Document:

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                                                                   EXHIBIT 10(i)

                              EMPLOYMENT AGREEMENT

                  AGREEMENT between Mountain West Bank, ("Bank"), and Jon W.
         Hippler, ("Executive"), and ratified by Glacier Bancorp, Inc.
         ("Bancorp"),

                                    RECITALS

A.       Mountain West Bank, ("Bank"), is a wholly owned subsidiary of Glacier
         Bancorp, Inc., ("Bancorp").

B.       Executive is the President and Chief Executive Officer of the Bank, a
         director of the Bank, and a director of Bancorp.

C.       The Bank desires Executive to continue his employment at the Bank under
         the terms and conditions of this Agreement.

D.       Executive desires to continue his employment at the Bank under the
         terms and conditions of this Agreement.

                                    AGREEMENT

1.       EMPLOYMENT. The Bank agrees to employ Executive and Executive accepts
         employment by the Bank on the terms and conditions set forth in this
         Agreement. Executive's title will be President and Chief Executive
         Officer of the Bank. During the term of this Agreement, Executive will
         serve as a director of the Bank.

2.       TERM. The term of this Agreement is from September 9, 2002 to December
         31, 2002.

3.       DUTIES. The Bank will employ Executive as its President and Chief
         Executive Officer. Executive will faithfully and diligently perform his
         assigned duties, which are as follows:

         (a)      Bank Performance. Executive will be responsible for all
                  aspects of the Bank's performance, including without
                  limitation, directing that daily operational and managerial
                  matters are performed in a manner consistent with the Bank's
                  and Bancorp's policies.

         (b)      Development and Preservation of Business. Executive will be
                  responsible for the development and preservation of banking
                  relationships and other business development efforts
                  (including appropriate civic and community activities) in
                  Kootenai County.

         (c)      Report to Board. Executive will report directly to the Bank's
                  board of directors and to the Chief Executive Officer of
                  Bancorp. The Bank's board of directors may, from time to time,
                  modify Executive's title or add, delete, or modify

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                  Executive's performance responsibilities to accommodate
                  management succession, as well as any other management
                  objectives of the Bank or of Bancorp. Executive will assume
                  any additional positions, duties and responsibilities as may
                  reasonably be requested of him with or without additional
                  compensation, as appropriate and consistent with Sections 3(a)
                  and 3(b) of this Agreement.

4.       EXTENT OF SERVICES. Executive will devote all of his working time,
         attention and skill to the duties and responsibilities set forth in
         Section 3. To the extent that such activities do not interfere with his
         duties under Section 3, Executive may participate in other businesses
         as a passive investor, but (a) Executive may not actively participate
         in the operation or management of those businesses, and (b) Executive
         may not, without the Bank's prior written consent, make or maintain any
         investment in a business with which the Bank or Bancorp has an existing
         competitive or commercial relationship.

5.       SALARY. Executive will receive an annual salary of $158,080.00 to be
         paid in accordance with the Bank's regular payroll schedule.

6.       INCENTIVE COMPENSATION. During the Term, the Bank's board of directors,
         subject to ratification by Bancorp's board of directors, will determine
         the amount of bonus to be paid by the Bank to Executive for that year.
         In making this determination, the Bank's board of directors will
         consider factors such as Executive's performance of his duties and the
         safety, soundness and profitability of the Bank. Executive's bonus will
         reflect Executive's contribution to the performance of the Bank during
         the year. This bonus will be paid to Executive no later than January 31
         of the year following the year in which the bonus is earned by
         Executive.

7.       INCOME DEFERRAL. Executive will be eligible to participate in any
         program available to the Bank's and Bancorp's senior management for
         income deferral, for the purpose of deferring receipt of any or all of
         the compensation he may become entitled to under this Agreement.

8.       VACATION AND BENEFITS.

         (a)      Vacation and Holidays. Executive will receive four weeks of
                  paid vacation each year in addition to all holidays observed
                  by the Bank. Executive may carry over, in the aggregate, up to
                  four weeks of unused vacation to a subsequent year. Any unused
                  vacation time in excess of four weeks will not accumulate or
                  carry over from one calendar year to the next. Each calendar
                  year Executive shall take not less than one (1) week vacation.

         (b)      Benefits. Executive will be entitled to participate in any
                  group life insurance, disability, health and accident
                  insurance plans, profit sharing and pension plans and in other
                  employee fringe benefit programs the Bank or Bancorp may have
                  in effect from time to time for its similarly situated
                  employees, in accordance with and subject to any policies
                  adopted by the Bank's board of directors with respect to the
                  plans or programs, including without limitation, any incentive
                  or employee stock option plan, deferred compensation plan,
                  401(k) plan, and Supplemental Executive Retirement Plan
                  (SERP). Neither the Bank nor Bancorp, through this Agreement,
                  obligate itself to make any particular benefits available to
                  its employees.

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         (c)      Business Expenses. The Bank will reimburse Executive for
                  ordinary and necessary expenses which are consistent with past
                  practice at the Bank (including, without limitation, travel,
                  entertainment, and similar expenses) and which are incurred in
                  performing and promoting the Bank's business. Executive will
                  present from time to time itemized accounts of these expenses,
                  subject to any limits of the Bank policy or the rules and
                  regulations of the Internal Revenue Service.

9.       TERMINATION OF EMPLOYMENT.

         (a)      Termination by the Bank for Cause. If the Bank terminates
                  Executive's employment for Cause (defined below) before this
                  Agreement terminates, the Bank will pay Executive the salary
                  earned and expenses reimbursable under this Agreement incurred
                  through the date of his termination. Executive will have no
                  right to receive compensation or other benefits for any period
                  after termination under this Section 9(a).

         (b)      Other Termination by the Bank. If the Bank terminates
                  Executive's employment without Cause before this Agreement
                  terminates, or Executive terminates his employment for Good
                  Reason (defined below), the Bank will pay Executive for the
                  remainder of the Term the compensation and other benefits he
                  would have been entitled to if his employment had not
                  terminated.

         (c)      Death or Disability. This Agreement terminates (1) if
                  Executive dies or (2) if Executive is unable to perform his
                  duties and obligations under this Agreement for a period of 90
                  consecutive days as a result of a physical or mental
                  disability arising at any time during the term of this
                  Agreement, unless with reasonable accommodation Executive
                  could continue to perform his duties under this Agreement and
                  making these accommodations would not pose an undue hardship
                  on the Bank. If termination occurs under this Section 9(c),
                  Executive or his estate will be entitled to receive all
                  compensation and benefits earned and expenses reimbursable
                  through the date Executive's employment terminated.

         (d)      Termination Related to a Change in Control.

                  (1)      Termination by Bank. If the Bank, or its successor in
                           interest by merger, or its transferee in the event of
                           a purchase in an assumption transaction (for reasons
                           other than Executive's death, disability, or Cause)
                           (1) terminates Executive's employment within one year
                           following a Change in Control (as defined below), or
                           (2) terminates Executive's employment before the
                           Change in Control but on or after the date that any
                           party either announces or is required by law to
                           announce any prospective Change in Control
                           transaction and a Change in Control occurs within six
                           months after the termination, the Bank will provide
                           Executive with the payment and benefits described in
                           Section 9(d)(3) below.

                  (2)      Termination by Executive. If Executive terminates
                           Executive's employment, with or without Good Reason,
                           within one year following a

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                           Change in Control, the Bank will provide Executive
                           with the payment and benefits described in Section
                           9(d)(3).

                  (3)      Payments. If Section 9(d)(1) or (2) is triggered in
                           accordance with its terms, the Bank will: (i) pay
                           Executive in 12 monthly installments in an amount
                           equal to the Executive's annual salary (determined as
                           of the day before the date Executive's employment was
                           terminated) and (ii) maintain and provide for 1 year
                           following Executive's termination, at no cost to
                           Executive, the benefits described in Section 9(b) to
                           which Executive is entitled (determined as of the day
                           before the date of such termination); but if
                           Executive's participation in any such benefit is
                           thereafter barred or not feasible, or discontinued or
                           materially reduced, the Bank will arrange to provide
                           Executive with either benefits substantially similar
                           to those benefits or a cash payment of substantially
                           similar value in lieu of the benefits.

         (e)      Limitations on Payments Related to Change in Control. The
                  following apply notwithstanding any other provision of this
                  Agreement:

                  (1)      the total of the payments and benefits described in
                           Section 9(d)(3) will be less than the amount that
                           would cause them to be a "parachute payment" within
                           the meaning of Section 280G(b)(2)(A) of the Internal
                           Revenue Code;

                  (2)      the payment and benefits described in Section 9(d)(3)
                           will be reduced by any compensation (in the form of
                           cash or other benefits) received by Executive from
                           the Bank or its successor after the Change in
                           Control; and

                  (3)      Executive's right to receive the payments and
                           benefits described in Section 9(d)(3) terminates (i)
                           immediately if before the Change in Control
                           transaction closes, Executive terminates his
                           employment without Good Reason, or the Bank
                           terminates Executive's employment for Cause, or (ii)
                           one year after a Change of Control occurs.

         (f)      Return of Bank Property. If and when Executive ceases, for any
                  reason, to be employed by the Bank, Executive must return to
                  the Bank all keys, pass cards, identification cards and any
                  other property of the Bank. At the same time, Executive also
                  must return to the Bank all originals and copies (whether in
                  memoranda, designs, devices, diskettes, tapes, manuals, and
                  specifications) which constitute proprietary information or
                  material of the Bank. The obligations in this paragraph
                  include the return of documents and other materials which may
                  be in his desk at work, in his car, in place of residence, or
                  in any other location under his control.

