical Quinton or any of their Affiliates
at such location, in each case related to the Fitness Business;

      "Lien" means any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including but not limited to such as may
arise under any Contracts.

      "Loss" and "Losses" have the respective meanings given to them in Section
10.1.

      "Material Adverse Effect" means any event, occurrence, fact, condition,
change or effect that is materially adverse to the business, operations, sales
prospects, results of operations, financial condition, properties (including
intangible properties), assets including intangible assets) or liabilities of
the Fitness Business.

      "Medical Quinton" has the meaning given to it in the preamble to this
Agreement.

      "Non-Fitness Business" means all of the business and operations of Sellers
other than the Fitness Business.

      "Note" means the note payable to Fitness Quinton in the amount of
$1,000,000, in the form attached as Exhibit C hereto.

                                       5
<PAGE>
      "Permitted Liens" means (a) liens for taxes and other governmental charges
and assessments which are not yet due and payable, (b) liens of landlords and
liens of carriers, warehousemen, mechanics and materialmen and other like liens
arising in the ordinary course of business for sums not yet due and payable, and
(c) liens granted to Silicon Valley Bank as of the date hereof.

      "Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.

      "Predecessor Versions" means treadmill products in the Q-Series, Club
Track, Club Track Plus, Club Track H.R., Club Track H.R. Plus, SR60, CR60, ST55,
and ST65 product lines which were but are no longer produced by Medical Quinton
as of the date of this Agreement.

      "Products" means the current Q-65, Club Track, Club Track Plus, Club Track
H.R. and Club Track H.R. Plus treadmill products designed or manufactured by
Sellers.

      "Purchased Assets" means the assets of Fitness Quinton, and, to the extent
owned by it, Medical Quinton, wherever located, tangible or intangible, used
primarily in connection with the Fitness Business as the same shall exist on the
Closing Date, including those set forth on Schedule 1.1-3, but excluding the
Excluded Assets.

      "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of September 5, 1997, between StairMaster Holdings, Inc. and the
parties listed therein.

      "Release" means any releasing, disposing, discharging, leaking, leaching,
dumping, seeping, migration, placing and the like, including without limitation,
the moving of any materials through, into or upon, any land, soil, surface
water, ground water or air, or otherwise entering into the environment.

      "Remedial Action" means all actions required to investigate, clean up,
remove, treat or in any other way remediate any Hazardous Substances, or prevent
the release of Hazardous Substances into the environment.

      "Seller Indemnitees" has the meaning given to it in Section 10.3.

      "Seller Protected Information" means any information concerning the
Non-Fitness Business that is proprietary, confidential, and not otherwise
publicly available, including without limitation business or technical
information concerning Seller's costs of manufacturing and financial data
relating to any products or business of Sellers relating

                                       6
<PAGE>
to the Non-Fitness Business, except as such information (x) becomes generally
available to the public other than as a result of a disclosure by any of the
Sellers or (y) is required to be disclosed by law or legal process by the
Sellers and except to the extent such information relates to the Purchased
Assets.

      "Shares" has the meaning given it in Section 3.1.

      "Software" means all computer software, including but not limited to,
application software and system software, including all source code and object
code versions thereof, in any and all forms and media, whether recorded on
paper, magnetic media or other electronic or non-electronic media (including
data and related documentation, user manuals, training materials, flow charts,
diagrams, descriptive tests and programs, computer print-outs, underlying tapes,
computer databases and similar items), integrated circuits, embedded systems,
and other electro-mechanical or processor based systems.

      "Stock Subscription Agreement" means the Stock Subscription Agreement
between StairMaster Holding, Inc. and Fitness Quinton in the form as the parties
shall mutually agree.

      "Sublease Agreement" means a sublease agreement for a portion of the
facility located in Bothell, Washington, leased by Medical Quinton to be entered
into as of the Closing Date between Medical Quinton, as sublessor, and Buyer, as
sublessee, in substantially the form attached as Exhibit D hereto.

      "Subleased Premises" means the premises at the facility located in
Bothell, Washington, leased by Medical Quinton, which are to be subleased by
Buyer from Medical Quinton in accordance with the terms of and pursuant to the
Sublease Agreement.

      "Supply Agreement" means the Supply and Distributorship Agreement to be
entered into as of the Closing Date between Buyer and Medical Quinton, in the
form attached as Exhibit E hereto.

      "Tax" means any federal, state, provincial, local, foreign or other
income, alter-native, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp, documentary, recording,
premium, severance, environmental (including taxes under Section 59A of the
Code), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care,

                                       7
<PAGE>
withholding, estimated or other similar tax, duty or other governmental charge
or assessment or deficiencies thereof (including all interest and penalties
thereon and additions thereto whether disputed or not).

      "Tax Return" means any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

      "Technology License" means the Technology License Agreement to be entered
into as of the Closing Date between Buyer and Medical Quinton in the form
attached as Exhibit F hereto.

      "Territory" means medical diagnostic testing and rehabilitation facilities
where subjects are monitored with medical equipment by medical personnel. These
facilities can be a hospital, medical research facility, doctor's office or
rehabilitation center. Hospital wellness centers and community-based wellness
centers are not considered part of the Territory except for segregated locations
within such wellness centers where cardiac or cardio-pulmonary rehabilitation is
monitored with medical equipment by medical personnel.

      "Trademark License" means the Trademark License Agreement relating to use
of the "Quinton" mark to be entered into as of the Closing Date between Buyer,
as licensee, and Medical Quinton, as licensor, in the form attached as Exhibit G
hereto.

      "Transition Services Agreement" means the Transition Services Agreement to
be entered into as of the Closing Date between Buyer and Medical Quinton, in
such form as the parties shall mutually agree.

      "Year 2000 Compliant" means that Software, hardware and embedded
microcontrollers in non-computer equipment (x) correctly perform date data
century recognition, and calculations that accommodate same century and
multi-century formulas and date values; (y) operate or are expected to operate
on a basis comparable to their current operation during and after calendar year
A.D. 2000, including but not limited to leap years; and (z) shall not end
abnormally or provide invalid or incorrect results as a result of date data
which represents or references different centuries or more than one century.

      Section 1.2. Miscellaneous Terms and Usage. The term "or" is disjunctive;
the term "and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. The term "including" is by way of example and not a limitation. All
pronouns used herein shall be deemed to refer to the masculine, feminine or
neuter gender or singular or plural, as the context requires. All terms defined
herein shall be equally applicable to

                                       8
<PAGE>
both the singular and plural forms. Any agreement referred to Section 1.1 shall
mean such agreement as amended, supplemented and modified from time to time to
the extent permitted by the applicable provisions thereof and by this Agreement.
The term "herein" means this Agreement, including the Schedules and Exhibits
hereto. The term "business day" means any day, other than Saturday, Sunday or a
federal or State of Washington legal holiday.

                                   ARTICLE II
                                PURCHASE AND SALE

      Section 2.1. Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Fitness Quinton and, to the
extent that Medical Quinton owns any Purchased Assets, Medical Quinton shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase
from such Sellers, the Purchased Assets.

      Section 2.2. Excluded Assets. The Purchased Assets shall not include any
of the Excluded Assets.

      Section 2.3. Assumed Liabilities. On the Closing Date, pursuant to the
Assumption Agreement, Buyer shall assume and agree to pay, perform, or otherwise
discharge the Assumed Liabilities.

      Section 2.4. Excluded Liabilities. Notwithstanding Section 2.3, Buyer
shall not assume or incur or be obligated or become liable to pay, perform or
otherwise discharge any Excluded Liabilities.

                                   ARTICLE III
                                 PURCHASE PRICE

      Section 3.1. Purchase Price. On the terms and subject to the conditions
set forth in this Agreement, in consideration for the Purchased Assets and the
covenant not to compete set forth in Section 8.9, Buyer agrees to cause to be
paid to Sellers at the Closing: (x) TWELVE MILLION DOLLARS ($12,000,000), (y) a
$1,000,000 Subordinated Promissory Note in the form of Exhibit C and (z) 23,077
shares (the "Shares") of common stock, par value $.01 per share, of StairMaster
Holding, Inc. (collectively the "Purchase Price"), and to assume the Assumed
Liabilities as provided in Section 2.3. The Purchase Price shall be payable at
the Closing pursuant to Section 4.2, and later shall be adjusted pursuant to
Section 3.2.

      Section 3.2. Post-Closing Adjustment to Purchase Price. The Purchase Price
provided for in Section 3.1 hereof has been determined on the assumption that
the

                                       9
<PAGE>
amount of Adjusted Net Current Assets of the Fitness Business as of the Closing
Date and immediately prior to the Closing is not less than $3,600,00 and not
greater than $4,200,000.

      (b) As soon as reasonably practical following (but not more than 45 days
after) the Closing Date, Sellers shall cause to be prepared and delivered to
Buyer the Adjusted Net Current Assets of the Fitness Business as of the Closing
Date and immediately prior to the Closing (the "Adjusted Net Current Assets
Computation"). All expenses incurred in connection with the preparation of the
Adjusted Net Current Assets Computation shall be the responsibility of Sellers.
To assist the Buyer in its review of the Adjusted Net Current Assets
Computation, Sellers shall make available to the Buyer simultaneously with the
Adjusted Net Current Assets Computation, all work papers prepared in connection
therewith.

      (c) The Adjusted Net Current Assets Computation shall become final and
binding upon the parties unless, within 30 days following its submittal to the
Buyer, the Buyer notifies Sellers of its objection thereto in reasonable detail.
If the Buyer does so notify Sellers of its objection to the Adjusted Net Current
Assets Computation, Sellers and Buyer shall negotiate in good faith to resolve
any differences. If within 15 days following the receipt of such notice by
Sellers, such differences have not been resolved, they shall be resolved by an
independent "big five" accounting firm (other than Sellers accountants). If
Buyer and the Sellers cannot agree on the independent accounting firm to be
retained, Buyer, on the one hand, and the Sellers, on the other hand, shall each
submit the name of one accounting firm that satisfies the qualifications set
forth in this Section 3.2(c), and the independent accounting firm shall be
selected by lot from those two firms. Such accounting firm's opinion thereon and
the resulting Adjusted Net Current Assets Computation shall be final, binding
and not subject to any appeal. The fees and expenses of such accounting firm
shall be paid by one-half by Sellers and one-half by Buyer.

