<PAGE>   1

                                                                   EXHIBIT 10.31

                               SECOND AMENDMENT TO
                       AMENDED AND RESTATED LOAN AGREEMENT


        THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the
"Amendment") is made this 15th day of October, 1998, by and among BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION doing business as SEAFIRST BANK,
successor by merger to Seattle-First National Bank, a national banking
association ("Seafirst"), U.S. BANK NATIONAL ASSOCIATION, a national banking
association ("U.S. Bank") (each individually a "Lender" and collectively the
"Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION doing
business as SEAFIRST BANK, successor by merger to Seattle-First National Bank, a
national banking association, as agent for Lenders (the "Agent"), SPACELABS
MEDICAL, INC., a California corporation (the "Borrower") and SPACELABS MEDICAL,
INC., a Delaware corporation (the "Guarantor").

                                    RECITALS

        A. Borrower, Seafirst, Guarantor and Agent are parties to that certain
Amended and Restated Loan Agreement dated as of July 16, 1997, as amended by
that certain First Amendment to Amended and Restated Loan Agreement dated as of
October 16, 1997 (as the same may be amended, modified or extended from time to
time the "Loan Agreement") and the related Loan Documents described therein.
Capitalized terms used herein and not otherwise defined shall have the meanings
given in the Loan Agreement.

        B. Under an Assignment and Assumption Agreement dated as of January 8,
1998 (the "Assignment Agreement"), Seafirst assigned to U.S. Bank a portion of
Seafirst's rights under the Loan Agreement with respect to Seafirst's Burdick
Loans and Revolving Loans and U.S.
Bank accepted such assignment.

        C. Borrower has requested that the Loan Agreement be amended to make
additional currency options available to Borrower. Lenders and Agent are
prepared to amend the Loan Agreement to permit Borrower to utilize the Revolving
Commitment for borrowing in Offshore Currencies (as each such term is defined in
the Loan Agreement, as amended hereby) on the terms and conditions set forth
below.

        NOW, THEREFORE, the parties agree as follows:

                                    AGREEMENT

        1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the meaning given in the Loan Agreement.

        2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is amended as
follows:

               (a) AMENDMENT TO DEFINITIONS. In Section 1.1, amendments are made
to the definitions, as follows:

                      (1) AGREED ALTERNATIVE CURRENCY. The definition of "Agreed
Alternative Currency" is added to read as follows:

                        "Agreed Alternative Currency" has the meaning given in
Section 2.16(e).

                      (2) APPLICABLE CURRENCY. The definition of "Applicable
Currency" is added to read as follows:



<PAGE>   2

                      "Applicable Currency" means, as to any particular payment
        or Loan, Dollars or the Offshore Currency in which it is denominated or
        is payable.

                      (3) APPLICABLE INTEREST PERIOD. The following phrase is
added at the end of the last paragraph of the definition of "Applicable Interest
Period:"

        , provided, further, that no Applicable Interest Period for any Offshore
        Currency Loan may be selected if it extends beyond the last day of the
        Revolving Commitment Period.

                      (4) BANKING DAYS. The definition of "Banking Days" is
added to read as follows:

                      "Banking Day" means any day other than a Saturday, Sunday
        or other day on which commercial banks in New York City, New York, San
        Francisco, California or Seattle, Washington are authorized or required
        by law to close and (i) with respect to disbursements and payments in
        Dollars, a day on which dealings are carried on in the applicable
        offshore Dollar interbank market, and (ii) with respect to any
        disbursements and payments in and calculations pertaining to any
        Offshore Currency Loan, a day on which commercial banks are open for
        foreign exchange business in London, England, and on which dealings in
        the relevant Offshore Currency are carried on in the applicable offshore
        foreign exchange interbank market in which disbursement of or payment in
        such Offshore Currency will be made or received hereunder.

                      (5) BUSINESS DAY. The definition of "Business Day" is
amended and restated to read as follows:

                      "Business Day" means any day other than a Saturday, Sunday
        or other day on which commercial banks in Seattle, Washington are
        authorized or required by law to close and, if the applicable Business
        Day relates to any LIBOR Rate Loan, means a London Business Day, and if
        the applicable Business Day relates to any Offshore Currency Loan, means
        a Banking Day.