         (g)      Cause. "Cause" means any one or more of the following:

                  (1)      Willful misfeasance or gross negligence in the
                           performance of Executive's duties;

                  (2)      Conviction of a crime in connection with his duties;

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                  (3)      Conduct demonstrably and significantly harmful to the
                           Bank, as reasonably determined on the advice of legal
                           counsel by the Bank's board of directors; or

                  (4)      Permanent disability, meaning a physical or mental
                           impairment which renders Executive incapable of
                           substantially performing the duties required under
                           this Agreement, and which is expected to continue
                           rendering Executive so incapable for the reasonably
                           foreseeable future.

         (h)      Good Reason. "Good Reason" means only any one or more of the
                  following

                  (1)      Reduction of Executive's salary or reduction or
                           elimination of any compensation or benefit plan
                           benefiting Executive, unless the reduction or
                           elimination is generally applicable to other
                           executive officers within Bancorp (or executive
                           officers of a successor or controlling entity of the
                           Bank) formerly benefited;

                  (2)      The assignment to Executive without his consent of
                           any authority or duties materially inconsistent with
                           Executive's position as of the date of this
                           Agreement;

                  (3)      The material breach of this Agreement by the Bank, or

                  (4)      A relocation or transfer of Executive's principal
                           place of employment that would require Executive to
                           commute on a regular basis more than 20 miles each
                           way from Coeur d'Alene, Idaho, with the exception of
                           travel to and from Boise, Idaho.

         (i)      Change in Control. "Change in Control" means a change "in the
                  ownership or effective control" or "in the ownership of a
                  substantial portion of the assets" of the Bank, within the
                  meaning of Section 280G of the Internal Revenue Code.

10.      CONFIDENTIALITY. Executive will not, after the date this Agreement was
         signed, including during and after its Term, use for his own purposes
         or disclose to any other person or entity any confidential business
         information concerning the Bank or its business operations, unless (1)
         the Bank consents to the use or disclosure of confidential information;
         (2) the use or disclosure is consistent with Executive's duties under
         this Agreement, or (3) disclosure is required by law or court order.
         For purposes of this Agreement, confidential business information
         includes, without limitation, trade secrets (as defined under the
         Montana Uniform Trade Secrets Act, Montana Code Section 30-14-402),
         various confidential information on investment management practices,
         marketing plans, pricing structure and technology of either the Bank or
         Bancorp. Executive will also treat the terms of this Agreement as
         confidential business information.

11.      NONCOMPETITION. During the Term and the terms of any extensions or
         renewals of this Agreement and for a period equal to one year after
         Executive's employment with the Bank and Bancorp has terminated,
         Executive will not, directly or indirectly, as a shareholder, director,
         officer, employee, partner, agent, consultant, lessor, creditor or
         otherwise:

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         (a)      provide management, supervisory or other similar services to
                  any person or entity engaged in any business in counties in
                  which the Bank or Bancorp may have a presence which is
                  competitive with the business of the Bank or Bancorp or a
                  subsidiary as conducted during the term of this Agreement or
                  as conducted as of the date of termination of employment,
                  including any preliminary steps associated with the formation
                  of a new bank.

         (b)      persuade or entice, or attempt to persuade or entice any
                  employee of the Bank or Bancorp or a subsidiary to terminate
                  his/her employment with the Bank or a subsidiary.

         (c)      persuade or entice or attempt to persuade or entice any person
                  or entity to terminate, cancel, rescind or revoke its business
                  or contractual relationships with the Bank or Bancorp.

12.      ENFORCEMENT.

         (a)      The Bank and Executive stipulate that, in light of all of the
                  facts and circumstances of the relationship between Executive
                  and the Bank, the agreements referred to in Sections 10 and 11
                  (including without limitation their scope, duration and
                  geographic extent) are fair and reasonably necessary for the
                  protection of the Bank's and Bancorp's confidential
                  information, goodwill and other protectable interests. If a
                  court of competent jurisdiction should decline to enforce any
                  of those covenants and agreements, Executive and the Bank
                  request the court to reform these provisions to restrict
                  Executive's use of confidential information and Executive's
                  ability to compete with the Bank and Bancorp to the maximum
                  extent, in time, scope of activities and geography, the court
                  finds enforceable.

         (b)      Executive acknowledges the Bank and Bancorp will suffer
                  immediate and irreparable harm that will not be compensable by
                  damages alone if Executive repudiates or breaches any of the
                  provisions of Sections 10 or 11 or threatens or attempts to do
                  so. For this reason, under these circumstances, the Bank, in
                  addition to and without limitation of any other rights,
                  remedies or damages available to it at law or in equity, will
                  be entitled to obtain temporary, preliminary and permanent
                  injunctions in order to prevent or restrain the breach, and
                  the Bank will not be required to post a bond as a condition
                  for the granting of this relief.

13.      COVENANTS. Executive specifically acknowledges the receipt of adequate
         consideration for the covenants contained in Sections 10 or 11 and that
         the Bank is entitled to require him to comply with these Sections.
         These Sections will survive termination of this Agreement. Executive
         represents that if his employment is terminated, whether voluntarily or
         involuntarily, Executive has experience and capabilities sufficient to
         enable Executive to obtain employment in areas which do not violate
         this Agreement and that the Bank's enforcement of a remedy by way of
         injunction will not prevent Executive from earning a livelihood.

14.      ARBITRATION.

         (a)      Arbitration. At either party's request, the parties must
                  submit any dispute, controversy or claim arising out of or in
                  connection with, or relating to, this

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                  Agreement or any breach or alleged breach of this Agreement,
                  to arbitration under the American Arbitration Association's
                  rules then in effect (or under any other form of arbitration
                  mutually acceptable to the parties). A single arbitrator
                  agreed on by the parties will conduct the arbitration. if the
                  parties cannot agree on a single arbitrator, each party must
                  select one arbitrator and those two arbitrators will select a
                  third arbitrator. This third arbitrator will hear the dispute.
                  The arbitrator's decision is final (except as otherwise
                  specifically provided by law) and binds the parties, and
                  either party may request any court having jurisdiction to
                  enter a judgment and to enforce the arbitrator's decision. The
                  arbitrator will provide the parties with a written decision
                  naming the substantially prevailing party in the action. This
                  prevailing party is entitled to reimbursement from the other
                  party for its costs and expenses, including reasonable
                  attorneys' fees.

         (b)      Governing Law. All proceedings will be held at a place
                  designated by the arbitrator in Kootenai County, Idaho. The
                  arbitrator, in rendering a decision as to any state law
                  claims, will apply Idaho law.

         (c)      Exception to Arbitration. Notwithstanding the above, if
                  Executive violates Section 10 or 11, the Bank will have the
                  right to initiate the court proceedings described in Section
                  12(b), in lieu of an arbitration proceeding under this Section
                  14.

15.      MISCELLANEOUS PROVISIONS.

         (a)      Entire Agreement. This Agreement constitutes the entire
                  understanding and agreement between the parties concerning its
                  subject matter and supersedes all prior agreements,
                  correspondence, representations, or understandings between the
                  parties relating to its subject matter.

         (b)      Binding Effect. This Agreement will bind and inure to the
                  benefit of the Bank's and Executive's heirs, legal
                  representatives, successors and assigns.

         (c)      Litigation Expenses. If either party successfully seeks to
                  enforce any provision of this Agreement or to collect any
                  amount claimed to be due under it, this party will be entitled
                  to reimbursement from the other party for any and all of its
                  out-of-pocket expenses and costs including, without
                  limitation, reasonable attorneys' fees and costs incurred in
                  connection with the enforcement or collection.

         (d)      Waiver. Any waiver by a party of its rights under this
                  Agreement must be written and signed by the party waiving its
                  rights. A party's waiver of the other party's breach of any
                  provision of this Agreement will not operate as a waiver of
                  any other breach by the breaching party.

         (e)      Assignment. The services to be rendered by Executive under
                  this Agreement are unique and personal. Accordingly, Executive
                  may not assign any of his rights or duties under this
                  Agreement.

         (f)      Amendment. This Agreement may be modified only through a
                  written instrument signed by both parties and ratified by
                  Bancorp.

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         (g)      Severability. The provisions of this Agreement are severable.
                  The invalidity of any provision will not affect the validity
                  of other provisions of this Agreement.

         (h)      Governing Law and Venue. This Agreement will be governed by
                  and construed in accordance with Montana law, except to the
                  extent that certain regulatory matters may be governed by
                  federal law. The parties must bring any legal proceeding
                  arising out of this Agreement in Kootenai County, Idaho.

         (i)      Counterparts. This Agreement may be executed in one or more
                  counterparts, each of which shall be deemed to be an original,
                  but all of which taken together will constitute one and the
                  same instrument.

         Signed this 9th day of September, 2002.

                                                      MOUNTAIN WEST BANK

                                                      By: /s/ Charles Nipp

Attest: By:

By: /s/ Kim Jacklin
   ----------------
Secretary

                                                      EXECUTIVE

                                                      By: /s/ Jon W. Hippler

Ratified September 25, 2002

GLACIER BANCORP, INC.

By: /s/ Michael J. Blodnick
   ------------------------
President/CEO<PAGE>
                                                                  Exhibit 10.13
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SILICON VALLEY BANK

                          LOAN AND SECURITY AGREEMENT

BORROWER:  QUINTON CARDIOLOGY SYSTEMS, INC.
           QUINTON, INC.

ADDRESS:   3303 MONTE VILLA PARKWAY
           BOTHELL, WA  98021

DATE:      DECEMBER 30, 2002

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 3003 Tasman Drive, Santa
Clara, California 95054 and the borrower(s) named above (jointly and
severally, the "Borrower"), whose chief executive office is located at the
above address ("Borrower's Address").  The Schedule to this Agreement (the
"Schedule") shall for all purposes be deemed to be a part of this Agreement, and
the same is an integral part of this Agreement.  (Definitions of certain
terms used in this Agreement are set forth in Section 8 below.)