      (d) Within 10 days following the final determination of the Adjusted Net
Current Assets Computation, (i) if the Adjusted Net Current Assets Computation
is less than $3,600,000, the Sellers shall pay Buyer, as a reduction in the
Purchase Price paid at the Closing, the amount of such deficiency or (ii) if the
Adjusted Net Current Assets Computation is greater than $4,200,000, the Buyer
shall pay Sellers, as an increase in the Purchase Price paid at the Closing, the
amount of such excess. Such amounts shall be paid by wire transfer of
immediately available funds.

      Section 3.3. Allocation of Purchase Price. The aggregate amount of the
Purchase Price and the Assumed Liabilities shall be allocated among the
Purchased Assets in accordance with section 1060 of the Code and the Treasury
regulations thereunder. In connection with the preparation of the foregoing
allocations, the parties

                                       10
<PAGE>
shall cooperate with each other and provide such information as any of them
shall reasonably request. Each of the parties shall (and shall cause its
Affiliates to) report the federal, state and local and other Tax consequences of
the purchase and sale contemplated hereby (including the filing of IRS Form
8594) in a manner consistent with the forgoing allocations.

                                   ARTICLE IV
                                     CLOSING

      Section 4.1. Closing Date. The Closing shall take place at such location
as the parties shall agree at 9:00 a.m., San Francisco, California time, on
December 17, 1999, or at such other time as the parties hereto shall agree,
provided that all conditions set forth in Article IX shall have been satisfied
or waived.

      Section 4.2. Payment on the Closing Date. Subject to fulfillment or waiver
of the conditions set forth in Article IX, at Closing, Buyer shall pay
$11,900,000 by wire transfer of immediately available funds to the bank account
specified by Fitness Quinton in writing to Buyer, shall pay $100,000 by wire
transfer of immediately available funds to the Escrow Agent specified in the
Escrow Agreement, shall execute and deliver the Note provided for in Section
3.1(y) payable to Fitness Quinton and shall deliver the Shares provided for in
Section 3.1(z) to Fitness Quinton.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

      As of the date hereof and as of the Closing Date, each of Medical Quinton
and Fitness Quinton represents and warrants to Buyer as follows:

      Section 5.1. Authorization, etc. Each of Fitness Quinton and Medical
Quinton has the corporate power and authority to execute and deliver this
Agreement and each of the Collateral Documents to which it will be a party, to
perform fully its obligations thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Fitness
Quinton of this Agreement, and the consummation of the transactions contemplated
hereby have been, and on the Closing Date the execution and delivery by each of
Fitness Quinton and Medical Quinton of each of the Collateral Documents to which
it will be a party and the consummation of the transactions contemplated thereby
will have been, duly authorized by all requisite corporate action of Fitness
Quinton and Medical Quinton, as the case may be. Each of Medical Quinton and
Fitness Quinton has duly executed and delivered this Agreement and on the
Closing Date each of Fitness Quinton and Medical Quinton will have duly

                                       11
<PAGE>
executed and delivered each of the Collateral Documents to which it is a party.
This Agreement is, and on the Closing Date, each of the Collateral Documents to
which Fitness Quinton or Medical Quinton is a party will be, legal, valid and
binding obligations of Fitness Quinton or Medical Quinton, as the case may be,
enforceable against it in accordance with their respective terms.

      Section 5.2. Corporate Status. (a) Each of Fitness Quinton and Medical
Quinton is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, with full corporate
power and authority to carry on its business as currently conducted and to own
or lease and to operate its properties as and in the places where such business
is conducted and such properties are owned, leased or operated.

      (b) Each of Fitness Quinton and Medical Quinton is duly qualified or
licensed to do business and is in good standing in each of the jurisdictions
specified opposite its name in Schedule 5.2(b) which are the only jurisdictions
in which the operation of the Fitness Business, or the character of the
properties owned, leased or operated by it in connection with Fitness Business
makes such qualification or licensing necessary except where the failure to be
so qualified or licensed would not have a Material Adverse Effect.

      (c) Each of Fitness Quinton and Medical Quinton has delivered to Buyer
complete and correct copies of its certificate of incorporation and by-laws or
other organizational documents, in each case, as amended and in effect on the
date hereof. Neither Fitness Quinton nor Medical Quinton is in violation of any
of the provisions of its certificate of incorporation or by-laws or other
organizational documents.

      Section 5.3. No Conflicts, etc. The execution, delivery and performance by
each of Fitness Quinton and Medical Quinton of, as the case may be, this
Agreement and each of the Collateral Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not materially conflict with, contravene, result in a material violation or
breach of or default under (with or without the giving of notice or the lapse of
time or both), give rise to a right or claim of termination, amendment,
modification, vesting, acceleration or cancellation of any right or obligation
or loss of any material benefit under, or result in the creation of any Lien (or
any obligation to create any Lien) under (i) to Sellers' knowledge any
Applicable Law applicable to either Fitness Quinton or Medical Quinton or any
Affiliate thereof or any of the properties or assets of either Fitness Quinton
or Medical Quinton (relating to the Purchased Assets), (ii) the certificate of
incorporation or by-laws or other organizational documents of either Fitness
Quinton or Medical Quinton or (iii) except as set forth in Schedule 5.3, any
Contract or other contract, agreement or other instrument relating to the
Fitness Business to which either Fitness Quinton or Medical Quinton or any
Affiliate

                                       12
<PAGE>
thereof is a party or by which any Seller or any of their properties or assets,
including but not limited to the Purchased Assets, may be bound or affected.
Except as specified in Schedule 5.3, no Consent is required to be obtained or
made by either Fitness Quinton or Medical Quinton in connection with the
execution and delivery of this Agreement and the Collateral Documents or the
consummation of the transactions contemplated hereby and thereby except where
the failure to obtain such consent would not have a Material Adverse Effect.

      Section 5.4. Financial Statement, Etc. Fitness Quinton has delivered to
Buyer an unaudited statement of Fitness Quinton as of and for the nine months
ended September 30, 1999 (the "Financial Statement"), including a balance sheet,
a statement of income and a statement of cash flows. The Financial Statement has
been prepared in accordance with GAAP and is consistent in all material respects
with the financial statements prepared for QIC Holding Corp. To the best
knowledge of Fitness Quinton, the Financial Statement presents fairly the
financial condition of Fitness Quinton for the period indicated and reflects all
costs that have historically been incurred by Fitness Quinton.

      Section 5.5. Absence of Undisclosed Liabilities. To the Sellers'
knowledge, neither Fitness Quinton nor Medical Quinton has any liabilities or
obligations of any nature, absolute, accrued, contingent or otherwise and
whether due or to become due, arising out of or relating to the Fitness
Business, except (a) as set forth in Schedule 5.5, (b) as and to the extent
disclosed or reserved against in the Financial Statement (excluding the notes
thereto), and (c) for liabilities and obligations that (i) were incurred after
the date of the Financial Statement in the ordinary course of business
consistent with prior practice and (ii) individually and in the aggregate are
not material to the Fitness Business and have not had or resulted in, and will
not have or result in, a Material Adverse Effect. None of Fitness Quinton's
employees is now or will by the passage of time hereinafter become entitled to
receive any vacation time, vacation pay or severance pay attributable to
services rendered prior to such date except as disclosed on the Financial
Statement (excluding the notes thereto).

      Section 5.6. Taxes. (a) Except as shown on Schedule 5.6, all Tax Returns
with respect to the Purchased Assets or Fitness Business required to be filed
have been filed. All Taxes (whether or not reflected on such Tax Returns) with
respect to the Purchased Asset or Fitness Business required to be paid have been
paid.

      (b) The Buyer will not be required to deduct or withhold any consideration
or amount paid to the Sellers pursuant to Section 1445(a) of the Code or any
U.S. state or local tax law in connection with or resulting from the transaction
contemplated by this Agreement.

                                       13
<PAGE>

         Section 5.7. Absence of Changes. Except as set forth in Schedule 5.7,
since September 30, 1999, Fitness Quinton has conducted the Fitness Business
only in the ordinary course consistent with prior practice and has not, on
behalf of, in connection with or relating to the Fitness Business or the
Purchased Assets:

         (a) suffered any Material Adverse Effect;

         (b) incurred any obligation or liability, absolute, accrued, contingent
or otherwise, whether due or to become due, except current liabilities for trade
or business obligations incurred in connection with the purchase of goods or
services in the ordinary course of business consistent with prior practice, none
of which liabilities, in any case or in the aggregate, has had or could have a
Material Adverse Effect;

         (c) discharged or satisfied any Lien other than those then required to
be discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than
current liabilities shown on the Financial Statement and current liabilities
incurred since the thereof in the ordinary course of business consistent with
prior practice;

         (d) assigned, mortgaged, pledged or otherwise subjected to Lien, any
property, business or assets, tangible or intangible, held in connection with
the Fitness Business;

         (e) sold, transferred, leased to others or otherwise disposed of any of
the Purchased Assets, except for inventory sold in the ordinary course of
business, or forgiven, canceled or compromised any debt or claim, or waived or
released any right of substantial value;

         (f) received any notice of termination of any contract, lease or other
agreement or suffered any damage, destruction or loss (whether or not covered by
insurance) which termination or loss, in any case or in the aggregate, has had
or could have a Material Adverse Effect;

         (g) transferred or granted any rights or licenses under, or entered
into any settlement regarding the breach or infringement of, any Intellectual
Property, or modified any existing rights with respect thereto;