                      (6) COMPUTATION DATE. The definition of "Computation Date"
is added to read as follows:

                      "Computation Date" has the meaning given in Section
2.16(a).

                      (7) DOLLAR EQUIVALENT. The definition of "Dollar
Equivalent" is added to read as follows:

                      "Dollar Equivalent" means, at any time, (i) as to any
        amount denominated in Dollars, the amount thereof at such time, and (ii)
        as to any amount denominated in an Offshore Currency, the equivalent
        amount in Dollars as determined by the Agent at such time on the basis
        of the Spot Rate for the purchase of Dollars with such Offshore Currency
        on the most recent Computation Date provided for in subsection 2.16(a).

                      (8) DOLLARS. The definition of "Dollars" is added to read
as follows:

                      "Dollars", "dollars" and "$" each mean lawful money of the
        United States of America.

                      (9) EURODOLLAR RESERVES. The definition of "Eurodollar
Reserves" is added to read as follows:

                      "Eurodollar Reserves" means a fraction (expressed as a
        decimal), the numerator of which is the number one and the denominator
        of which is the number one minus the aggregate 


                                       
<PAGE>   3

        of the maximum reserve percentages (including, without limitation, any
        special, supplemental, marginal or emergency reserves) expressed as a
        decimal established by the Board of Governors of the Federal Reserve
        System or any other banking authority to which Lenders are subject for
        Eurocurrency Liability (as defined in Regulation D of such Board of
        Governors). It is agreed that for purposes hereof, each Loan (or portion
        thereof) accruing interest at the IBOR Rate or the LIBOR Rate shall be
        deemed to constitute a Eurocurrency Liability and to be subject to the
        reserve requirements of Regulation D, without benefit of credit or
        proration, exemptions or offsets which might otherwise be available to
        Lenders from time to time under such Regulation D. Eurodollar Reserves
        shall be adjusted automatically on and as of the effective date of any
        change in any reserve percentage and shall apply to Applicable Interest
        Periods commencing after the effective date of change.

                      (10) FX TRADING OFFICE. The definition of "FX Trading
Office" is added to read as follows:

                      "FX Trading Office" means the Foreign Exchange Trading
        Center, Seattle, Washington, of Seafirst, or such other of Seafirst's
        offices as Seafirst may designate from time to time.

                      (11) IBOR RATE. The definition of "IBOR Rate" is amended
and restated to read as follows:

                      "IBOR Rate" means, for any Applicable Interest Period, an
        interest rate per annum equal to the product of (i) the Offshore Rate;
        and (ii) the Eurodollar Reserves in effect on the first day of such
        Applicable Interest Period.

        As used herein the "Offshore Rate" means the rate of interest per annum
        determined by Agent as the rate at which deposits in the Applicable
        Currency in the approximate amount of such Loan for such Applicable
        Interest Period would be offered by Seafirst's Grand Cayman Branch,
        Grand Cayman B.W.I. (or such other office as may be designated for such
        purpose by Seafirst), to major banks in the offshore dollar interbank
        market at their request at approximately 11:00 a.m. (New York City time)
        on the first date of the proposed Applicable Interest Period.

                      (12) LIBOR RATE. The first paragraph of the definition of
"LIBOR Rate" is amended and restated to read as follows:

                      "LIBOR Rate" means, for any Applicable Interest Period, an
        interest rate per annum equal to the product of (i) the Euro-dollar Rate
        in effect for such Applicable Interest Period and (ii) the Eurodollar
        Reserves in effect on the first day of such Applicable Interest Period.