1.  LOANS

  1.1  LOANS.  Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its good faith business judgment, up to the amounts
(the "Credit Limit") shown on the Schedule, provided no Default or Event of
Default has occurred and is continuing, and subject to deduction of Reserves
for accrued interest and such other Reserves as Silicon deems proper from
time to time in its good faith business judgment.

  1.2  INTEREST.  All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement.  Interest shall be payable monthly, on the last
day of the month.  Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the
same rate as the other Loans.  Silicon may, in its discretion, charge interest
to Borrower's Deposit Accounts maintained with Silicon.  Regardless of the
amount of Obligations that may be outstanding from time to time, Borrower shall
pay Silicon minimum monthly interest during the term of this Agreement in the
amount set forth on the Schedule (the "Minimum Monthly Interest").

  1.3  OVERADVANCES.  If at any time or for any reason the total of all
outstanding Loans and all other monetary Obligations exceeds the Credit Limit
(an "Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand.  Without limiting Borrower's obligation to
repay to Silicon the amount of any Overadvance, Borrower agrees to pay Silicon
interest on the outstanding amount of any Overadvance, on demand, at the
Default Rate.

  1.4  FEES.  Borrower shall pay Silicon the fees shown on the Schedule, which
are in addition to all interest and other sums payable to Silicon and are not
refundable.

  1.5  LOAN REQUESTS.  To obtain a Loan, Borrower shall make a request to
Silicon by facsimile or telephone.  Loan requests received after 12:00 Noon
will not be considered by Silicon until the next Business Day.  Silicon may
rely on any telephone request for a Loan given by a person whom Silicon
believes is an authorized representative of Borrower, and Borrower will
indemnify Silicon for any loss Silicon suffers as a result of that reliance.

  1.6  LETTERS OF CREDIT. At the request of the Borrower, Silicon may, in its
good faith business judgment issue or arrange for the issuance of letters of
credit for the account of Borrower, in each case in form and substance
satisfactory to Silicon in its sole discretion (collectively, "Letters of
Credit").  The aggregate face amount of all Letters of Credit from time to time
outstanding shall not exceed the amount shown on the Schedule (the "Letter of
Credit Sublimit"), and shall be reserved against Loans which would otherwise be
available hereunder, and in the event at any time there are insufficient Loans

                                      -1-
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SILICON VALLEY BANK                                  LOAN AND SECURITY AGREEMENT
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available to Borrower for such reserve, Borrower shall deposit and maintain with
Silicon cash collateral in an amount at all times equal to such deficiency,
which shall be held as Collateral for all purposes of this Agreement. Borrower
shall pay all bank charges (including charges of Silicon) for the issuance of
Letters of Credit, together with such additional fee as Silicon's letter of
credit department shall charge in connection with the issuance of the Letters of
Credit. Any payment by Silicon under or in connection with a Letter of Credit
shall constitute a Loan hereunder on the date such payment is made. Each Letter
of Credit shall have an expiry date no later than thirty days prior to the
Maturity Date. Borrower hereby agrees to indemnify and hold Silicon harmless
from any loss, cost, expense or liability, including payments made by Silicon,
expenses, and reasonable attorneys' fees incurred by Silicon arising out of or
in connection with any Letters of Credit. Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guaranteed by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
Letters of Credit may require Silicon to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify and hold Silicon harmless with respect
to any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon's indemnification of any such issuing bank. The
provisions of this Loan Agreement, as it pertains to Letters of Credit, and any
other Loan Documents relating to Letters of Credit are cumulative.

2. SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of the following (collectively, the "Collateral"): all right, title and
interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located; all Accounts; all Inventory;
all Equipment; all Deposit Accounts; all General Intangibles (including without
limitation all Intellectual Property); all Investment Property; all Other
Property; and any and all claims, rights and interests in any of the above, and
all guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, any and all of the
above, and all Borrower's books relating to any and all of the above.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

   In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants, throughout the
term of this Agreement and until all Obligations have been paid and performed in
full:

   3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower is and will continue to be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would result in a Material Adverse Change. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby (i) have been duly and validly authorized, (ii) are enforceable against
Borrower in accordance with their terms(except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors' rights generally), and (iii) do not
violate Borrower's articles or certificate of incorporation, or Borrower's
by-laws, or any law or any material agreement or instrument which is binding
upon Borrower or its property, and (iv) do not constitute grounds for
acceleration of any material indebtedness or obligation under any agreement or
instrument which is binding upon Borrower or its property.

   3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed in the Representations are
all prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, in all material respects, with all laws relating to the
conduct of business under a fictitious business name, except where the failure
to so comply would not reasonably be expected to result in a Material Adverse
Change.

   3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth in the Representations*, Borrower will give Silicon at least 30 days
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth in the
Representations, except that Borrower may maintain sales offices in the ordinary
course of business at which not more than a total of $10,000 fair market value
of Equipment is located.

                                      -2-

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SILICON VALLEY BANK                 LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

 * EXCEPT FOR DEMONSTRATION INVENTORY AND FIELD SERVICE INVENTORY (DEFINED AS
INVENTORY IN THE POSSESSION OF BORROWER'S FIELD SERVICE REPRESENTATIVES FOR
PURPOSES OF REPAIR OF SUCH INVENTORY) PROVIDED THAT THE AMOUNT OF SUCH
DEMONSTRATION INVENTORY AND FIELD SERVICE INVENTORY SHALL NOT EXCEED $1,500,000
IN THE AGGREGATE.

3.4 TITLE TO COLLATERAL; PERFECTION; PERMITTED LIENS.

  (a) Borrower is now, and will at all times in the future be, the sole owner of
all the Collateral, except for items of Equipment which are leased to Borrower.
The Collateral now is and will remain free and clear of any and all liens,
charges, security interests, encumbrances and adverse claims, except for
Permitted Liens. Silicon now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral, subject
only to the Permitted Liens, and Borrower will at all times defend Silicon and
the Collateral against all claims of others.

  (b) Borrower has set forth in the Representations all of Borrower's Deposit
Accounts, and Borrower will give Silicon five Business Days advance written
notice before establishing any new Deposit Accounts and will cause the
institution where any such new Deposit Account is maintained to execute and
deliver to Silicon a control agreement in form sufficient to perfect Silicon's
security interest in the Deposit Account and otherwise satisfactory to Silicon
in its good faith business judgment. Nothing herein limits any requirements
which may be set forth in the Schedule as to where Deposit Accounts will be
maintained.

  (c) In the event that Borrower shall at any time after the date hereof have
any commercial tort claims against others, which it is asserting or intends to
assert, and in which the potential recovery exceeds $100,000, Borrower shall
promptly notify Silicon thereof in writing and provide Silicon with such
information regarding the same as Silicon shall request (unless providing such
information would waive the Borrower's attorney-client privilege). Such
notification to Silicon shall constitute a grant of a security interest in the
commercial tort claim and all proceeds thereof to Silicon, and Borrower shall
execute and deliver all such documents and take all such actions as Silicon
shall request in connection therewith.

  (d) None of the Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a fixture. Borrower is not and
will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral
is located upon premises in which any third party has an interest, Borrower
shall, whenever requested by Silicon, use its * efforts to cause such third
party to execute and deliver to Silicon, in form acceptable to Silicon, such
waivers and subordinations as Silicon shall specify in its good faith business
judgment. Borrower will keep in full force and effect, and will comply with all
material terms of, any lease of real property where any of the Collateral now or
in the future may be located.

* reasonable

  3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use
the Collateral for any unlawful purpose. Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.

  3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at Borrower's
Address complete and accurate books and records, comprising an accounting system
in accordance with GAAP.

  3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements now
or in the future delivered to Silicon have been, and will be, prepared in
conformity with GAAP and now and in the future will fairly present the results
of operations and financial condition of Borrower, in accordance with GAAP, at
the times and for the periods therein stated. Between the last date covered by
any such statement provided to Silicon and the date hereof, there has been no
Material Adverse Change.

  3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all required tax returns and reports, and Borrower
has timely paid, and will timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions now or in the future owed by
Borrower. Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid, and shall continue to pay all
amounts necessary to fund all present and future pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not
and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any
such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.

                                      -3-
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  3.9 COMPLIANCE WITH LAW. Borrower has, to the best of its knowledge, complied,
and will comply, in all material respects, with all provisions of all foreign,
federal, state and local laws and regulations applicable to Borrower, including,
but not limited to, those relating to Borrower's ownership of real or personal
property, the conduct and licensing of Borrower's business, and all
environmental matters.

  3.10 LITIGATION. There is no claim, suit, litigation, proceeding or
investigation pending or (to best of Borrower's knowledge) threatened against or
affecting Borrower in any court or before any governmental agency (or any basis
therefor known to Borrower) which could reasonably be expected to result, either
separately or in the aggregate, in any Material Adverse Change. Borrower will
promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted against Borrower involving
any single claim of * or more, or involving ** or more in the aggregate.

*$150,000
**$400,000

  3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."

4. ACCOUNTS.

  4.1 REPRESENTATIONS RELATING TO ACCOUNTS. Borrower represents and warrants to
Silicon as follows: Each Account with respect to which Loans are requested by
Borrower shall, on the date each Loan is requested and made, (i) represent an
undisputed bona fide existing unconditional obligation of the Account Debtor
created by the sale, delivery, and acceptance of goods or the rendition of
services, or the non-exclusive licensing of Intellectual Property, in the
ordinary course of Borrower's business, and (ii) meet the Minimum Eligibility
Requirements set forth in Section 8 below.