         (h) made any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any shareholder, director, officer, employee, salesman,
distributor or agent of any Seller relat-

                                       14
<PAGE>
ing to the Business, except in the ordinary course of business consistent with
past practice;

         (i) encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts, or had any
material change in its relations with its employees, agents, customers or
suppliers;

         (j) failed to replenish the inventories and supplies in a normal and
customary manner consistent with its prior practice, or made any purchase
commitment in excess of the normal, ordinary and usual requirements of its
business or at any price in excess of the then current market price, or made any
change in its selling, pricing, advertising or personnel practices inconsistent
with its prior practice;

         (k) made any capital expenditures or capital additions or improvements
in excess of an aggregate of $50,000;

         (l) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the Fitness
Business or the Purchased Assets other than in the ordinary course of business
consistent with past practices but not in any case involving amounts in excess
of $50,000;

         (m) (i) entered into any transaction, contract or commitment other than
in the ordinary course of business, (ii) breached any material contract or
commitment or (iii) paid or agreed to pay any legal, accounting, brokerage,
finder's fee, Taxes or other expenses in connection with, or incurred any
severance pay obligations by reason of, this Agreement or the transactions
contemplated hereby;

         (n) made any material changes in policies or practices relating to
selling practices, returns, discounts or other terms of sale or accounting
therefor or in policies of employment;

         (o) made any prepayment of any accounts payable, delayed payment of any
trade payables or other obligations other than in the ordinary course of
business consistent with past practice, or made any other cash payments other
than in the ordinary course of business;

         (p) failed to maintain all of the tangible Purchased Assets and all
other tangible properties and assets owned, leased, occupied, operated or used
in connection with the Fitness Business in good repair, working order and
operating condition subject only to ordinary wear and tear;

                                       15
<PAGE>
         (q) failed to keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried in connection with the
Fitness Business; or

         (r) taken any action or omitted to take any action that would result in
the occurrence of any of the foregoing.

         Section 5.8. Litigation. Except as set forth on Schedule 5.8, there is
no action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to Sellers' knowledge,
threatened against or relating to Fitness Quinton or Medical Quinton in
connection with the Purchased Assets or the Fitness Business or against or
relating to the transactions contemplated by this Agreement, and neither Fitness
Quinton nor Medical Quinton knows or has reason to be aware of any basis for the
same. Except as set forth in such Schedule 5.8, no citations, fines or penalties
have been asserted against either Fitness Quinton or Medical Quinton with
respect to the Fitness Business since June 5, 1998, under any Environmental Law
or any foreign, federal, state or local law relating to occupational health or
safety.

         Section 5.9. Compliance with Laws; Governmental Approvals and Consents;
Governmental Contracts. (a) Except as disclosed in Schedule 5.9(a) since June 5,
1998, Fitness Quinton and Medical Quinton have complied in all material respects
with all Applicable Laws applicable to the Fitness Business or the Purchased
Assets, and neither Fitness Quinton nor Medical Quinton has received any notice
alleging any such conflict, violation, breach or default.

         (b) Schedule 5.9(b) sets forth all Consents necessary for, or otherwise
material to, the conduct of the Fitness Business as conducted by Sellers prior
to the Closing. Except as set forth in Schedule 5.9(b), all such Consents have
been duly obtained and are in full force and effect, and each of Fitness Quinton
and Medical Quinton is in compliance with each of such Consents held by it with
respect to the Purchased Assets and the Fitness Business.

         Section 5.10. Operation of the Fitness Business. Except as set forth in
Schedule 5.10, (a) the Fitness Business has been conducted only through Fitness
Quinton and not through any other divisions or any direct or indirect subsidiary
or affiliate of Fitness Quinton and (b) no part of the Fitness Business is
operated by Fitness Quinton through any entity other than Sellers.

         Section 5.11. Purchased Assets. Except as disclosed in Schedule 5.11,
Fitness Quinton has good title to all the Purchased Assets free and clear of any
and all Liens other than Permitted Liens. The Purchased Assets comprise all
assets required for the continued conduct of the Fitness Business by Buyer as
now being conducted. The

                                       16
<PAGE>
Purchased Assets, taken as a whole, constitute all the properties and assets
relating to or used or held for use in connection with the Fitness Business
during the past twelve months (except Inventory sold, cash disposed of, accounts
receivable collected, prepaid expenses realized, Contracts fully performed,
properties or assets replaced by functionally equivalent properties or assets,
in each case in the ordinary course of business, employees not to be hired by
Buyer, and the Excluded Assets). Except for Excluded Assets, there are no
material assets or properties used primarily in the operation of the Fitness
Business and owned by any Person other than Fitness Quinton that will not be
leased or licensed to Buyer under valid, current leases or license arrangements.
The Purchased Assets are in all material respects adequate for the purposes for
which such assets are currently used or are held for use, and are in reasonably
good repair and operating condition (subject to normal wear and tear) and, to
Sellers' knowledge, except as disclosed in this Agreement, there are no facts or
conditions affecting the Purchased Assets which could, individually or in the
aggregate, interfere in any material respect with the use, occupancy or
operation thereof as currently used, occupied or operated, or their adequacy for
such use.

         Section 5.12. Contracts. (a) Schedule 5.12(a) contains a complete and
correct list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (x) by which
any of the Purchased Assets are bound or affected or (y) to which either Fitness
Quinton or Medical Quinton is a party or by which it is bound, in each case in
connection with the Fitness Business or the Purchased Assets (the "Contracts"):

                (i) employment, termination, retention, severance,
         change-of-control, consulting, agency, collective bargaining or other
         similar contracts, agreements, and other instruments and arrangements
         relating to or for the benefit of current, future or former employees,
         officers, directors, sales representatives, distributors, dealers,
         agents, independent contractors or consultants;

                (ii) loan agreements, indentures, letters of credit, mortgages,
         security agreements, pledge agreements, deeds of trust, bonds, notes,
         guarantees, and other agreements and instruments relating to the
         borrowing of money or obtaining of or extension of credit;

                (iii) licenses, licensing arrangements and other contracts
         providing in whole or in part for the use of, or limiting the use of,
         any Intellectual Property;

                (iv) brokerage or finder's agreements;

                                       17
<PAGE>
                (v) joint venture, partnership and similar contracts involving a
         sharing of profits or expenses (including but not limited to joint
         research and development and joint marketing contracts);

                (vi) stock purchase agreements, asset purchase agreements and
         other acquisition or divestiture agreements, including but not limited
         to any agreements relating to the acquisition, sale, lease or disposal
         of any Purchased Assets (other than sales of inventory in the ordinary
         course of business) or involving continuing indemnity or other
         obligations;

                (vii) orders and other contracts for the purchase or sale of
         materials, supplies, products or services, each of which involves
         aggregate payments in excess of $100,000 in the case of purchases or
         $250,000 in the case of sales;

                (viii) contracts with respect to which the aggregate amount that
         could reasonably expected to be paid or received thereunder in the
         future exceeds $100,000 per annum or $500,000 in the aggregate;

                (ix) sales agency, manufacturer's representative, marketing or
         distributorship agreements;

                (x) contracts, agreements or arrangements with respect to the
         representation of the Fitness Business in foreign countries;

                (xi) master lease agreements providing for the leasing of both
         (A) personal property primarily used in, or held for use primarily in
         connection with, the Fitness Business and (B) other personal property;

                (xii) contracts, agreements or commitments with any employee,
         director, officer, stockholder or Affiliate of Fitness Quinton or
         Medical Quinton; and

                (xiii) any other contracts, agreements or commitments that are
         or will be material to the Fitness Business.

         (b) Buyer has been afforded access to complete and correct copies of
all written Contracts, together with all amendments thereto, set forth or
required to be set forth in Schedule 5.12(a).

         (c) To Sellers' knowledge, all Contracts are in full force and effect
and enforceable against each party thereto. There does not exist under any
Contract any event of default or event or condition that, after notice or lapse
of time or both, would constitute a violation, breach or event of default
thereunder on the part of either Fitness Quinton or Medical Quinton or, to the
best knowledge of either Fitness Quinton or

                                       18
<PAGE>
Medical Quinton, any other party thereto except as set forth in Section 5.12(c)
and except for such events or conditions that, individually and in the
aggregate, (i) have not had or resulted in, and will not have or result in, a
Material Adverse Effect and (ii) have not and will not materially impair the
ability of either Fitness Quinton or Medical Quinton to perform its obligations
under this Agreement and under the Collateral Documents to which it is a party.
Except as set forth in Schedule 5.12(c), no consent of any third party is
required under any Contract as a result or in connection with, and the
enforceability of any Contract will not be affected in any manner by, the
execution, delivery and performance of this Agreement or any of the Collateral
Documents or the consummation of the transactions contemplated hereby and
thereby.

         (d) Except as set forth in Schedule 5.12(d), none of the Sellers has
outstanding any power of attorney relating to the Fitness Business except for
customary and limited powers of attorney issued for customs forwarding purposes.

         Section 5.13. Territorial Restrictions. Except as set forth on Schedule
5.13, Fitness Quinton is not restricted by any written agreement or
understanding with any other Person from carrying on the Fitness Business
anywhere in the world.

         Section 5.14. Inventories. All Inventories are of good, usable and
merchantable quality in all material respects. Except as set forth on Schedule
5.14, (a) all Inventories are of such quality as to meet the quality control
standards of Fitness Quinton and any applicable quality control standards of any
Governmental Body, (b) all Inventories that are finished goods are saleable as
current inventories at the current prices thereof in the ordinary course of
business and (c) all Inventories are recorded on the books of the Fitness
Business at the lower of cost or market value determined in accordance with
GAAP. Schedule 5.14 lists the locations of all Inventories and reflects the book
to physical inventory variance recorded pursuant to the physical inventory taken
on June 1, 1999.