                      (13) NOTICE OF BORROWING. The definition of "Notice of
Borrowing" is amended and restated to read as follows:

                      "Notice of Borrowing" means a request for a Loan from
        Borrower delivered to Agent and containing the information set forth in
        Section 2.4 which shall be delivered prior to 11:00 a.m. (Seattle time)
        (i) on the requested date of borrowing of a Base Rate Loan or Reference
        Rate Loan, (ii) at least three (3) Business Days before the requested
        date of borrowing in the case of a LIBOR Rate Loan denominated in
        Dollars, and (iii) at least four (4) Business Days before the requested
        date of borrowing in the case of an Offshore Currency Loan. Requests for
        borrowing received after the designated hour will be deemed received on
        the next succeeding Business Day. A Notice of Borrowing given in respect
        of a borrowing comprised of Offshore Currency Loans shall be given in
        writing in the form of Exhibit H attached hereto. In all other cases, a
        Notice of Borrowing may be given in writing or telephonically (but if
        given telephonically, shall be 



                                       
<PAGE>   4

        confirmed in writing prior to 1:00 p.m. (Seattle time) on the first day
        of the Applicable Interest Period).

                      (14) OFFSHORE CURRENCY. The definition of "Offshore 
Currency" is added to read as follows:

                      "Offshore Currency" means at any time English pounds
        sterling, Canadian dollars, French francs, Deutsche Mark, Japanese yen
        and any Agreed Alternative Currency.

                      (15) OFFSHORE CURRENCY LOAN. The definition of "Offshore 
Currency Loan" is added to read as follows:

                      "Offshore Currency Loan" means any Offshore Rate Loan
        denominated in an Offshore Currency.

                      (16) OVERNIGHT RATE. The definition of "Overnight Rate" is
added to read as follows:

                      "Offshore Overnight Rate" means, for any day, the rate of
        interest per annum at which overnight deposits in the Applicable
        Currency, in an amount approximately equal to the amount with respect to
        which such rate is being determined, would be offered for such day by
        Seafirst's London Branch to major banks in the London or other
        applicable offshore interbank market.

                      (17) REVOLVING IBOR RATE. The definition of "Revolving
IBOR Rate" is amended and restated to read as follows:

                      "Revolving IBOR Rate" means, for any Applicable Interest
        Period, (i) prior to the Revolving Conversion Date, an interest rate per
        annum equal to the IBOR Rate for the Applicable Currency for such
        Applicable Interest Period plus fifty (50) basis points, and (ii) on and
        after the Revolving Conversion Date, an interest rate per annum equal to
        the IBOR Rate for the Applicable Currency for such Applicable Interest
        Period plus sixty five (65) basis points.

                      (18) SAME DAY FUNDS. The definition of "Same Day Funds" is
added to read as follows:

                      "Same Day Funds" means (i) with respect to disbursements
        and payments in Dollars, immediately available funds, and (ii) with
        respect to disbursements and payments in an Offshore Currency, same day
        or other funds as may be determined by Agent to be customary in the
        place of disbursement or payment for the settlement of international
        banking transactions in the relevant Offshore Currency.

                      (19) SPOT RATE. The definition of "Spot Rate" is added to
read as follows:

                      "Spot Rate" means for a currency, the rate quoted by
        Seafirst as the spot rate for the purchase by Seafirst of such currency
        with another currency through its FX Trading Office at approximately
        8:00 a.m. (Seattle time) on the date which the foreign exchange
        computation is made.

               (b) AMENDMENT TO SECTION 1.4. Section 1.4 is hereby added as
follows:

               SECTION 1.4 CURRENCY EQUIVALENTS. For all purposes of this
        Agreement (but not for purposes of the preparation of any financial
        statements delivered pursuant hereto), the equivalent 



                                       
<PAGE>   5

        in any Offshore Currency or other currency of an amount in Dollars, and
        the equivalent in Dollars of an amount in any Offshore Currency or other
        currency, shall be determined at the Spot Rate.

               (c) AMENDMENTS TO SECTION 2.2. The first paragraph of Section 2.2
is hereby amended and restated as follows:

               SECTION 2.2 BURDICK LOANS. Each Lender severally agrees on the
        terms and conditions of this Agreement to make revolving loans in
        Dollars (the "Burdick Loans") to Borrower from time to time on Business
        Days during the Burdick Commitment Period in an aggregate principal
        amount not exceeding at any one time the principal amount set forth
        opposite such Lender's name below (such Lender's "Burdick Commitment").