  4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's books and records are and
shall be genuine and in all respects what they purport to be. All sales and
other transactions underlying or giving rise to each Account shall comply in all
material respects with all applicable laws and governmental rules and
regulations. To the best of Borrower's knowledge, all signatures and
endorsements on all documents, instruments, and agreements relating to all
Accounts are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.

  4.3 SCHEDULES AND DOCUMENTS RELATING TO ACCOUNTS. Borrower shall deliver to
Silicon transaction reports and schedules of collections, as provided in the
Schedule, on Silicon's standard forms; provided, however, that Borrower's
failure to execute and deliver the same shall not affect or limit Silicon's
security interest and other rights in all of Borrower's Accounts, nor shall
Silicon's failure to advance or lend against a specific Account affect or limit
Silicon's security interest and other rights therein. If requested by Silicon,
Borrower shall furnish Silicon with copies (or, at Silicon's request, originals)
of all contracts, orders, invoices, and other similar documents, and all
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Accounts, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to Silicon an aged accounts receivable trial balance
as provided in the Schedule. In addition, Borrower shall deliver to Silicon, on
its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary indorsements, and
copies of all credit memos.

  4.4 COLLECTION OF ACCOUNTS. Borrower shall have the right to collect all
Accounts, unless and until a Default or an Event of Default has occurred and is
continuing. Whether or not an Event of Default has occurred and is continuing,
Borrower shall hold all payments on, and proceeds of, Accounts in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its good
faith business judgment, require that all proceeds of Collateral be deposited by
Borrower into a lockbox account, or such other "blocked account" as Silicon may
specify, pursuant to a blocked account agreement in such form as Silicon may
specify in its good faith business judgment.

  4.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of any
Collateral shall be delivered, in kind, by Borrower to Silicon in the original
form in which received by Borrower not later than the following Business Day
after receipt by Borrower, to be applied to the Obligations in such order as
Silicon shall determine; provided that, if no Default or Event of Default has
occurred and is continuing, Borrower shall not be obligated to remit to Silicon
the proceeds of the sale or worn out or obsolete Equipment disposed of by
Borrower in good faith in an arm's length transaction for an aggregate purchase

                                      -4-

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price of $25,000 or less (for all such transactions in any fiscal year).
Borrower agrees that it will not commingle proceeds of Collateral with any of
Borrower's other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Silicon.
Nothing in this Section limits the restrictions on disposition of Collateral
set forth elsewhere in this Agreement.

  4.6  DISPUTES.  Borrower shall notify Silicon promptly of all disputes or
claims relating to Accounts. Borrower shall not forgive (completely or
partially), compromise or settle any Account for less than payment in full, or
agree to do any of the foregoing, except that Borrower may do so, provided that:
(i) Borrower does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts, settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit.

  4.7  RETURNS.  Provided no Event of Default has occurred and is continuing, if
any Account Debtor returns any Inventory to Borrower, Borrower shall promptly
determine the reason for such return and promptly issue a credit memorandum to
the Account Debtor in the appropriate amount.  In the event any attempted
return occurs after the occurrence and during the continuance of any Event of
Default, Borrower shall hold the returned Inventory in trust for Silicon, and
immediately notify Silicon of the return of the Inventory.

  4.8 VERIFICATION.  Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Accounts, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.

  4.9  NO LIABILITY.  Silicon shall not be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of, any goods,
the sale or other disposition of which gives rise to an Account, or for any
error, act, omission, or delay of any kind occurring in the settlement, failure
to settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Silicon
be deemed to be responsible for any of Borrower's obligations under any
contract or agreement giving rise to an Account. Nothing herein shall, however,
relieve Silicon from liability for its own gross negligence or willful
misconduct.

5.  ADDITIONAL DUTIES OF BORROWER.

  5.1  FINANCIAL AND OTHER COVENANTS.  Borrower shall at all times comply with
the financial and other covenants set forth in the Schedule.

  5.2  INSURANCE.  Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require and that are customary and in accordance with standard
practices for Borrower's industry and locations, and Borrower shall provide
evidence of such insurance to Silicon.  All such insurance policies shall name
Silicon as an additional loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to Silicon.  Upon receipt of the
proceeds of any such insurance, Silicon shall apply such proceeds in reduction
of the Obligations as Silicon shall determine in its good faith business
judgment, except that, provided no Default or Event of Default has occurred and
is continuing, Silicon shall release to Borrower insurance proceeds with respect
to Equipment totaling less than *       , which shall be utilized by Borrower
for the replacement of the Equipment with respect to which the insurance
proceeds were paid.  Silicon may require reasonable assurance that the insurance
proceeds so released will be so used.  If Borrower fails to provide or pay for
any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense.  Borrower shall promptly deliver to Silicon copies of all
material reports made to insurance companies.

  $250,000

 5.3  REPORTS.  Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower  (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time specify in
its good faith business judgment.

  5.4  ACCESS TO COLLATERAL, BOOKS AND RECORDS.  At reasonable times, and on one
Business Day's notice, Silicon, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's books and records.
Silicon shall take reasonable steps to keep confidential all information
obtained in any such inspection or audit, but Silicon shall have the right to
disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process.  The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $700 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable
out-of-pocket expenses.  In the event Borrower and Silicon schedule an audit
more than 10 days in advance, and Borrower seeks to reschedule the audit with
less than 10 days written notice to Silicon, then (without limiting any of
Silicon's rights or remedies), Borrower shall pay Silicon a cancellation fee of
$1,000 plus any out-of-pocket expenses incurred by Silicon, to compensate
Silicon for the anticipated costs and expenses of the cancellation.

                                      -5-
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SILICON VALLEY BANK                               LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

  5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule, Borrower
shall not, without Silicon's prior written consent (which shall be a matter of
its good faith business judgment), do any of the following: (i) merge or
consolidate with another corporation or entity*; (ii) acquire any assets,
except in the ordinary course of business**; (iii) enter into any other
transaction outside the ordinary course of business***; (iv) sell or transfer
any Collateral, except for the sale of finished Inventory in the ordinary
course of Borrower's business, and except for the sale of obsolete or unneeded
Equipment in the ordinary course of business; (v) store any Inventory or other
Collateral with any warehouseman or other third party; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vii) make any loans of any money or other assets****; (viii) incur any debts,
outside the ordinary course of business, which would result in a Material
Adverse Change; (ix) guarantee or otherwise become liable with respect to the
obligations of another party or entity*****; (x) pay or declare any dividends
on Borrower's stock (except for dividends payable solely in stock of Borrower);
(xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower's stock; (xii) make any change in Borrower's capital structure
which would result in a Material Adverse Change; or (xiii) engage, directly or
indirectly, in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto; or (xiv) dissolve or elect to
dissolve.****** Transactions permitted by the foregoing provisions of this
Section are only permitted if no Default or Event of Default would occur as a
result of such transaction.

  *BORROWER HAS ADVISED SILICON THAT PURSUANT TO THE TERMS AND CONDITIONS OF
THAT CERTAIN STOCK PURCHASE AGREEMENT BY AND AMONG QUINTON CARDIOLOGY SYSTEMS,
INC., SPACELABS MEDICAL, INC., DATEX-OHMEDO, INC. AND SPACELABS BURDICK, INC.,
("SPACELABS BURDICK") AND DATED AS OF DECEMBER 23, 2003 (THE "MERGER
AGREEMENT"), QUINTON CARDIOLOGY SYSTEMS, INC. INTENDS TO PURCHASE ALL OF THE
ISSUED AND OUTSTANDING CAPITAL STOCK OF SPACELABS BURDICK IN EXCHANGE FOR
$24,000,000 AS ADJUSTED PURSUANT TO THE WORKING CAPITAL PROVISIONS OF THE
MERGER AGREEMENT (THE "MERGER"), AND AS A RESULT OF THE MERGER, SPACELABS
BURDICK SHALL BECOME A WHOLLY-OWNED SUBSIDIARY OF QUINTON CARDIOLOGY SYSTEMS,
INC. THE MERGER IS TO BE CONDUCTED IN ACCORDANCE WITH THE TERMS PREVIOUSLY
DISCLOSED BY BORROWER TO SILICON IN WRITING, AND SILICON HEREBY CONSENTS TO THE
MERGER PROVIDED THAT NOTHING HEREIN IS TO BE DEEMED A WAIVER OF SILICON'S RIGHT
TO REQUIRE SPACELABS BURDICK TO BECOME A CO-BORROWER UNDER THIS AGREEMENT AND
TO REQUIRE SPACELABS BURDICK TO EXECUTE SUCH DOCUMENTS AS SILICON DEEMS
NECESSARY IN CONJUNCTION THEREWITH, INCLUDING, WITHOUT LIMITATION, THE
ASSUMPTION BY SPACELABS BURDICK OF THIS AGREEMENT AND ALL RELATED DOCUMENTS.

  **AND EXCEPT WITH RESPECT TO THE MERGER

  ***EXCEPT FOR THE MERGER

  ****EXCEPT ADVANCES TO EMPLOYEES IN THE ORDINARY COURSE OF BUSINESS

  *****EXCEPT ENDORSEMENTS ON CHECKS IN THE ORDINARY COURSE OF BUSINESS

  ******BORROWER HAS ADVISED SILICON OF THAT CERTAIN UNSECURED PROMISSORY NOTE
ISSUED BY BORROWER IN FAVOR OF STAIRMASTER, INC. DATED OCTOBER 1, 2002 AND IN
THE ORIGINAL PRINCIPAL AMOUNT OF $725,000 (THE "STAIRMASTER NOTE"). THE
STAIRMASTER NOTE PROVIDES FOR EIGHT (8) QUARTERLY PAYMENTS OF PRINCIPAL AND
INTEREST COMMENCING JANUARY 1, 2003.