         Section 5.15. Customers. Schedule 5.15 sets forth (a) the names of all
customers of the Fitness Business that ordered goods and services with an
aggregate value for each such customer of $100,000 or more during the nine-month
period ended September 30, 1999 and (b) the amount for which each such customer
was invoiced during such period. Neither Fitness Quinton nor Medical Quinton has
received any notice that any significant customer of the Fitness Business (i)
has ceased, or will cease, to use the products, goods or services of the Fitness
Business, (ii) has substantially reduced or will substantially reduce, the use
of products, goods or services of the Fitness Business or (iii) will reduce the
price it will pay for products, goods or services of the Fitness Business,
including in each case after the consummation of the transactions contemplated
hereby.

                                       19
<PAGE>
         Section 5.16. Products. (a) Warranties. Buyer has been furnished with
complete and correct copies of the standard terms and conditions of sale for
each of the products or services of the Fitness Business (containing guaranty,
warranty and indemnity provisions). Except as provided under Applicable Law or
as set forth on Schedule 5.16(a), no product manufactured, sold, or delivered
by, or service rendered by or on behalf of, Fitness Quinton or Medical Quinton
in connection with the Fitness Business is subject to any guaranty, warranty or
other indemnity, express or implied, beyond such standard terms and conditions.

         (b) Product Liability. To Sellers' knowledge, except as set forth on
Schedule 5.5, 5.8 and 5.16(b), neither Fitness Quinton nor Medical Quinton has
any liability or obligation of any nature (whether known or unknown, accrued,
absolute, contingent or otherwise, and whether due or to become due), whether
based on strict liability, negligence, breach of warranty (express or implied),
breach of contract, infringement or otherwise, in respect of any product,
component or other item manufactured, sold, designed or produced in connection
with the Fitness Business prior to the Closing by, or service rendered prior to
the Closing by or on behalf of, Fitness Quinton, Medical Quinton or any
predecessor thereto, that (i) is not adequately covered by policies of insurance
or by indemnity, contribution, cost sharing or similar agreements or
arrangements by or with other Persons, (ii) is not otherwise adequately reserved
against as reflected in the Financial Statement and (iii) will not otherwise be
adequately reserved against.

         Section 5.17. Intellectual Property. (a) Title. Schedule 5.17(a)
contains a complete and correct list of all Intellectual Property that is owned
by Fitness Quinton or Medical Quinton and primarily related to, used in, held
for use in connection with, or necessary for the conduct of, or otherwise
material to the Fitness Business (the "Owned Intellectual Property"), provided
that the term "Owned Intellectual Property" shall include but Schedule 5.17(a)
need not set forth (i) inventions, trade secrets, processes, formulae,
compositions, know-how, designs and confidential business and technical
information and (ii) Intellectual Property that is both not registered or
subject to application for registration and not material to the Fitness
Business. Fitness Quinton owns or has the exclusive right, other than as noted
on Schedule 5.17(a), to use pursuant to license, sublicense, agreement or
permission all Intellectual Property Assets, free from any Liens (other than
Permitted Liens) and free from any requirement of any past, present or future
royalty payments, license fees, charges or other payments, or conditions or
restrictions whatsoever. The Intellectual Property Assets comprise all of the
Intellectual Property necessary for Buyer to conduct and operate the Fitness
Business as now being conducted by Fitness Quinton.

         (b) Transfer. Immediately after the Closing, Buyer will own all of the
Owned Intellectual Property and will have a right to use all other Intellectual
Property Assets,

                                       20
<PAGE>
free from any Liens (other than Permitted Liens) and on the same terms and
conditions as in effect prior to the Closing, subject to any contrary actions
taken by or against Buyer or conditions or restrictions imposed upon Buyer by
itself or third parties.

         (c) No Infringement. To Sellers' knowledge, except as set forth on
Schedule 5.17(c), the conduct of the Fitness Business does not infringe or
otherwise conflict with any rights of any Person in respect of any Intellectual
Property. To the knowledge of the Sellers, none of the Intellectual Property
Assets is being infringed or otherwise used or available for use, by any other
Person.

         (d) Licensing Arrangements. Schedule 5.17(d) sets forth all agreements,
arrangements or laws (i) pursuant to which either Fitness Quinton or Medical
Quinton has licensed Intellectual Property Assets to, or the use of Intellectual
Property Assets is otherwise permitted (through non-assertion, settlement or
similar agreements or otherwise) by, any other Person and (ii) pursuant to which
either Fitness Quinton or Medical Quinton has had Intellectual Property relating
to the Fitness Business licensed to it, or has otherwise been permitted to use
Intellectual Property (through non-assertion, settlement or similar agreements
or otherwise). All of the agreements or arrangements set forth on Schedule
5.17(d) (x) are in full force and effect in accordance with their terms and no
default exists thereunder by either Fitness Quinton or Medical Quinton, or to
the knowledge of Fitness Quinton and Medical Quinton, by any other party
thereto, (y) are free and clear of all Liens, and (z) do not contain any change
in control or other terms or conditions that will become applicable or
inapplicable as a result of the consummation of the transactions contemplated by
this Agreement. Fitness Quinton has delivered to Buyer true and complete copies
of all licenses and arrangements (including amendments) set forth on Schedule
5.17(d). All royalties, license fees, charges and other amounts payable by, on
behalf of, to, or for the account of, either Fitness Quinton or Medical Quinton
or the Fitness Business in respect of any Intellectual Property are disclosed in
the Financial Statement.

         (e) No Intellectual Property Litigation. Except at set forth on
Schedule 5.17(e), no claim or demand of any Person has been made nor is there
any proceeding that is pending, or to the knowledge of either Fitness Quinton or
Medical Quinton, threatened, which (i) challenges the rights of either Fitness
Quinton or Medical Quinton in respect of any Intellectual Property Assets, (ii)
asserts that either Fitness Quinton or Medical Quinton is infringing or
otherwise in conflict with, or is, except as set forth in Schedule 5.17(d),
required to pay any royalty, license fee, charge or other amount with regard to,
any Intellectual Property, or (iii) claims that any default exists under any
agreement or arrangement listed on Schedule 5.17(d), which default has been
noticed, if required under the applicable agreement or arrangement, and has not
been cured. None of the Intellectual Property Assets is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any court,
arbitrator, or administrative agency, or has been the

                                       21
<PAGE>
subject of any litigation within the last eighteen months, whether or not
resolved in favor of either Fitness Quinton or Medical Quinton.

         (f) Due Registration, Etc. To Sellers' knowledge, the Owned
Intellectual Property has been duly registered with, filed in or issued by, as
be case may be, the United States Patent and Trademark Office, United States
Copyright Office or such other filing offices, domestic or foreign, and Fitness
Quinton and Medical Quinton have taken such other actions, to ensure full
protection under any applicable laws or regulations, and such registrations,
filings, issuances and other actions remain in full force and effect, in each
case to the extent material to the Fitness Business.

         (g) Use of Name and Mark. Except as set forth in Schedule 5.17(g),
there are, and immediately after the Closing will be, no contractual restriction
or limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any Governmental Authority on Buyer's right to use the name and
mark "Quinton" in the conduct of the Fitness Business as presently carried on by
Fitness Quinton or as the Fitness Business may be carried on by Buyer after the
Closing.

         (h) Year 2000 Compliance. Fitness Quinton and Medical Quinton have
conducted an inventory of all Software used in or on behalf of the Fitness
Business as well as the hardware and embedded microcontrollers in non-computer
equipment used by or for the benefit of the Fitness Business (collectively, such
Software, hardware, and other equipment shall be the "Commuter Systems") in
order to determine which parts of the Computer Systems are not Year 2000
Compliant. Fitness Quinton and Medical Quinton have developed, funded and
commenced a plan to modify or replace any Computer Systems that are not Year
2000 Compliant and have adequate resources to do so. Based on such review and
plan, the Sellers believe that all Computer Systems are Year 2000 Compliant or
will be Year 2000 Compliant by December 15, 1999. Fitness Quinton and Medical
Quinton have also conducted a reasonable investigation into Year 2000 Compliant
status of the operations of materials providers and service providers material
to the Fitness Business. Fitness Quinton and Medical Quinton have a reasonable
basis to believe, and do believe, that all such third parties will timely be
Year 2000 Compliant and will be able to continue to conduct business with the
Fitness Business without material disruption. Fitness Quinton and Medical
Quinton have provided the Buyer copies of the inventory, Year 2000 Compliance
Plan, a current Year 2000 Compliance status report and other documents related
to the Year 2000 Compliant status of the Fitness Business.

         Section 5.18. Environmental Matters. (a) Permits. All Environmental
Permits are identified in Schedule 5.18(a), and either Fitness Quinton or
Medical Quinton currently holds all such Environmental Permits necessary to the
Fitness Business except where the lack of an Environmental Permit would not have
a Material Adverse Effect,

                                       22
<PAGE>
and all such Environmental Permits shall be validly transferred to Buyer on the
Closing Date. Neither Fitness Quinton nor Medical Quinton has been notified by
any relevant Governmental Authority that any Environmental Permit will be
modified, suspended, canceled or revoked, or cannot be renewed in the ordinary
course of business.

         (b) No Violations. Each of Fitness Quinton and Medical Quinton and
their Affiliates has complied and is in compliance in all material respects with
all Environmental Permits and all applicable Environmental Laws pertaining to
the Fitness Business (and the use or transferability thereof) and the Fitness
Business. To Sellers' knowledge, no Person has alleged any violation by either
Fitness Quinton or Medical Quinton or any of their Affiliates of any
Environmental Permits or any applicable Environmental Law relating to the
conduct of the Fitness Business.

         (c) No Actions. Except as set forth in Schedule 5.18(c), neither
Fitness Quinton nor Medical Quinton nor any of their Affiliates has caused or
taken any action that has resulted or may result in, or has been or is subject
to, any liability or obligation relating to (i) the environmental conditions on,
under or about the Purchased Assets or other properties or assets owned, leased
or used in connection with, necessary for the conduct of, or otherwise material
to, the Fitness Business, or (ii) the past or present use, management, handling,
transport, treatment, generation, storage or Release of any Hazardous
Substances, except for any such liabilities and obligations that, individually
and in the aggregate, are not material to the Fitness Business and have not had
or resulted in, and will not have or result in, a Material Adverse Effect.