<TABLE>
<CAPTION>
               Lender                                     Commitment
               ------                                     ----------
<S>                                                       <C>
               Seafirst Bank                              $21,000,000
               U.S. Bank                                  $ 9,000,000
                                                          -----------

                      Total                               $30,000,000
</TABLE>

               (d) AMENDMENTS TO SECTION 2.3. Section 2.3 is hereby amended and
restated as follows:

               SECTION 2.3 REVOLVING LOANS. Each Lender severally agrees on the
        terms and conditions of this Agreement to make revolving loans in
        Dollars and in Offshore Currencies (the "Revolving Loans") to Borrower
        from time to time on Business Days during the Revolving Commitment
        Period in an aggregate principal Dollar Equivalent amount not exceeding
        at any one time the principal amount set forth opposite such Lender's
        name below (such Lender's "Revolving Commitment"), provided that, after
        giving effect to any requested loan, aggregate principal Dollar
        Equivalent amount of all outstanding Offshore Currency Loans denominated
        in any single Offshore Currency shall not exceed $10,000,000.

<TABLE>
<CAPTION>
               Lender                                     Commitment
               ------                                     ----------
<S>                                                       <C>

               Seafirst Bank                              $24,000,000
               U.S. Bank                                  $11,000,000
                                                          -----------

                      Total                               $35,000,000
</TABLE>

        The line of credit extended hereunder is a revolving line of credit and,
        subject to the terms and conditions hereof, Borrower may borrow, repay
        and reborrow up the maximum principal Dollar Equivalent amount of
        Thirty-five Million Dollars ($35,000,000) outstanding at any one time
        less any reductions therein pursuant to Section 2.5 (the "Total
        Revolving Commitment") at any time on or before the last day of the
        Revolving Commitment Period. Any Revolving Loans denominated in an
        Offshore Currency as of the last day of the Revolving Commitment Period
        shall, as of such date, be redenominated and converted into Base Rate
        Loans in Dollars with effect from such date. Agent will promptly notify
        Borrower and Lenders of any such redenomination and in such notice by
        Agent to each Lender, Agent will state the aggregate Dollar Equivalent
        amount of the redenominated Offshore Currency Loans and such Lender's
        Revolving Percentage Interest thereof.

               (e) AMENDMENTS TO SECTION 2.4. Section 2.4 is hereby amended and
restated as follows:



                                       
<PAGE>   6

               SECTION 2.4  MANNER OF BORROWING.

                      (a) GENERALLY. Borrower shall give Agent the required
        Notice of Borrowing specifying (i) the date of the borrowing, (ii)
        whether such borrowing is a Burdick Loan or a Revolving Loan and the
        amount thereof, which shall be in integral multiples of Ten Thousand
        Dollars ($10,000) and not less than One Hundred Thousand Dollars
        ($100,000), and (iii) in the case of a borrowing comprised of Offshore
        Currency Loans, the Applicable Currency. Such notice shall be
        irrevocable and shall be deemed to constitute a representation and
        warranty by Borrower that as of the date of the notice the statements
        set forth in Article 4 hereof are true and correct and that no Default
        or Event of Default has occurred and is continuing or will occur as a
        result of making the Burdick Loan or Revolving Loan.

                      (b) LENDER NOTIFICATION. Upon receipt of the Notice of
        Borrowing, Agent will promptly notify each Lender by telephone
        (confirmed immediately by telex, facsimile transmission or cable),
        telex, facsimile transmission, or cable thereof, and, in the case of a
        Burdick Loan, such Lender's Burdick Percentage Interest of the
        borrowing, or, in the case of a Revolving Loan, such Lender's Revolving
        Percentage Interest of the borrowing. The Dollar Equivalent amount of
        any borrowing in an Offshore Currency will be determined by Agent for
        such Borrowing on the Computation Date therefor in accordance with
        subsection 2.16(a). In the case of a borrowing comprised of Offshore
        Currency Loans, such notice will provide the approximate amount of each
        Lender's Revolving Percentage Interest of the borrowing, and Agent will,
        upon the determination of Dollar Equivalent amount of such borrowing as
        specified in the Notice of Borrowing, promptly notify each Lender of the
        exact amount of such Lender's Revolving Percentage Interest of the
        borrowing.