  5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Silicon, make available Borrower
and its officers, employees and agents and Borrower's books and records, to the
extent that Silicon may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.

  5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon may, in its
good faith business judgment, deem necessary or useful in order to perfect and
maintain Silicon's perfected first-priority security interest in the Collateral
(subject to Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.

6. TERM.

  6.1 MATURITY DATE. This Agreement shall continue in effect until the maturity
date set forth on the Schedule (the "Maturity Date"), subject to Section 6.3
below.

  6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three Business Days after
written notice of termination is given to Silicon; or (ii) by Silicon at any
time after the occurrence and during the continuance of an Event of Default,
without notice, effective immediately. If this Agreement is terminated by
Borrower or by Silicon under this Section 6.2, Borrower shall pay to Silicon a
termination fee in an amount equal to * of the Maximum Credit Limit, provided
that no termination fee shall be charged if the credit facility hereunder is
replaced with a new facility from another division of Silicon Valley Bank. The
termination fee shall be due and payable on the effective date of termination
and thereafter shall bear interest at a rate equal to the highest rate
applicable to any of the Obligations.

                                      -6-
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  *ONE PERCENT (1.0%)

  6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by Installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to 105% of the face amount of all such Letters of Credit plus all
interest, fees and cost due or to become due in connection therewith (as
estimated by Silicon in its good faith business judgment), to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided that
Silicon may, in its sole discretion, refuse to make any further Loans after
termination. No termination shall in any way affect or impair any right or
remedy of Silicon, nor shall any such termination relieve Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Silicon shall promptly terminate its financing
statements with respect to the Borrower and deliver to Borrower such other
documents as may be required to fully terminate Silicon's security interests.

7. EVENTS OF DEFAULT AND REMEDIES.

  7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or
any of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect when made or deemed to be made; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall
fail to comply with any of the financial covenants set forth in the Schedule,
or shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured, or shall fail to permit Silicon to conduct an inspection or
audit as specified in Section 5.4 hereof; or (e) Borrower shall fail to perform
any other non-monetary Obligation, which failure is not cured within five
Business Days after the date due; or (f) any levy, assessment, attachment,
seizure, lien or encumbrance (other than a Permitted Lien) is made on all or
any part of the Collateral which is not cured within*   days after the
occurrence of the same; or (g) any default or event of default occurs under any
obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted
Lien; or (h) Borrower breaches any material contract or obligation, which has
resulted or may reasonably be expected to result in a Material Adverse Change;
or (i) Dissolution, termination of existence, insolvency or business failure of
Borrower, or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (j) the commencement of any proceeding against Borrower or any guarantor of
any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; which is not cured by the
dismissal thereof within**   days after the date commenced; or (k) revocation
or termination of, or limitation or denial of liability upon, any guaranty of
the Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all
of the Obligations, or any attempt to do any of the foregoing, or commencement
of proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any Person
who has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (n) there shall be a change in the
record or beneficial ownership of an aggregate of more than*** of the
outstanding shares of stock of Borrower, in one or more transactions, compared
to the ownership of outstanding shares of stock of Borrower in effect on the
date hereof****, without the prior written consent of Silicon; or (o) Borrower
shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (p) a Material Adverse Change shall occur. Silicon may cease
making any Loans hereunder during any of the above cure periods, and thereafter
if an Event of Default has occurred and is continuing.

                                      -7-
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     *20
     **45
     ***50%
     **** that results in either: (i) a change in the controlling ownership of
          Borrower or (ii) any Person owning more that 50% of the outstanding
          shares of stock of Borrower

     7.2 REMEDIES. Upon the occurrence and during the continuance of any Event
of Default, and at any time thereafter, Silicon, at its option, and without
notice or demand of any kind (all of which are hereby expressly waived by
Borrower), may do any one or more of the following: (a) Cease making Loans or
otherwise extending credit to Borrower under this Agreement or any other Loan
Document; (b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation; (c) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Borrower hereby authorizes Silicon without
judicial process to enter onto any of Borrower's premises without interference
to search for, take possession of, keep, store, or remove any of the Collateral,
and remain on the premises or cause a custodian to remain on the premises in
exclusive control thereof, without charge for so long as Silicon deems it
necessary, in its good faith business judgment, in order to complete the
enforcement of its rights under this Agreement or any other agreement; provided,
however, that should Silicon seek to take possession of any of the Collateral by
court process, Borrower hereby irrevocably waives: (i) any bond and any surety
or security relating thereto required by any statute, court rule or otherwise as
an incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of, and not dispose of, any such
Collateral until after trial or final judgment; (d) Require Borrower to assemble
any or all of the Collateral and make it available to Silicon at places
designated by Silicon which are reasonably convenient to Silicon and Borrower,
and to remove the Collateral to such locations as Silicon may deem advisable;
(e) Complete the processing, manufacturing or repair of any Collateral prior to
a disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use Borrower's premises, vehicles, hoists,
lifts, cranes, and other Equipment and all other property without charge; (f)
Sell, lease or otherwise dispose of any of the Collateral, in its condition at
the time Silicon obtains possession of it or after further manufacturing,
processing or repair, at one or more public and/or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit, and to adjourn any
such sale from time to time without notice other than oral announcement at the
time scheduled for sale. Silicon shall have the right to conduct such
disposition on Borrower's premises without charge, for such time or times as
Silicon deems reasonable, or on Silicon's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Silicon may directly
or through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale; (g) Demand payment
of, and collect any Accounts and General Intangibles comprising Collateral and,
in connection, therewith, Borrower irrevocably authorizes Silicon to endorse or
sign Borrower's name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to Borrower and remove
therefrom payments made with respect to any item of the Collateral or proceeds
thereof, and, in Silicon's good faith business judgment, to grant extensions of
time to pay, compromise claims and settle Accounts and the like for less than
face value; (h) Offset against any sums in any of Borrower's general, special or
other Deposit Accounts with Silicon against any or all of the Obligations; and
(i) Demand and receive possession of any of Borrower's federal and state income
tax returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence and during the continuance of any Event of Default, the
interest rate applicable to the Obligations shall be increased by an additional
*     percent per annum (the "Default Rate").

     * two

     7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least ten days prior to the sale, and, in the case of a public sale,
notice of the sale is published at least *   days prior before the sale; (iii)
The sale is conducted at a place designated by Silicon, with or without the
Collateral being present; (iv) The sale commences at any time between 8:00 a.m.
and 6:00 p.m.; (v) Payment of the purchase price in cash or by cashier's check
or wire transfer is required; (vi) With respect to any sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective

     * 10

                                      -8-
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purchaser to ascertain directly from Borrower any and all information concerning
the same. Silicon shall be free to employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.

 *10

 7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of any
Event of Default, without limiting Silicon's other rights and remedies, Borrower
grants to Silicon an irrevocable power of attorney coupled with an interest,
authorizing and permitting Silicon (acting through any of its employees,
attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but Silicon agrees that if it
exercises any right hereunder, it will do so in good faith and in a commercially
reasonably manner: (a) Execute on behalf of Borrower any documents that Silicon
may, in its good faith business judgment, deem advisable in order to perfect and
maintain Silicon's security interest in the Collateral, or in order to exercise
a right of Borrower or Silicon, or in order to fully consummate all the
transactions contemplated under this Agreement, and all other Loan Documents;
(b) Execute on behalf of Borrower, any invoices relating to any Account, any
draft against any Account Debtor and any notice to any Account Debtor, any proof
of claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's
or other lien, or assignment or satisfaction of mechanic's, materialman's or
other lien; (c) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Silicon's possession; (d) Endorse all checks and other forms of remittances
received by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance,
security interest and adverse claim in or to any of the Collateral, or any
judgment based thereon, or otherwise take any action to terminate or discharge
the same; (f) Grant extensions of time to pay, compromise claims and settle
Accounts and General Intangibles for less than face value and execute all
releases and other documents in connection therewith; (g) Pay any sums required
on account of Borrower's taxes or to secure the release of any liens therefor,
or both; (h) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor; (i) Instruct any
third party having custody or control of any books or records belonging to, or
relating to, Borrower to give Silicon the same rights of access and other rights
with respect thereto as Silicon has under this Agreement; and (j) Take any
action or pay any sum required of Borrower pursuant to this Agreement and any
other Loan Documents. Any and all reasonable sums paid and any and all
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon's rights under the foregoing power of attorney or any
of Silicon's other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of Borrower.

 7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale of
the Collateral shall be applied by Silicon first to the reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion.  Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Silicon for any deficiency. If Silicon, in its good faith
business judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Silicon
shall have the option, exercisable at any time, in its good faith business
judgment, of either reducing the Obligations by the principal amount of purchase
price or deferring the reduction of the Obligations until the actual receipt by
Silicon of the cash therefor.

 7.6  REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.

8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:

 "Account Debtor" means the obligor on an Account.

 "Accounts" means all present and future "accounts" as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Borrower.

                                      -9-
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   "Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.

   "Business Day" means a day on which Silicon is open for business.

   "Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.

   "Collateral" has the meaning set forth in Section 2 above.

   "continuing" and "during the continuance of" when used with reference to a
Default or Event of Default means that the Default or Event of Default has
occurred and has not been either waived in writing by Silicon or cured within
any applicable cure period.

   "Default" means any event which with notice or passage of time or both, would
constitute an Event of Default.

   "Default Rate" has the meaning set forth in Section 7.2 above.