         Section 5.19. Employees, Labor Matters, etc. There are no labor
disputes currently subject to any grievance procedure, arbitration or litigation
and there is no representation petition pending or, to the best knowledge of any
Seller after due inquiry, threatened with respect to any employee employed in
the operation of the Fitness Business. Each Seller has materially complied with
all provisions of Applicable Law pertaining to the employment of employees,
including, without limitation, all such Applicable Laws relating to labor
relations, equal employment, fair employment practices, entitlements, prohibited
discrimination or other similar employment practices or acts, except for any
failure so to comply that, individually or together with all such other
failures, has not and will not result in a material liability or obligation on
the part of Buyer or the Fitness Business, and has not had or resulted in, and
will not have or result in, a Material Adverse Effect.

         Section 5.20. Employee Benefit Plans and Related Matters. Schedule 5.20
lists each pension, retirement, profit-sharing, deferred compensation, bonus or
other incentive plan or other employee benefit program, arrangement, agreement
or understanding, or medical, vision, dental or other health plan, or life
insurance or disability plan, or any other employee benefit plan, including,
without limitation, any "employee benefit plan"

                                       23
<PAGE>
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (" ERISA"), to which Seller contributes or is a party or is
bound or under which it may have liability and under which employees or former
employees of the Fitness Business (or their beneficiaries) are eligible to
participate or derive a benefit ("Employee Benefit Plans"). Seller has delivered
to the Buyer true, correct and complete copies of all Employee Benefit Plans.
None of the assets of the Fitness Business are subject to any lien in favor of,
or enforceable by, the Pension Benefit Guaranty Corporation. No Employee Benefit
Plan is subject to section 412 of the Code or section 302 or Title IV of ERISA.

         Section 5.21. Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Documents, and the transactions contemplated hereby
and thereby, have been carried on without the participation of any Person acting
on behalf of Fitness Quinton or Medical Quinton or any of their Affiliates in
such manner as to give rise to any valid claim against Buyer or any of its
subsidiaries for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to Fitness Quinton or Medical Quinton
or any of their Affiliates upon consummation of the transactions contemplated
hereby or thereby.

         Section 5.22. Disclosure. No representation or warranty by Fitness
Quinton or Medical Quinton contained in this Agreement nor any statement or
certificate furnished or to be furnished by or on behalf of Fitness Quinton or
Medical Quinton to Buyer or its representatives in connection herewith or
pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements contained herein or therein not misleading.

         Section 5.23. Receivables. All of Fitness Quinton's receivables
(including accounts receivable, loans receivable and advances) which have arisen
in connection with the Fitness Business and which are reflected in the Financial
Statement, and all such receivables which will have arisen since September 30,
1999, shall have arisen only from bona fide transactions in the ordinary course
of business. Neither Quinton nor Medical Quinton has any knowledge of any facts
or circumstances generally which would result in any material increase in the
uncollectability of such receivables as a class in excess of the reserves
therefor set forth on the Financial Statement. Schedule 5.23 hereto accurately
lists as of September 30, 1999, all receivables arising out of or relating to
the Fitness Business in excess of $50,000.00, the amount owing and the aging of
such receivable, the name and last known address of the party from whom such
receivable is owing.

         Section 5.24. Purchase of StairMaster Common Stock. (a) Fitness Quinton
agrees that it will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or

                                       24
<PAGE>
otherwise dispose of any of the Shares (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of any Shares), except in compliance with
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state securities or "blue sky"
laws.

         (b) Legends. Fitness Quinton acknowledges that the certificate or
certificates representing the Shares shall bear the following legends:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
          PROVISIONS OF A STOCK SUBSCRIPTION AGREEMENT, DATED AS OF DECEMBER __,
          1999, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT
          ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
          PROVISIONS OF SUCH STOCK SUBSCRIPTION AGREEMENT AS THE SAME MAY BE
          AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH THE
          SECRETARY OF THE COMPANY."

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
          ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS
          AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
          DISPOSED OF UNLESS (i)(A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
          (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN OPINION
          OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY
          TO THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE
          PROVISIONS OF SECTION 5 OF SUCH ACT OR (C) A NO-ACTION LETTER FROM THE
          SECURITIES AND EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL
          FOR THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
          DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO REGISTRATION
          UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM."

                                       25
<PAGE>
                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Section 6.1. Representations and Warranties of Buyer. As an inducement
to each Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, as of the date hereof and as of the Closing Date, Buyer
represents and warrants to each Seller that:

         (a) Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.

         (b) Authority of Buyer. (a) Buyer has full power and authority to
execute and deliver this Agreement and any Collateral Document to be executed by
it, to perform fully its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby; (b) the execution, delivery
and performance of this Agreement and any Collateral Document to be executed by
Buyer have been duly authorized and approved by Buyer's board of directors and
do not require any further authorization or consent of Buyer or, except for the
waiver of certain preemptive rights, its shareholders; and (c) Buyer has duly
executed and delivered this Agreement and on the Closing Date Buyer will have
duly executed and delivered each Collateral Document to which it is a party.
This Agreement is, and on the Closing Date, each of the Collateral Documents to
which Buyer is a party will be, the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with their respective terms.

         (c) No Conflicts. The execution, delivery and performance by Buyer of
this Agreement and each of the Collateral Documents that it has executed, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with or result in a violation of or a default under (with or
without the giving of notice or the lapse of time or both): (i) to Buyer's
knowledge, any Applicable Law applicable to Buyer or any of the properties or
assets of Buyer (other than the Purchased Assets), (ii) the certificate of
incorporation or by-laws or other organizational documents of Buyer or (iii)
except for the consent of lenders required under the Buyer's Credit Facility,
dated as of September 5,1997, as amended, and the waiver of certain preemptive
rights, any contract, agreement or other instrument to which Buyer or any
Affiliate thereof is a party or by which Buyer's, or any of its Affiliates',
properties or assets (other than the Purchased Assets) may be bound or affected.
To Buyer's knowledge, except for Consents under the HSR Act and the consent of
lenders required under the Buyer's Credit Facility, dated September 5, 1997, as
amended, and the waiver of certain preemptive rights, no Consent is required to
be obtained or made by Buyer in connection with the execution and delivery of
this Agreement or any Collateral Documents executed by Buyer or the consummation
of the transactions contemplated hereby or thereby, except for Consents which
have been obtained and except Consents

                                       26
<PAGE>
that Buyer would not reasonably expect the failure to obtain to have a Material
Adverse Effect on Buyer's ability to: (x) consummate the transactions
contemplated hereby or by the Collateral Documents or (y) perform its
obligations hereunder or thereunder.

         (d) No Finder. Neither Buyer nor any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.

                                   ARTICLE VII
                        ACTIONS PRIOR TO THE CLOSING DATE

         The parties hereto respectively covenant and agree to take the
following actions between the date hereof and the Closing Date:

         Section 7.1. Investigation by Buyer. Medical Quinton and Fitness
Quinton shall afford to the employees and authorized representatives of Buyer
(including independent public accountants and attorneys) reasonable access at
times mutually agreeable to Buyer and Sellers to the offices, properties,
employees and business and financial records (including computer files,
retrieval programs and similar documentation) of Fitness Quinton and Medical
Quinton to the extent Buyer shall deem necessary, and shall furnish to Buyer or
its authorized representatives such additional information concerning the
Purchased Assets, the Sublease Agreement and Subleased Premises, the Assumed
Liabilities, Consents, the business and the operations of Sellers, and the
Transition Services Agreement, as shall be reasonably requested. No
investigation made by Buyer or its representatives hereunder shall affect in any
way the representations and warranties of Sellers hereunder.

         Section 7.2. Preserve Accuracy of Representations and Warranties. Each
of the parties hereto shall refrain from taking any action which would render
any representation or warranty contained in Article V or (vi) of this Agreement
materially inaccurate as of the Closing Date. Each party shall promptly notify
the other of any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement.

         Section 7.3. Consents of Third Parties. Sellers shall act diligently
and reasonably, and Buyer shall cooperate with Sellers, to attempt to secure,
after a public announcement of the transactions contemplated hereby and before
the Closing Date:

         (a) The consent, approval or waiver, in form and substance reasonably
satisfactory to Buyer, from each other Person party to each contract identified
by Sellers in writing prior to the date hereof.

                                       27
<PAGE>
         (b) To the extent any Consent issued to Medical Quinton or Fitness
Quinton necessary for the operation of the Fitness Business is assignable or
transferable, any Consents of any Person (including any Governmental Body)
required to be obtained in order to assign or transfer any such Consents to
Buyer.

         (c) Notwithstanding foregoing Sections 7.3(a) and (b): (i) none of the
parties hereto shall have any obligation to offer or pay any consideration in
order to obtain any such Consents or related waivers (except for indemnification
obligations as otherwise provided in Article X), (ii) the Purchase Price shall
not be affected by failure to obtain any such Consents or waivers and (iii)
Sellers shall have no liability or indemnification obligation whatsoever
hereunder except for losses arising out of the failure of each Seller to act
diligently and reasonably (from the date it becomes bound hereby) to assist in
obtaining such Consents or waivers and except for liability an indemnity
obligations arising out of a breach of representation and warranty hereunder.

         Section 7.4. Hart-Scott-Rodino Notification. Each of Buyer and Sellers,
shall make the filings required to be made by such party under the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended (the "HSR
Act"), except to the extent such required filings have already been made, and
shall request early termination. Buyer shall be responsible for all filing fees
in connection with the filings required by the HSR Act.