                      (c) FUNDING OF LOANS. Each Lender, in the case of a
        Burdick Loan, shall before 12:00 noon (Seattle time) pay in Dollars the
        lesser of (i) such Lender's Burdick Percentage Interest of the aggregate
        principal amount of the requested borrowing identified in the Notice of
        Borrowing or (ii) the maximum amount such Lender is committed to advance
        pursuant to the terms of Section 2.2, or, in the case of a Revolving
        Loan, shall (A) in the case of a borrowing comprised of Loans in
        Dollars, before 12:00 noon (Seattle time) or (B) in the case of a
        borrowing comprised of Offshore Currency Loans, by such time as Agent
        may specify, pay in the requested currency the lesser of (i) such
        Lender's Revolving Percentage Interest of the aggregate principal amount
        of the requested borrowing identified in the Notice of Borrowing or (ii)
        the maximum amount such Lender is committed to advance pursuant to the
        terms of Section 2.3, in all cases in Same Day Funds to Agent at its
        Commercial Loan Processing Center, Seattle, Washington. Upon fulfillment
        to Agent's satisfaction of the applicable conditions set forth in
        Article 3, and after receipt by Agent of such funds, Agent will promptly
        make like funds available to Borrower in accordance with written
        instructions provided to Agent by Borrower.

               (f) AMENDMENT TO SECTION 2.5. In the first sentence of Section
2.5, the words "the then-outstanding principal balance of the Revolving Loans"
are hereby deleted and the words "the then-outstanding principal Dollar
Equivalent amount of the Revolving Loans" are substituted in their stead.

               (g) AMENDMENT TO SECTION 2.6. Subsection 2.6(c) is hereby amended
and restated as follows:

                      (c)  REVOLVING LOANS.

                             (1)  Borrower shall repay to Agent for the account
        of Lenders the principal amount of the Revolving Loans outstanding as of
        the last day of the Revolving Commitment Period (the "Revolving Loan
        Amount") in twenty (20) equal consecutive quarterly 



                                       
<PAGE>   7

        installments commencing the first LIBOR Business Day of October,
        January, April or July following the last day of the Revolving
        Commitment Period, whichever is earlier (the "Revolving Conversion
        Date"), and continuing on the first LIBOR Business Day of each January,
        April, July and October thereafter in an amount equal to one twentieth
        (1/20) of the Revolving Loan Amount and shall repay the balance of the
        principal outstanding of the Revolving Loans on or before the date which
        is five (5) years after the Revolving Conversion Date (the "Revolving
        Maturity Date").

                             (2) If, on any Computation Date Agent shall have
        determined that the aggregate Dollar Equivalent principal amount of all
        Revolving Loans then outstanding exceeds the Total Revolving Commitment
        by more than $1,500,000, due to a change in applicable rates of exchange
        between Dollars and Offshore Currencies, then Agent shall give notice to
        Borrower of such determination, and Borrower agrees thereupon to make
        prepayments of Revolving Loans such that, after giving effect to such
        prepayment the aggregate Dollar Equivalent amount of all Revolving Loans
        does not exceed the Total Revolving Commitment. If Borrower shall pay
        any LIBOR Loan pursuant to this subsection 2.6(c) prior to the end of
        the Applicable Interest Period, Borrower shall include with such payment
        any amount payable pursuant to Section 2.9 and applicable to the payment
        of such LIBOR Loan prior to the termination of the Applicable Interest
        Period.

               (h) AMENDMENT TO SECTION 2.7. The second sentence of Section 2.7
is hereby deleted and the following substituted in its stead:

        If and to the extent that such Lender shall not have so made such
        portion available to Agent in Same Day Funds and Agent in such
        circumstances shall have advanced such portion to Borrower, such Lender
        agrees to pay to Agent forthwith on demand such corresponding amount,
        together with interest thereon for each day from the date such amount is
        made available to borrower until the date such amount is repaid to Agent
        at the Federal Funds Rate or, in the case of any borrowing consisting of
        Offshore Currency Loans, the Offshore Overnight Rate.