   "Deposit Accounts" means all present and future "deposit accounts" as
defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all general and special bank accounts, demand accounts, checking
accounts, savings accounts and certificates of deposit.

   "Eligible Inventory" means Inventory which Silicon, in its good faith
business judgment, deems eligible for borrowing. Without limiting the fact that
the determination of which Inventory is eligible for borrowing is a matter of
Silicon's good faith business judgment, the following are the minimum
requirements for Inventory to be Eligible Inventory: the Inventory must (i)
consist of * finished goods, in good, new and salable condition, not be
perishable, not be obsolete or unmerchantable, and not be comprised of work in
process, packaging materials or supplies; (ii) meet all applicable governmental
standards; (iii) have been manufactured in compliance with the Fair Labor
Standards Act; (iv) conform in all respects to the warranties and
representations set forth in this Agreement; (v) be at all times subject to
Silicon's duly perfected, first priority security interest; and (vi) be
situated at Borrower's Address or at one of the locations set forth in the
Representations.

   *raw materials and

   "Eligible Accounts" mean Accounts and General Intangibles arising in the
ordinary course of Borrower's business from the sale of goods or the rendition
of services, or the non-exclusive licensing of Intellectual Property, which
Silicon, in its good faith business judgment, shall deem eligible for borrowing.
Without limiting the fact that the determination of which Accounts are eligible
for borrowing is a matter of Silicon's good faith business judgment, the
following (the "Minimum Eligibility Requirements") are the minimum requirements
for an Account to be an Eligible Account: (i) the Account must not be
outstanding for more than 90 days from its invoice date (the "Eligibility
Period"), (ii) the Account must not represent progress billings, or be due under
a fulfillment or requirements contract with the Account Debtor, (iii) the
Account must not be subject to any contingencies (including Accounts arising
from sales on consignment, guaranteed sale or other terms pursuant to which
payment by the Account Debtor may be conditional), (iv) the Account must not be
owing from an Account Debtor with whom Borrower has any dispute (whether or not
relating to the particular Account), (v) the Account must not be owing from an
Affiliate of Borrower, (vi) the Account must not be owing from an Account Debtor
which is subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to Silicon, or which, fails or goes out of a
material portion of its business, (vii) the Account must not be owing from the
United States or any department, agency or instrumentality thereof (unless there
has been compliance, to Silicon's satisfaction, with the United States
Assignment of Claims Act), (viii) the Account must not be owing from an Account
Debtor located outside the United States or Canada (unless pre-approved by
Silicon in its discretion in writing, or backed by a letter of credit
satisfactory to Silicon, or FCIA insured satisfactory to Silicon), (ix) the
Account must not be owing from an Account Debtor to whom Borrower is or may be
liable for goods purchased from such Account Debtor or otherwise (but, in such
case, the Account will be deemed not eligible only to the extent of any amounts
owed by Borrower to such Account Debtor). Accounts owing from one Account Debtor
will not be deemed Eligible Accounts to the extent they exceed 25% of the total
Accounts outstanding. In addition, if more than 50% of the Accounts owing from
an Account Debtor are outstanding for a period longer than their Eligibility
Period (without regard to unapplied credits) or are otherwise not eligible
Accounts, then all Accounts owing from that Account Debtor will be deemed
ineligible for borrowing. Silicon may, from time to time, in its good faith
business judgment, revise the Minimum Eligibility Requirements, upon written
notice to Borrower.

   "Equipment" means all present and future "equipment" as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing.

   "Event of Default" means any of the events set forth in Section 7.1 of this
Agreement.

   "GAAP" means generally accepted accounting principles consistently applied.

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     "General Intangibles" means all present and future "general intangibles" as
defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all intellectual Property payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone numbers, domain names, claims, income tax refunds, security and
other deposits, options to purchase or sell real or personal property, rights in
all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

     "good faith business judgment" means honesty in fact and good faith (as
defined in Section 1201 of the Code) in the exercise of Silicon's business
judgement.

     "including" means including (but not limited to).

     "Intellectual Property" means all present and future (a) copyrights,
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, (b) trade secret rights, including all rights to
unpatented inventions and know-how, and confidential information; (c) mask
work or similar rights available for the  protection of semiconductor chips;
(d) patents, patent applications and like protections including without
limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same; (e) trademarks, service-
marks, trade styles, and trade names, whether or not any of the foregoing
are registered, and all applications to register and registration of the
same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by any such trademarks; (f) computer
software and computer software products; (g) designs and design rights;
(h) technology; (i) all claims for damages by way of past, present and
future infringement of any of the rights included above; (j) all licenses
or other rights to use any property or rights of a type described above.

     "Inventory" means all present and future "inventory" as defined in
the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returned goods and any documents
of title representing any of the above.

     "Investment Property" means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership interests,
limited liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets held
in any securities account or otherwise, and all options and warrants to purchase
any of the foregoing, wherever located, and all other securities of every kind,
whether certificated or uncertificated.

     "Loan Documents" means, collectively, this Agreement, the Representations,
and all other present and future documents, instruments and agreements between
Silicon and Borrower, including, but not limited to those relating to this
Agreement, and all amendments and modifications thereto and replacements
therefor.

     "Material Adverse Change" means any of the following: (i) a material
adverse change in the business, operations, or financial or other condition of
the Borrower, or (ii) a material impairment of the prospect of repayment of any
portion of the Obligations: or (iii) a material impairment of the value or
priority of Silicon's security interest in the Collateral.

     "Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, or otherwise, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by
Silicon in Borrower's debts owing to others), absolute or contingent, due or to
become due, including, without limitation, all interest, charges, expenses,
fees, attorney's fees, expert witness fees, audit fees, letter of credit fees,
collateral monitoring fees, closing fees, facility fees, termination fees,
minimum interest charges and any other sums chargeable to Borrower under this
Agreement or under any other Loan Documents.

     "Other Property" means the following as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term
as may hereafter be made, and all rights relating thereto: all present and
future "commercial tort claims" (including without limitation any commercial
tort claims identified in the Representations), "documents", "instruments",
"promissory notes", "chattel paper", "letters of credit", "letter-of-credit
rights", "fixtures", "farm products" and "money"; and all other goods and
personal property of every kind, tangible and intangible, whether or not
governed by the California Uniform Commercial Code.

     "Permitted Liens" means the following: (1) purchase money security
interests in specific items of Equipment, (ii) leases of specific items of
Equipment, (iii) liens for taxes not yet payable; (iv) additional security
interests and liens consented to in writing by Silicon, which consent
may be withheld in its good faith business judgment; (v) security interests
being terminated

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substantially concurrently with this Agreement; (vi) liens of materialmen,
mechanics, warehousemen, carriers, or other similar liens arising in the
ordinary course of business and securing obligations which are not delinquent;
(vii) liens incurred in connection with the extension, renewal or refinancing
of the Indebtedness secured by liens of the type described above in clauses (i)
or (ii) above, provided that any extension, renewal or replacement lien is
limited to the property encumbered by the existing lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase; (viii) Liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods. Silicon
will have the right to require, as a condition to its consent under
subparagraph (iv) above, that the holder of the additional security interest or
lien sign an intercreditor agreement on Silicon's then standard form,
acknowledge that the security interest is subordinate to the security interest
in favor of Silicon, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding,
and that Borrower agree that any uncured default in any obligation secured by
the subordinate security interest shall also constitute an Event of Default
under this Agreement.

     "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.

     "Representations" means the written Representations and Warranties
provided by Borrower to Silicon referred to in the Schedule.

     "Reserves" means, as of any date of determination, such amounts as Silicon
may from time to time establish and revise in its good faith business judgment,
reducing the amount of Loans, Letters of Credit and other financial
accommodations which would otherwise be available to Borrower under the lending
formula(s) provided in the Schedule: (a) to reflect events, conditions,
contingencies or risks which, as determined by Silicon in its good faith
business judgment, do or may adversely affect (i) the Collateral or any other
property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets,
business or prospects of Borrower or any Guarantor, or (iii) the security
interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.

     Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP,
consistently applied. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the
extent such terms are defined therein.

9. GENERAL PROVISIONS.

     9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon
(including proceeds of Accounts and payment of the Obligations in full) shall
be deemed applied by Silicon on account of the Obligations two Business Days
after receipt by Silicon of immediately available funds, and, for purposes of
the foregoing, any such funds received after 12:00 Noon on any day shall be
deemed received on the next Business Day. Silicon shall not, however, be
required to credit Borrower's account for the amount of any item of payment
which is unsatisfactory to Silicon in its good faith business judgment, and
Silicon may charge Borrower's loan account for the amount of any item of
payment which is returned to Silicon unpaid.

     9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations
may be applied, and in Silicon's good faith business judgment, reversed and
re-applied, to the Obligations, in such order and manner as Silicon shall
determine in its good faith business judgment.

     9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same
rate applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.

     9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for * reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within 60 days after such account is
rendered, describing the nature of any alleged errors or omissions.

     *MANIFEST ERROR AND FOR

     9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or any other address designated in writing by one

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party to the other party. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, or at the expiration of one Business
Day following delivery to the private delivery service, or * Business Days
following the deposit thereof in the United States mail, with postage prepaid.