                                  ARTICLE VIII
                              ADDITIONAL AGREEMENTS

         Section 8.1. Use of Trademarks. After the Closing, neither of the
Sellers will, directly or indirectly, use or do business, and neither of the
Sellers will allow any of their Affiliates to use or do business, or assist any
other Person other than Buyer in using or doing business, under any name or
trademark the same or similar to the trademarks identified in Schedule 5.17(a)
(other than "Quinton"), which are being transferred to Buyer in connection
herewith. Notwithstanding any other provision hereof, Sellers shall retain
ownership of all rights to the trademarks, servicemarks, and tradenames of
"Quinton" and "Medtrack," and any variations thereof; provided, however, that
Sellers shall license the right to use the tradename "Quinton" pursuant to the
terms of the Trademark License.

         Section 8.2. Confidentiality. (a) Subject to Section 12.1: (i) neither
Seller shall disclose, and shall not permit any of their Affiliates, or any of
its or their Affiliates', officers, directors, employees or agents
(collectively, the "Seller Parties") to disclose, to any Persons, other than
other parties hereunder, any Buyer Protected Information that is known to any of
the Seller Parties on the Closing Date; and (ii) Buyer shall not disclose,

                                       28
<PAGE>
and shall not permit any of its Affiliates, or any of its or its Affiliates',
officers, directors, employees or agents (collectively, the "Buyer Parties") to
disclose, to any Persons, other than other parties hereunder, any Seller
Protected Information that is known to any of the Buyer Parties on the Closing
Date. In the event the transaction contemplated hereby shall not be consummated,
each party will return to the other parties all copies of nonpublic documents
and materials which have been furnished in connection therewith. The obligation
of a party to treat such documents, materials and other information in
confidence shall not apply to any information which such party reasonably deems
necessary to disclose to obtain any Consents contemplated hereby.

         (b) Each of the Sellers acknowledges that the Buyer Parties hereto
would be irreparably damaged in the event of a breach or a threatened breach of
any of their respective obligations under this Section 8.2, and agrees (and each
of Medical Quinton and Fitness Quinton shall cause each of their respective
Affiliates to agree) that, in the event of a breach or a threatened breach of
any such obligation, Buyer shall, in addition to any other rights and remedies
available to it in respect of such breach, be entitled to an injunction from a
court of competent jurisdiction granting it specific performance of the
provisions of this Section 8.2. In addition, each of the Buyer Parties
acknowledges that the Sellers hereto would be irreparably damaged in the event
of a breach or a threatened breach of any of their respective obligations under
this Section 8.2, and agrees (and Buyer shall cause each of its Affiliates to
agree) that, in the event of a breach or a threatened breach of any such
obligation, each Seller shall, in addition to any other rights and remedies
available to them in respect of such breach, be entitled to an injunction from a
court of competent jurisdiction granting it specific performance of the
provisions of this Section 8.2.

         Section 8.3. Taxes. With respect to taxes relating to or arising out of
the transactions contemplated hereby, any sales tax, use tax, documentary stamp
tax or similar tax attributable to the sale or transfer of the Purchased Assets,
or any tax penalties or interest charges related to the same, shall be borne by
Buyer. Buyer shall timely satisfy or otherwise discharge such taxes and file any
necessary report with respect thereto.

         Section 8.4. Delivery of Possession. After the Closing, Sellers shall
promptly take all steps and actions as Buyer may reasonably request to turn over
actual possession and control of the Purchased Assets and, to the extent
required by the Sublease Agreement, the Subleased Premises, and any documents
and information required by Buyer in connection therewith. In addition, subject
to the last sentence of Section 8.5, Sellers shall provide reasonable assistance
including providing information necessary to comply with any rules or
regulations of any Governmental Body or any law relating thereto; provided,
that, Sellers shall have no obligation to expend any amount of funds in
providing such assistance.

                                       29
<PAGE>
         Section 8.5. Further Assurances. Each of the Parties shall execute and
deliver such other instruments and documents as the other parties hereto may
reasonably request. In furtherance of the foregoing, the Sellers shall (i)
provide reasonable cooperation to Buyer at its request in endeavoring to
promptly obtain licenses, certificates, approvals, authorizations, agreements,
contracts, leases, and other commitments included in the Purchased Assets which
cannot be obtained prior to the Closing, and (ii) use their reasonable efforts
jointly with Buyer to secure to Buyer the benefits thereof in some other manner
where such rights are not transferable or assignable. Notwithstanding the
foregoing and the provisions of Section 8.4, neither of the Sellers shall be
required to expend any amount of funds or more than reasonable amounts of time
(unless reasonably compensated therefor) to carry out the provisions of this
Section 8.5 or Section 8.4.

         Section 8.6. Financing. Buyer shall use its commercially reasonable
efforts to obtain sufficient financing to consummate the transactions
contemplated by this Agreement. Buyer agrees to keep Sellers regularly informed
as to its progress with respect to obtaining commercially reasonable financing.

         Section 8.7. Non-Solicitation. Prior to any termination of this
Agreement, pursuant to Section 11.1, Sellers agree to deal exclusively with
Buyer with respect to the matters referred to in this Agreement and that they
will not, and they will cause their stockholders, directors and agents not to,
directly or indirectly, entertain, solicit or otherwise encourage any offer or
negotiate or offer to negotiate or enter into any agreement relating to the sale
of the Fitness Business, the stock of Fitness Quinton or any material portion of
the assets of Fitness Quinton or give any potential buyer of the Fitness
Business access to the books, records, facilities, assets and management of the
Fitness business.

         Section 8.8. Conduct of Business. From the date hereof to the Closing
Date, except as otherwise disclosed in this Agreement or as expressly permitted
or required by this Agreement or as otherwise consented to by the Buyer in
writing, Sellers will:

         (a) carry on the Fitness Business in, and only in, the ordinary course,
in substantially the same manner as heretofore conducted, and use all reasonable
efforts to preserve intact its present business organization, maintain its
properties in good operating condition and repair, keep available the services
of its present officers and significant employees, and preserve its relationship
with customers, and others having business dealings with it, to the end that its
goodwill and going business shall be in all material respects unimpaired
following the Closing;

         (b) pay accounts payable and other obligations of the Business when
they become due and payable in the ordinary course of business consistent with
prior practice;

                                       30
<PAGE>
         (c) as and when they become due, perform in all material respects all
of its obligations under all Contracts and other agreements and instruments
relating to or affecting the Fitness Business or the Purchased Assets, and
comply in all material respects with all Applicable Laws applicable to it, the
Purchased Assets or the Fitness Business;

         (d) not enter into or assume any material agreement, contract or
instrument relating to the Fitness Business, or enter into or permit any
material amendment, supplement, waiver or other modification in respect thereof;
and

         (e) not grant (or commit to grant) any increase in the compensation
(including incentive or bonus compensation) of any employee employed in the
operation of the Fitness Business or institute, adopt or amend (or commit to
institute, adopt or amend) any compensation or benefit plan, policy, program or
arrangement or collective bargaining agreement applicable to any such employee,
except in the ordinary course of business, consistent with past practice.

         Section 8.9. Covenant Not to Compete. (a) Each Seller acknowledges that
the Fitness Business has significant potential for expansion, that Buyer intends
to operate the Fitness Business throughout the world (including, without
limitation, the United States, Canada, Australia, Western Europe and South
America) and that the operation of any same, similar or directly competitive
business by any Seller anywhere in the world would materially detract from the
value of the Fitness Business and the Purchased Assets transferred hereunder.

         (b) In furtherance of the sale of the Fitness Business and the
Purchased Assets to Buyer, for a period commencing on the Closing Date and
ending ten years thereafter, no Seller, or QIC Holding Corp. or any subsidiary
thereof, will, directly or indirectly (including, without limitation, as a
shareholder), (i) engage anywhere in the world in any business activity which is
the same, or similar to, or directly competitive with, the Fitness Business now
being conducted by the Sellers, for sale of any product or service now supplied
by Sellers, (ii) use any customer list or other confidential information used in
connection with the Fitness Business for any purpose competitive with the
Fitness Business, or (iii) tamper with or induce any employee, agent,
salesperson, contractor or any customer, supplier, manufacturer or dealer of
Buyer to leave, to stop selling to or stop buying from Buyer or otherwise cease
dealing with Buyer, provided that Sellers and their Affiliates shall not be
prohibited from selling treadmills that are part of a stress test system or are
used for medical or diagnostic testing in the Territory.

         (c) Each Seller acknowledges that the covenants contained in this
Section 8.9 were a material and necessary inducement for the Buyer to agree to
the transactions contemplated hereby, that each Seller realized significant
monetary benefit from these

                                       31
<PAGE>
transactions, that violation of any of the covenants contained in this Section
8.9 will cause irreparable and continuing damage to Buyer, that Buyer shall be
entitled to injunctive or other equitable relief from any court of competent
jurisdiction restraining any further violation of such covenants and that such
injunctive relief shall be cumulative and in addition to any other rights or
remedies to which Buyer may be entitled.

         (d) In case any one or more of the terms or provisions contained in
this Section 8.9 shall for any reason be held invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not affect any other terms
or provisions hereof, but such term or provision shall be deemed modified or
deleted as or to the extent required by applicable law, and such modification or
deletion shall not affect the validity of the other terms or provisions of this
Section 8.9. In addition, if any one or more of the restrictions contained in
this Section 8.9 shall for any reason be held to be unreasonable with regard to
time, duration, geographic scope or activity, the parties contemplate and hereby
agree that such restriction shall be modified and shall be enforced to the
extent compatible with applicable law.

                                   ARTICLE IX
                             CONDITIONS PRECEDENT TO
            OBLIGATIONS OF BUYER, MEDICAL QUINTON AND FITNESS QUINTON

         Section 9.1. Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by Buyer) on or prior to the Closing Date of the
following conditions, which conditions Sellers agree to use reasonable good
faith efforts to cause to be fulfilled:

         (a) Representations, Performance, etc.