               (i) AMENDMENTS TO SECTION 2.8. In Section 2.8, amendments are
made to subsections (c), (d) and (e) as follows:

                      (1) SELECTION OF ALTERNATIVE RATES. The first sentence of
subsection 2.8(c)(1) is hereby deleted and the following substituted in its
stead:

        Borrower may, subject to the requirements of this Section 2.8(c), on
        same-day notice (in the case of a Loan denominated in Dollars and a
        selection of an Applicable IBOR Rate, the Overnight Rate, or the Quoted
        Rate), three (3) London Business Days' prior notice (in the case of a
        selection of an Applicable LIBOR Rate) or four (4) Banking Days' prior
        notice (in the case of an Offshore Currency Loan) elect to have interest
        accrue on any Loan denominated in Dollars (or any portion thereof) at an
        Applicable LIBOR Rate, and in the case of any Burdick Loan or any
        Revolving Loan denominated in Dollars (or any portion thereof) at the
        Overnight Rate, and in the case of any Burdick Loan or any Revolving
        Loan (or any portion thereof) at an Applicable IBOR Rate, and in the
        case of the Term Loan at the Quoted Rate, in each case for an Applicable
        Interest Period.

                      (2) FAILURE TO SELECT AN ALTERNATIVE RATE. The following
sentence is hereby added at the end of subsection 2.8(c)(4):

        In the absence of a request for the application of an applicable IBOR
        Rate to be applicable to Offshore Currency Loans prior to the fourth
        Business Day in advance of the expiration date of the current Applicable
        Interest Period applicable thereto as provided in subsection 2.8(c)(i),
        or if a Default or Event of Default shall have occurred and be
        continuing, subject to the provisions of 



                                       
<PAGE>   8

        subsection 2.16(d), Borrower shall be deemed to have elected to continue
        such Offshore Currency Loans on the basis of an Applicable Interest
        Period of one month.

                      (3) FAILURE TO TAKE A LOAN. The words "and any charges
relating to any Offshore Currency Loans" are hereby added at the end of the
first sentence of subsection 2.8(c)(6).

                      (4) APPLICABLE DAYS FOR COMPUTATION OF INTEREST. The
following sentence is hereby added at the end of subsection 2.8(d):

        Notwithstanding the foregoing to the contrary, computations of interest
        in respect of Offshore Currency Loans denominated in English pounds
        sterling and Canadian dollars shall be made on the basis of a year of
        365/366 days, in each case, for the actual number of days (including the
        first day but excluding the last day) occurring in the period for which
        such interest is payable.

                      (5) UNAVAILABLE IBOR OR LIBOR RATES. Subsection 2.8(e) is
hereby amended and restated as follows:

                      (e) UNAVAILABLE IBOR OR LIBOR RATES. If, for any reason,
        any Lender determines that a fair and adequate means does not exist for
        establishing a particular IBOR Rate or LIBOR Rate or that the making or
        continuation of any IBOR Rate Loan or LIBOR Rate Loan by such Lender has
        become unlawful, then such Lender may give notice of that fact to Agent
        and Borrower and such determination shall become conclusive and binding
        absent manifest error. After such notice has been given and until Lender
        notifies Agent and Borrower that the circumstances giving rise to such
        notice no longer exist, (i) such IBOR Rate or LIBOR Rate, as the case
        may be, shall no longer be available in respect of Loans, (ii) Borrower
        shall not be entitled to request a borrowing comprised of Offshore
        Currency Loans denominated in an Offshore Currency for which an IBOR
        Rate is unavailable, and (iii) any outstanding Offshore Currency Loans
        denominated in an Offshore Currency for which an IBOR Rate is
        unavailable, shall, as of the last day of the Applicable Interest Period
        with respect to any such Offshore Currency Loans, be redenominated and
        converted into Base Rate Loans in Dollars with effect from such date.
        Any subsequent request by Borrower to have interest accrue at such an
        IBOR Rate or LIBOR Rate shall be deemed to be a request for interest to
        accrue at the Base Rate. If the Lender shall thereafter determine to
        permit borrowing at such IBOR Rate or LIBOR Rate, as the case may be,
        such Lender shall notify Agent and Borrower in writing of that fact, and
        Borrower shall then once again become entitled to (i) request that such
        rate apply to the Loans in accordance with subsection 2.8(c), and (ii)
        in the case of a notice restoring the availability of an IBOR Rate,
        request a borrowing comprised of Offshore Currency Loans in accordance
        with subsection 2.4(a).