     * three

     9.6  SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.

     9.7  INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.

     9.8  WAIVERS; INDEMNITY. The failure of Silicon at any time or times to
require Borrower to strictly comply with any of the provisions of this Agreement
or any other Loan Document shall not waive or diminish any right of Silicon
later to demand and receive strict compliance therewith. Any waiver of any
default shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. None of the provisions of this Agreement
or any other Loan Document shall be deemed to have been waived by any act or
knowledge of Silicon or its agents or employees, but only by a specific written
waiver signed by an authorized officer of Silicon and delivered to Borrower.
Borrower waives the benefit of all statutes of limitations relating to any of
the Obligations or this Agreement or any other Loan Document, and Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension or
renewal of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by Silicon on which Borrower is or may in
any way be liable, and notice of any action taken by Silicon, unless expressly
required by this Agreement. Borrower hereby agrees to indemnify Silicon and its
affiliates, subsidiaries, parent, directors, officers, employees, agents, and
attorneys, and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including reasonable attorneys' fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or any
relationship or agreement between Silicon and Borrower, or any other matter,
relating to Borrower or the Obligations; provided that this indemnity shall not
extend to damages proximately caused by the indemnitee's own gross negligence or
willful misconduct. Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full force
and effect.

     9.9  NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.

     9.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.

     9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.

     9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and all present and future documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower, enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce Silicon's security interest in, the Collateral; and
otherwise represent Silicon in any litigation relating to Borrower. In
satisfying Borrower's obligation hereunder to reimburse Silicon for attorneys'
fees, Borrower may, for convenience, issue checks directly to Silicon's
attorneys, Levy, Small & Lallas, but Borrower acknowledges and agrees that Levy,
Small & Lallas is representing only Silicon and not Borrower in connection with
this Agreement. If either Silicon or Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of,

                                      -13-

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execution upon or defense of any order, decree, award or judgment.  All
attorney's fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of Borrowers's Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.

     9.13  BENEFIT OF AGREEMENT.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void.  No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.

     9.14  JOINT AND SEVERAL LIABILITY.  If Borrower consists of more than one
Person, their liability shall be joint and several,and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.

     9.15  LIMITATION OF ACTIONS.  Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement or any
other Loan Document, or any other transaction contemplated hereby or thereby or
relating hereto or thereto, or any other matter, cause or thing whatsoever,
occurred, done, omitted or suffered to be done by Silicon, its directors,
officers, employees, agents, accountants or attorneys, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within one year after the
first act, occurrence or omission upon which such claim or cause of action, or
any part thereof, is based, and the service of a summons and complaint on an
officer of Silicon, or on any other person authorized to accept service on
behalf of Silicon, within thirty (30) days thereafter.  Borrower agrees that
such one-year period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action.  The one-year period
provided herein shall not be waived, tolled, or extended except by the written
consent of Silicon in its sole discretion.  This provision shall survive any
termination of this Loan Agreement or any other Loan Document.

     9.16  PARAGRAPH HEADINGS; CONSTRUCTION.  Paragraph headings are only used
in this agreement for convenience.  Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement.  This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Silicon or Borrower under any rule of construction or otherwise.

     9.17  GOVERNING LAW; JURISDICTION; VENUE.  This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California.  As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Clara County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.

                                      -14-

<PAGE>

SILICON VALLEY BANK                         LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

     9.18  MUTUAL WAIVER OF JURY TRIAL.  BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

BORROWER:                                    SILICON:

  QUINTON CARDIOLOGY SYSTEMS, INC.             SILICON VALLEY BANK

  BY  /s/ Michael Matysik                      BY  /s/ Silicon Valley Bank
      -----------------------------                ---------------------------
      PRESIDENT OR VICE PRESIDENT              TITLE
                                                   ---------------------------
  BY  /s/ Tim Way
      -----------------------------
      SECRETARY OR ASS'T SECRETARY

Borrower:

  QUINTON, INC.

  BY  /s/ Michael Matysik
      -----------------------------
      PRESIDENT OR VICE PRESIDENT

  BY  /s/ Tim Way
      -----------------------------
      SECRETARY OR ASS'T SECRETARY

                                      -15-

<PAGE>
SILICON VALLEY BANK

                                  SCHEDULE TO

                          LOAN AND SECURITY AGREEMENT

BORROWER: QUINTON CARDIOLOGY SYSTEMS, INC.
          QUINTON, INC.

ADDRESS:  3303 MONTE VILLA PARKWAY
          BOTHELL, WA 98021

DATE:     DECEMBER 30, 2002

This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.

--------------------------------------------------------------------------------

1.  CREDIT LIMIT
    (Section 1.1):

          An amount not to exceed the lesser of a total of $12,000,000 at any
          one time outstanding (the "Maximum Credit Limit"), or the sum of (a)
          and (b) below:

               (a) 80% (an "Advance Rate") of the amount of Borrower's
                   Eligible Accounts (as defined in Section 8 above), plus

               (b) an amount not to exceed to lesser of:

                   (1)   20% (an "Advance Rate") of the value of
                         Borrower's Eligible Inventory (as defined in Section
                         8 above), calculated at the lower of cost or market
                         value and determined on a weighted average basis;
                         or

                   (2)   an amount equal to 30% (an "Advance Rate") of
                         the Borrower's Eligible Receivables (as defined in
                         Section 8 above); or

                   (3)   $2,500,000.

          Silicon may, from time to time, modify the Advance Rates, in its good
          faith business judgment, upon notice to the Borrower, based on changes
          in collection experience with respect to Accounts, its evaluation of
          the Inventory or other issues or factors relating to the Accounts,
          Inventory or other Collateral. Silicon shall have the right, in its
          good faith business judgment to have appraisals of the orderly
          liquidation value of the Eligible Inventory done periodically by an

                                      -1-

<PAGE>
SILICON VALLEY BANK                      SCHEDULE OF LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

                              appraiser acceptable to Silicon, in order to
                              assist it in determining Advance Rates.

                              Loans will be made to each Borrower based on the
                              Eligible Receivables and Eligible Inventory of
                              each Borrower, subject to the Maximum Credit Limit
                              set forth above for all Loans to all Borrowers
                              combined.

LETTER OF CREDIT SUBLIMIT
(Section 1.6):                $500,000.

CASH MANAGEMENT
SERVICES AND RESERVES:        Borrower may use up to $500,000 of Loans available
                              hereunder for Silicon's Cash Management Services
                              (as defined below), including, merchant services,
                              business credit card, ACH and other services
                              identified in the cash management services
                              agreement related to such service (the "Cash
                              Management Services"). Silicon may, in its sole
                              discretion, reserve against Loans which would
                              otherwise be available hereunder such sums as
                              Silicon shall determine in its good faith business
                              judgment in connection with the Cash Management
                              Services, and Silicon may charge to Borrower's
                              Loan account, any amounts that may become due or
                              owing to Silicon in connection with the Cash
                              Management Services. Borrower agrees to execute
                              and deliver to Silicon all standard form
                              applications and agreements of Silicon in
                              connection with the Cash Management Services, and
                              without limiting any of the terms of such
                              applications and agreements, Borrower will pay all
                              standard fees and charges of Silicon in connection
                              with the Cash Management Services. The Cash
                              Management Services shall terminate on the
                              Maturity Date.

--------------------------------------------------------------------------------

2. INTEREST.

     INTEREST RATE (Section 1.2):

                              A rate equal to the "Prime Rate" in effect from
                              time to time, plus 1.50% per annum. The foregoing
                              interest rate shall be reduced by 0.50% per annum
                              at such time as, and for so long as, Borrower has
                              a Funded Debt to EBITDA ratio (as defined below)
                              between 1.0 and 1.75. The foregoing interest rate
                              shall be reduced by an additional 0.50% per annum
                              at such time as, and for so long as, Borrower has
                              a Funded Debt to EBITDA ratio equal to or less
                              than 1.0. The foregoing rate reduction(s) shall be
                              effective on the first day of the month
                              immediately following Silicon's receipt of the
                              financial statements showing, to Silicon's
                              satisfaction in its good faith business judgment,
                              that Borrower is entitled to such rate
                              reduction(s) (See Example

                                      -2-
<PAGE>
SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

          below). If the interest rate is so reduced, based on financial
          statements as of a certain date and thereafter Borrower's Funded Debt
          to EBITDA ratio is no longer less than 1.0, then the interest rate
          shall be increased by 0.50% per annum, and the interest rate shall be
          increased by an additional 0.50% per annum if Borrower's Funded Debt
          to EBITDA ratio is no longer less than 1.75, which rate increase(s)
          shall go into effect on the first day of the month immediately
          following Silicon's receipt of the financial statements showing that
          Borrower is no longer entitled to the rate reduction(s). Such
          reduction(s) and increase(s) may be made throughout the term of this
          Agreement.

          Notwithstanding the foregoing, in no event shall an interest rate
          reduction go into effect if, at the date it is to go into effect, a
          Default or Event of Default has occurred and is continuing.

          Interest shall be calculated on the basis of a 360-day year for the
          actual number of days elapsed. "Prime Rate" means the rate announced
          from time to time by Silicon as its "prime rate;" provided that the
          "Prime Rate" in effect on any day shall not be less than 4.25% per
          annum; it is a base rate upon which other rates charged by Silicon are
          based, and it is not necessarily the best rate available at Silicon.
          The interest rate applicable to the Obligations shall change on each
          date there is a change in the Prime Rate.

          For purposes of the foregoing, "Funded Debt to EBITDA" shall mean the
          ratio of (a) all of Borrower's debt funded by third parties (exclusive
          of accruals or accounts payable) plus the amount of all outstanding
          Loans plus the face amount of all outstanding Letters of Credit plus
          the amount of all Reserves, to (b) Borrower's EBITDA (as defined
          below) on an annualized basis, calculated on a rolling three month
          basis. For the purposes hereof, "EBITDA" shall mean, on a consolidated
          basis, Borrower's earnings before interest, taxes, depreciation and
          other non-cash amortization expenses and other non-cash expenses of
          Borrower, determined in accordance with generally accepted accounting
          principles, consistently applied.