         (i) The representations and warranties of Sellers contained in Article
V shall be true and correct in all respects (in the case of any representation
or warranty containing any materiality qualification) or in all material
respects (in the case of any representation or warranty without any materiality
qualification) as of the Closing Date with the same effect as though made at and
as of such time;

         (ii) Each Seller shall have in all material respects duly performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date; and

         (iii) Each Seller shall have delivered to Buyer a certificate dated the
Closing Date and signed by its President or one of its Vice Presidents to the
effect set forth above in this Section 9.1(a):

                                       32
<PAGE>
         (b) Termination of Hart Scott Rodino Waiting Period. The applicable
waiting period, including any extension thereof, under the HSR Act shall have
expired or been terminated, and neither the Department of Justice nor the
Federal Trade Commission shall have instituted any proceeding or litigation to
enjoin or delay the consummation of the transactions contemplated hereby;

         (c) No Restraint or Litigation. No action, suit, investigation or
proceeding shall have been instituted, which has not been dismissed, by a third
party to restrain or prohibit or otherwise challenge the legality or validity of
the transactions contemplated hereby;

         (d) Consents. Sellers shall have obtained, assigned and delivered to
Buyer (x) the consent of Monark Exercise AB to the assignment to Buyer of the
Distribution Agreement with Monark Exercise AB, dated June 30, 1999 and (y) all
other Consents reasonably necessary to operate the Fitness Business;

         (e) Collateral Documents. Each Seller shall have entered into and
delivered each of the Collateral Documents to which it is intended to be party;

         (f) Filings. Sellers shall have obtained duly executed UCC-3 statements
in form and substance reasonably satisfactory to Buyer and its counsel, as shall
be effective to vest in Buyer valid and marketable title to the Purchased
Assets, free and clear of any liens and encumbrances other than liens and
encumbrances created by Buyer and the Permitted Liens listed in clauses (a) and
(b) of the definition of such term;

         (g) Assignment of Patents and Patent Applications. An assignment of the
patents and patent applications listed on Schedule 5.17(a) pursuant to
reasonably acceptable form(s) prepared by Buyer for filing with the U.S. Patent
and Trademark Office.

         (h) Opinions of Counsel. Buyer shall have received an opinion,
addressed to it and dated the Closing Date, of Greene Radovsky Maloney & Share
LLP, special counsel to Sellers, in the form of Exhibit I;

         (i) Secretary's Certificate. Each Seller shall have delivered to Buyer
a certificate of its secretary, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to incumbency and signatures of its
officers executing this Agreement and any Collateral Document that such Seller
has executed; and

         (j) Section 1445 Tax Certificate. A certificate pursuant to Internal
Revenue Service Code Section 1445, executed by each Seller, indicating that it
is not a foreign Person.

                                       33
<PAGE>
         (k) No Material Adverse Change. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
the date of this Agreement that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected to constitute or
result in a Material Adverse Effect on the value of the Purchased Assets taken
as a whole.

         (l) Financing. Buyer shall have obtained funds sufficient, after using
its commercially reasonable efforts to do so, to enable Buyer to consummate the
transactions contemplated by this Agreement on such terms as are satisfactory to
Buyer.

         (m) Purchase of Common Stock of StairMaster Holding, Inc. Fitness
Quinton shall have executed and delivered the Stock Subscription Agreement.

         (n) Satisfactory Review. Buyer and its accountants, legal counsel and
other authorized representatives shall have been given reasonable and
appropriate access to and been permitted to review the assets, books and records
and to interview the management of the Sellers and such other information as
shall have been reasonably requested by Buyer, in order that Buyer may have the
opportunity to make such investigation as it shall desire to make of the affairs
and the assets of the Fitness Business, and Buyer shall be satisfied with the
results thereof.

         (o) Washington State Tax Exemption Certificate. Sellers shall have
executed and delivered a resale exemption certificate indicating those assets
which constitute inventory or other assets held for resale, a manufacturing
equipment exemption certificate with respect to manufacturing equipment, and
such other certificates with respect to exemptions to Washington State sales and
transfer taxes as Buyer may reasonably request.

         Section 9.2. Conditions to Obligations of Sellers. The obligation of
each Seller to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by such Seller), on or prior to the Closing Date,
of the following conditions, which the Buyer agrees to use reasonable good faith
efforts to cause to be fulfilled:

         (a) Representations, Performance, etc.

         (i) The representations and warranties of Buyer contained in Article VI
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the Closing Date, with the same effect as though made at
and as of such time;

                                       34
<PAGE>
         (ii) Buyer shall have in all material respects duly performed and
complied with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date; and

         (iii) Buyer shall have delivered to Sellers a certificate dated the
Closing Date and signed by its President or a Vice President to the effect forth
above in this Section 9.2(a);

         (b) Termination of Hart Scott Rodino Waiting Period. The applicable
waiting period, including any extension thereof, under the HSR Act shall have
expired or been terminated, and neither the Department of Justice nor the
Federal Trade Commission shall have instituted any proceeding or litigation to
enjoin or delay the consummation of the transactions contemplated hereby;

         (c) No Restraint or Litigation. No action, suit, investigation or
proceeding shall have been instituted, which has not been dismissed, by a third
party to restrain or prohibit or otherwise challenge the legality or validity of
the transactions contemplated hereby;

         (d) Collateral Documents. Buyer shall have entered into and delivered
each of the Collateral Documents to which it is intended to be a party;

         (e) Opinions of Counsel. Sellers shall have received an opinion,
addressed to it and dated the Closing Date, of Debevoise & Plimpton, special
counsel to Buyer, in the form described at Exhibit J;

         (f) Secretary's Certificate. Buyer shall have delivered to Sellers a
certificate of its secretary, dated the Closing Date, in form and substance
reasonably satisfactory to Sellers, as to incumbency and signatures of the
officers of Buyer executing this Agreement and any Collateral Document executed
by it; and,

         (g) Stock Subscription Agreement and Registration Rights Agreement.
StairMaster Holding, Inc., John Rutledge Partners II, L.P. and John Rutledge
Partners II - Parallel Fund, L.P. shall have executed and delivered the Stock
Subscription Agreement and an amendment to the Registration Rights Agreement
adding Fitness Quinton and its permitted assignees as a party thereto.

                                    ARTICLE X
                                 INDEMNIFICATION

         Section 10.1. Indemnification by Sellers. The Sellers, jointly and
severally, covenant and agree to defend, indemnify and hold harmless Buyer, its
officers, directors, employees, agents, advisers, representatives and Affiliates
(collectively, the "Buyer

                                       35
<PAGE>
Indemnitees") from and against, and pay or reimburse Buyer Indemnitees for, any
and all claims, demands, liabilities, obligations, losses, fines, costs,
expenses, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses",
and, individually, a "Loss") incurred or suffered by Buyer, in connection with,
resulting from or arising out of:

         (a) any inaccuracy of any representation or warranty made by any Seller
herein or under any Collateral Document which it has executed and delivered
(without reference to any qualifications as to knowledge or materiality);

         (b) any failure of Sellers to perform any covenant or agreement
hereunder or under any Collateral Document executed and delivered by it;

         (c) any Excluded Liabilities or Excluded Assets;

         (d) subject to Section 10.3(c) ownership of the Purchased Assets or
operation of the Fitness Business for the period prior to the Closing Date; or

         (e) any failure to comply with any applicable bulk sales law.

         Section 10.2.  Sellers Indemnity Limitations.

         (a) Survival. The indemnification provided for: (i) in Section 10.1(a)
shall survive for a period of eighteen months from the Closing Date; (ii) in
Section 10.1(e) shall survive for the applicable statute of limitations period;
and (iii) in Sections 10.1(b), 10.1(c) and 10.1(d) shall not expire.

         (b) Deductibles and Threshold. Notwithstanding any other provision
hereof, the Sellers shall not have any obligation under Section 10.1(a) to any
indemnified party thereunder until the Losses arising therefrom exceed $250,000
in the aggregate (the "Aggregate Threshold"). The Buyer shall be liable under
Section 10.1(a) for all losses up to the Aggregate Threshold without any right
to indemnification or damages from the Sellers for such amounts.

         (c) Aggregate Liability. The aggregate liability of the Sellers
(including the liability of any successor, assign, or Affiliate thereto, if any)
for all claims and Losses under Sections 10.1(a) and 10.1(e), together, shall
not exceed $2,000,000.

         Section 10.3. Indemnification by Buyer. Buyer covenants and agrees to
defend, indemnify and hold harmless each Seller, its respective officers,
directors, employees,

                                       36
<PAGE>
agents, advisers, representatives and Affiliates (collectively, the "Seller
Indemnitees") from and against any and all Losses incurred or suffered by any
Seller in connection with, resulting from or arising out of:

         (a) any inaccuracy of any representation or warranty made by Buyer
herein or under any Collateral Document executed and delivered by Buyer (without
reference to any qualifications as to knowledge or materiality);

         (b) any failure of Buyer to perform any covenant or agreement hereunder
or under any Collateral Document executed and delivered by Buyer;

         (c) any Assumed Liabilities; or

         (d) ownership of the Purchased Assets or operation of the Fitness
Business on or after the Closing Date except to the extent such Losses result
from or arise out of the Excluded Liabilities or constitute Losses for which
Sellers are required to indemnify Buyer under Section 10.1 and except to the
extent such Losses result from a breach by Seller of its obligations under the
Transition Services Agreement.

         Section 10.4.  Buyer's Indemnity Limitations.

         (a) Survival. The indemnification provided for: (i) in Section 10.3(a)
shall survive for a period of eighteen months from the Closing Date; and (ii) in
Section 10.3(b), 10.3(c) and 10.3(d) shall not expire.

         (b) Deductibles and Threshold. Notwithstanding any other provision
hereof, Buyer shall not have any obligation under Section 10.3(a) to Sellers
thereunder until the Losses arising therefrom exceed the Aggregate Threshold.
The Sellers shall be liable under Section 10.3(a) for all losses up to the
Aggregate Threshold without any right to indemnification or damages from Buyer
for such amounts.

         (c) Aggregate Liability. The aggregate liability of Buyer (including
the liability of any successor, assign, or Affiliate thereto, if any) for all
claims and Losses under Section 10.3(a), shall not exceed $2,000,000.

         Section 10.5. Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), written notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting

                                       37
<PAGE>
therefrom; provided that (i) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably satisfactory
to the Indemnified Party, (ii) the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and (iii) the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
to the extent that such omission results in such Indemnifying Party being
damaged as a result of such failure to give notice. Except with the prior
written consent of the Indemnified Party, no Indemnifying Party, in the defense
of any such claim or litigation, shall consent to entry of any judgment or enter
into any settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation. In the
event that the Indemnified Party may have available to it one or more defenses
or counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto or the claim or litigation is likely to have a material adverse
effect on the Indemnified Party, if determined adversely to such Indemnified
Party, the Indemnified Party shall have the right at all times to take over and
assume control over the defense, settlement, negotiations or litigation relating
to any such claim at the sole cost of the Indemnifying Party (subject to
Sections 10.1, 10.2, 10.3 and 10.4), provided that if the Indemnified Party does
so take over and assume control, the Indemnified Party shall not settle such
claim or litigation without the written consent of the Indemnifying Party, such
consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such claim or
demand and shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
reasonably cooperate in the defense of any claim or litigation subject to this
Section 10.5 and the records of each shall be reasonably available to the other
with respect to such defense.

         Section 10.6. Sole and Exclusive Remedy. The provisions of this Article
X shall provide the sole and exclusive remedy of all Buyer Indemnitees and
Seller Indemnitees for breach of any provisions of this Agreement or any untrue
representation or warranty with respect to any matter within the scope or
addressed by Sections 10.1(a), (b), (c), (d) or (e) or 10.3(a), (b), (c), or
(d), without reference to any limitations imposed on such indemnification rights
under Section 10.2 or 10.4 (i.e., assuming no Aggregate Threshold, no aggregate
liability, and no time limited existed on the bringing of such claim); except
with respect to injunctive relief. In furtherance of the foregoing, the parties
hereto hereby irrevocably waive their right to bring an action for damages or to
enforce any other rights or claims whatsoever with respect to matters so
addressed by Sections 10.1(a), (b), (c), (d) and (e) and 10.3(a), (b), (c) or
(d), except as expressly set

                                       38
<PAGE>
forth in this Article X and except for claims with respect to the Collateral
Documents. In the event an Indemnified Party becomes entitled to assert a claim
for indemnification under Section 10.1 or 10.3, as applicable, regardless of the
nature of the Loss, any action on the claim shall be commenced within one year
after the date on which the Indemnified Party first had actual knowledge of the
occurrence or existence of the claim, and if an action thereon is not commenced
within such one year period, such claim shall thereafter be forever barred and
the Indemnifying Party shall have no further indemnification obligation with
respect to such Loss.

         Section 10.7. Tax Treatment of the Indemnity Payments. The parties
agree that any indemnity payment made under this Article X shall be treated as
an adjustment to the Purchase Price for Tax purposes unless otherwise required
by law.

                                   ARTICLE XI
                                   TERMINATION

         Section 11.1. Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing:

         (a) by the mutual consent of Buyer, on the one hand, and Fitness
Quinton and Medical Quinton, on the other hand; or

         (b) by Buyer, Medical Quinton or Fitness Quinton, if the Closing shall
not have occurred on or before December 17, 1999.

         Section 11.2. Notice of Termination. Any party terminating this
Agreement pursuant to Section 11.1 shall give prompt written notice of such
termination to the other party to this Agreement.

         Section 11.3. Effect of Termination. In the event that this Agreement
shall be terminated prior to the Closing pursuant to Section 11.1, all further
obligations of the parties under this Agreement (other than Sections 8.2, 12.1
and 12.7) shall be terminated without further liability of any party to the
other.

         Section 11.4. Liquidated Damages. Notwithstanding anything contained
herein to the contrary, if the Closing has not occurred prior to December 17,
1999 for any reason other than because the conditions set forth in Section 9.1
(other than clauses (l) or (n) thereof) have not been fulfilled, within ten (10)
days of demand therefor Buyer shall pay to Medical Quinton, as liquidated
damages and not as a penalty, and as the sole and exclusive remedy for such
failure, $l,000,000. The parties acknowledge that in the event

                                       39
<PAGE>
of such a failure to close the transaction, the damages to Sellers would be
significant but extremely difficult or impractical to determine. Therefore, the
parties acknowledge that, after negotiation, they have agreed on the above
amount as a reasonable estimate of Sellers' damages. If Buyer should challenge
the applicability on efficacy of this provision, Sellers shall be entitled to
any and all other damages and remedies otherwise provided by law.

<TABLE>
<S>                           <C>                           <C>
         /s/ HB                          /s/ MB                        /s/ MB
------------------------      -------------------------     -------------------------
    Buyer's Initials              Fitness Quinton's             Medical Quinton's
                                        Initials                     Initials
</TABLE>

                                   ARTICLE XII
                               GENERAL PROVISIONS

         Section 12.1. No Public Announcement. Prior to the Closing, no party
hereto shall, and each party hereto shall to the extent possible ensure that
none of its Affiliates shall, without the prior written approval of the other
parties hereto make any press release or other public announcement concerning
the transactions contemplated by this Agreement or take any other action that
would result in the disclosure of such matters, except as and to the extent that
any such party shall be so obligated by law or court or administrative order (in
which case the party obligated to make such disclosure shall advise the other
parties hereto in advance). The parties hereto shall use their best efforts to
cause a mutually agreeable release or announcement to be issued in the event:
(a) a disclosure prior to Closing is required to be made by law or court or
administrative order or (b) any party hereto reasonably wishes to make an
announcement to its employees or to the public generally.

         Section 12.2. Notices. All notices, waivers, consents, approvals or
other communications required or permitted hereunder shall be in writing and
shall be deemed given or delivered when delivered personally or by recognized
overnight courier, or by facsimile, (in each case during regular business hours
on a business day), or shall be deemed given on the third business day after
sending when sent by registered or certified mail, addressed as follows:

         If to Buyer, to:

         StairMaster Sports/Medical Products, Inc.
         12421 Willows Road, N.E., Suite 100

                                       40
<PAGE>
         Kirkland, WA 98034
         Fax No:  425-821-3794
         Attention:  Mr. Tom Bryant
         President & CEO

         with a copy to:

         Debevoise & Plimpton
         875 Third Avenue
         New York, New York 10022
         Fax No. 212-909-6836
         Attention: David Schwartz, Esq.

         If to Medical Quinton, to:

         Quinton Instrument Company
         3303 Monte Villa Parkway
         Bothell, WA 98021-8906
         Fax No: 425-402-2001
         Attention: President

         with a copy to:

         Greene Radovsky Maloney & Share LLP
         4 Embarcadero Center, Suite 4000
         San Francisco, CA 94111-4103
         Fax No: (415) 777-4961
         Attention:  Russell D. Pollock, Esq.

         If to Fitness Quinton, to:

         Quinton Fitness, Inc.
         3303 Monte Villa Parkway
         Bothell, WA 98021-8906
         Fax No: 425-402-2001
         Attention:  President

         with a copy to:

         Greene Radovsky Maloney & Share LLP
         4 Embarcadero Center, Suite 4000

                                       41
<PAGE>
         San Francisco, CA 941114103
         Fax No:  (415) 777-4961
         Attention:  Russell D. Pollock, Esq.

or to such other address as such party may indicate by a notice delivered to the
other party hereto.

         Section 12.3. Successors and Assigns. A party's rights under this
Agreement shall not be assignable without the written consent of the other
parties hereto. This Agreement, including the indemnification provisions set
forth in Article X, shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and their successors and permitted
assigns any right, remedy or claim under or by reason of this Agreement and this
Agreement shall not be interpreted or enforced as a third-party beneficiary
contract.

         Section 12.4. Entire Agreement: Amendments, etc. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, may not be contradicted by evidence
of any prior or contemporaneous agreement and supersede all prior agreements,
understandings or letters of intent or among any of the parties hereto,
including any letter of intent. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by each of the parties hereto
or its successor in interest. The rights and remedies herein are cumulative with
and not exclusive of any rights or remedies that any party may otherwise have at
equity to seek an injunction or specific performance. The rights and remedies of
any party based upon, arising out of, or otherwise in respect of any inaccuracy
or breach or any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the act,
omission, concurrence or other state of facts upon which any claim of any
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement as to which there is no
inaccuracy or breach.

         Section 12.5. Interpretation. Article titles and section headings
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
Exhibits and Schedules attached and referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein.

         Section 12.6. Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for

                                       42
<PAGE>
the purposes of this Agreement if, as to any party, it is authorized in writing
by an authorized representative of such party. The failure of any party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.

         Section 12.7. Expenses. Each party hereto will pay (whether or not the
transactions contemplated hereby shall be consummated) all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.

         Section 12.8. Execution in Counterparts. This Agreement may be executed
by facsimile and in one or more counterparts, each of which shall be considered
an original instrument, but all of which shall be considered one and the same
agreement.

         Section 12.9. Governing Law. This Agreement shall be governed by and
construed in accordance, including as to validity, interpretation and effect,
with the internal laws of the State of Washington, without giving effect to the
conflicts of laws rules thereof.

                                       43
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.

QUINTON INSTRUMENT COMPANY                  QUINTON FITNESS, INC.

By:  /s/ Michael Blomeyer                   By:  /s/ Michael Blomeyer
   ------------------------------------        ---------------------------------
     Its President                               Its President

STAIRMASTER SPORTS/MEDICAL
PRODUCTS, INC.

By:  /s/ Tom Bryant
     Its President

                                       44

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