          As an example of the Funded Debt to EBITDA ratio, if the amount of
          Funded Debt is $5,000,000 and Borrower's EBITDA for October 2002 is
          $500,000, for November 2002 is $500,000 and for December 2002 is
          $1,000,000, the Funded Debt to EBITDA ratio for December 2002 would be
          0.625 calculated as follows: (i) $5,000,000 (the Funded Debt) divided
          by (ii) $8,000,000 (the sum of Borrower's October 2002, November 2002
          and December 2002 EBITDA on an annualized basis (i.e., multiplied by
          4)). In order to calculate the Funded Debt to EBITDA ratio for January
          2003, the EBITDA portion will be calculated by adding the Borrower's
          EBITDA for November 2002, December 2002 and January 2003 and
          multiplying such sum by 4, and any interest rate adjustment due to the
          Funded Debt to EBITDA ratio would go into effect March 1, 2003
          assuming Borrower has provided

                                      -3-
<PAGE>
SILICON VALLEY BANK                      SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

                               Silicon with the necessary financial statements
                               when required as provided for herein.

     MINIMUM MONTHLY
     INTEREST (Section 1.2):   $9,000 per month

--------------------------------------------------------------------------------

3. FEES (Section 1.4):

     Loan Fee:                 $150,000 payable as follows: (i) $90,000,
                               payable concurrently herewith and (ii) $60,000
                               payable on or before the first anniversary of
                               this Agreement.

     Collateral Monitoring
     Fee:                      $1,000, per month, payable in arrears (prorated
                               for any partial month at the beginning and at
                               termination of this Agreement).

     Unused Line Fee:          In the event, in any calendar month (or portion
                               thereof at the beginning and end of the term
                               hereof), the sum of (i) the average daily
                               principal balance of the Loans outstanding during
                               the month and (ii) the face amount of any
                               outstanding Letters of Credit is less than the
                               amount of the Maximum Credit Limit, Borrower
                               shall pay Silicon an unused line fee in an amount
                               equal to 0.50% per annum on the difference
                               between the amount of the Maximum Credit Limit
                               and the sum of (i) the average daily principal
                               balance of the Loans outstanding during the month
                               and (ii) the face amount of any Letters of
                               Credit, computed on the basis of a 360-day year,
                               which unused line fee shall be computed and paid
                               monthly, in arrears, on the first day of the
                               following month.

--------------------------------------------------------------------------------

4. MATURITY DATE
   (Section 6.1):              Two years from the date of this Agreement.

--------------------------------------------------------------------------------

5. FINANCIAL COVENANTS
   (Section 5.1):              Borrower shall, on a consolidated basis, comply
                               with each of the following covenants. Compliance
                               shall be determined as of the end of each month,
                               except as otherwise specifically provided below:

     MINIMUM TANGIBLE
     NET WORTH:                Borrower shall maintain a Tangible Net Worth of
                               not less than $4,000,000 (the "Tangible Net Worth
                               Base") plus (i) 100% of all consideration
                               received after the date hereof for equity
                               securities and subordinated debt of the
                               Borrower, plus (ii) 50% of the Borrower's net
                               income in each fiscal quarter ending after the
                               date hereof. Increases in the Minimum Tangible
                               Net Worth Covenant based on consideration
                               received for equity securities and subordinated
                               debt of the Borrower shall be effective as of the
                               end of the month in which such consideration is
                               received, and shall continue effective
                               thereafter.

                                      -4-
<PAGE>
SILICON VALLEY BANK                     SCHEDULE TO LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

               Increases in the Minimum Tangible Net Worth Covenant based on net
               income shall be effective on the last day of the fiscal quarter
               in which said net income is realized, and shall continue
               effective thereafter. In no event shall the Minimum Tangible Net
               Worth Covenant be decreased.

               The Tangible Net Worth Base set forth above is based on the pro
               forma closing balance sheet as of December 31, 2002, provided to
               Silicon by Borrower, which showed a net worth of $7,872,000. In
               the event the net worth of Borrower immediately after giving
               effect to the Merger referred to above, is more than $7,872,000,
               the Tangible Net Worth Base will be increased dollar for dollar
               in an amount equal to the amount by which such net worth exceeds
               $7,872,000. In no event, however, shall the Tangible Net Worth
               Base be decreased.

DEFINITIONS.   For purposes of the foregoing financial covenants, the following
               term shall have the following meaning:

               "Current assets", "current liabilities" and "liabilities" shall
               have the meaning ascribed thereto by GAAP.

               "Tangible Net Worth" shall mean the excess of total assets over
               total liabilities, determined in accordance with GAAP, with the
               following adjustments:

                  (A) there shall be excluded from assets: (i) notes, accounts
                  receivable and other obligations owing to Borrower from its
                  officers or other Affiliates, and (ii) all assets which would
                  be classified as intangible assets under GAAP, including
                  without limitation goodwill, licenses, patents, trademarks,
                  trade names, copyrights, capitalized software and
                  organizational costs, licenses and franchises and Borrower's
                  shareholder's interest in Sci-Image;

                  (B) there shall be excluded from liabilities: all indebtedness
                  which is subordinated to the Obligations under a subordination
                  agreement in form specified by Silicon or by language in the
                  instrument evidencing the indebtedness which Silicon agrees in
                  writing is acceptable to Silicon in its good faith business
                  judgment.

-------------------------------------------------------------------------------

6.  REPORTING.
     (Section 5.3):

          Borrower shall provide Silicon with the following:

          1.  Weekly transaction reports and schedules of collections, on
              Silicon's standard form.

          2.  Monthly accounts receivable agings, aged by invoice date, within
              fifteen days after the end of each month.

                                      -5-

<PAGE>
SILICON VALLEY BANK                    SCHEDULE TO LOAN AND SECURITY AGREEMENT
------------------------------------------------------------------------------

     3.   Monthly accounts payable agings, aged by invoice date, and outstanding
          or held check registers, if any, within fifteen days after the end of
          each month.

     4.   Monthly reconciliations of accounts receivable agings (aged by invoice
          date), transaction reports, and general ledger, within fifteen days
          after the end of each month.

     5.   Monthly perpetual inventory reports for the Inventory valued on a
          first-in, first-out basis at the lower of cost or market (in
          accordance with GAAP) or such other inventory reports as are requested
          by Silicon in its good faith business judgment, all within fifteen
          days after the end of each month.

     6.   Monthly unaudited financial statements, as soon as available, and in
          any event within thirty days after the end of each month.

     7.   Monthly Compliance Certificates, within thirty days after the end of
          each month, in such form as Silicon shall reasonably specify, signed
          by the Chief Financial Officer of Borrower, certifying that as of the
          end of such month Borrower was in full compliance with all of the
          terms and conditions of this Agreement, and setting forth calculations
          showing compliance with the financial covenants set forth in this
          Agreement and such other information as Silicon shall reasonably
          request, including, without limitation, a statement that at the end of
          such month there were no held checks.

     8.   Quarterly unaudited financial statements, as soon as available, and in
          any event within forty-five days after the end of each fiscal quarter
          of Borrower.

     9.   Annual operating budgets (including income statements, balance sheets
          and cash flow statements, by month) for the upcoming fiscal year of
          Borrower within thirty days prior to the end of each fiscal year of
          Borrower.

     10.  Annual financial statements, as soon as available, and in any event
          within 120 days following the end of Borrower's fiscal year, certified
          by, and with an unqualified opinion of, independent certified public
          accountants acceptable to Silicon.

                                      -6-

<PAGE>
SILICON VALLEY BANK                     SCHEDULE TO LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------

7. BORROWER INFORMATION:

          Borrower represents and warrants that the information set forth in the
          Representations and Warranties of the Borrower dated December 12,
          2002, previously submitted to Silicon (the "Representations") is true
          and correct as of the date hereof.

-------------------------------------------------------------------------------

8. ADDITIONAL PROVISIONS

          (1)  BANKING RELATIONSHIP. Borrower shall at all times maintain its
               primary banking relationship with Silicon, including, without
               limitation, its primary operating and investment accounts. As to
               any Deposit Accounts and investment accounts maintained with
               another institution, Borrower shall cause such institution,
               within 30 days after the date of this Agreement, to enter into a
               control agreement in form acceptable to Silicon in its good faith
               business judgment in order to perfect Silicon's first-priority
               security interest in said Deposit Accounts and investment
               accounts.

          (2)  SUBORDINATION OF INSIDE DEBT.  All present and future
               indebtedness of Borrower to its officers, directors and
               shareholders ("Inside Debt") shall, at all times, be
               subordinated to the Obligations pursuant to a subordination
               agreement on Silicon's standard form. Borrower represents and
               warrants that there is no Inside Debt presently outstanding,
               expect for the following: NONE. Prior to incurring any Inside
               Debt in the future, Borrower shall cause the person to whom such
               Inside Debt will be owed to execute and deliver to Silicon a
               subordination agreement on Silicon's standard form.

                                      -7-

<PAGE>
SILICON VALLEY BANK                 SCHEDULE TO LOAN AND SECURITY AGREEMENT
---------------------------------------------------------------------------

Borrower:                             Silicon:

QUINTON CARDIOLOGY SYSTEMS, INC.      SILICON VALLEY BANK

By /s/ Michael Matysik                By /s/ Silicon Valley Bank
   ----------------------------       ------------------------------
   President or Vice President        Title

By /s/ Tim Way
   ----------------------------
   Secretary or Ass't Secretary

Borrower:

QUINTON, INC.

By /s/ Michael Matysik
   ----------------------------
   President or Vice President

By /s/ Tim Way
   ----------------------------
   Secretary or Ass't Secretary

                                      -8-

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