                      (6) DETERMINATION OF INTEREST RATES AND EQUIVALENT
AMOUNTS. Subsection 2.8(g) is hereby added as follows:

                      (g) DETERMINATION OF INTEREST RATES AND EQUIVALENT
        AMOUNTS. Each determination of an interest rate or a Dollar Equivalent
        amount by Agent shall be conclusive and binding on Borrower and Lenders
        in the absence of manifest error. Agent will, at the request of Borrower
        or any Lender, deliver to Borrower or such Lender, as the case may be, a
        statement showing the quotations used by Agent in determining any
        interest rate or Dollar Equivalent amount.

               (j) AMENDMENT TO SECTION 2.9. The following sentence is hereby
added at the end of the fourth sentence of Section 2.9:

        If an Offshore Currency Loan is repaid prior to the end of the
        Applicable Interest Period, Borrower shall reimburse each Lender and
        hold each Lender harmless from any loss or expense 



                                       
<PAGE>   9

        which the Lender may sustain or incur as a consequence thereof,
        including, without limitation, any such loss or expense arising from the
        liquidation or reemployment of funds obtained by it to maintain its
        Offshore Currency Loans or from fees payable to terminate the deposits
        from which such funds were obtained or from any other charges relating
        its Offshore Currency Loans.

               (k) AMENDMENT TO SECTION 2.10. The first sentence of subsection
Section 2.10(b) is hereby amended and restated as follows:

        Each Lender is hereby authorized to record the date and amount of the
        Loans it makes, the Base Rate, the Overnight Rate, the Applicable IBOR
        Rate, Applicable LIBOR Rate or Quoted Rate, as applicable, the
        Applicable Currency, and the date and amount of each payment of
        principal and interest thereon on a schedule annexed to or kept in
        respect of any Note.

               (l) AMENDMENT TO SECTION 2.11. Subsection 2.11(a) is hereby
amended and restated as follows:

                      (a) All payments and prepayments of principal and interest
        on any Loan (other than an Offshore Currency Loan) and all other amounts
        payable hereunder by Borrower to Agent or any Lender shall be made by
        paying the same in Dollars, and all payments and prepayments of
        principal and interest on and any other amounts relating to any Offshore
        Currency Loan shall be made in the Offshore Currency in which such Loan
        is denominated or payable. All such payments shall be made in Same Day
        Funds to Agent at its Commercial Loan Processing Center, Seattle,
        Washington, and (i) in the case of any Dollar payments, not later than
        12:00 noon (Seattle time) on the date specified herein, and (ii) in the
        case of Offshore Currency payments, no later than such time on the dates
        specified herein as may be determined by Agent to be necessary for such
        payment to be credited on such date in accordance with normal banking
        procedures in the place of payment. If such payment is received after
        12:00 noon, or later than the time specified by Agent as provided in
        clause (ii) above (in the case of Offshore Currency payments) then it
        will be deemed received on the next Business Day.

               (m) AMENDMENT TO SECTION 2.13. The following sentence is hereby
added at the end of Subsection 2.13(a):

        For purposes of determining utilization of each Lender's Revolving
        Commitment in order to calculate the unused commitment fee due
        hereunder, the amount of any outstanding Offshore Currency Loan on any
        date shall be determined based upon the Dollar Equivalent amount as of
        the most recent Computation Date with respect to such Offshore Currency
        Loan.

               (n) AMENDMENT TO SECTION 2.16. Section 2.16 is hereby added as
follows:

               SECTION 2.16  OFFSHORE CURRENCY LOANS.

                      (a) DOLLAR EQUIVALENT AMOUNT. Agent will determine the
        Dollar Equivalent amount with respect to any (i) borrowing comprised of
        Offshore Currency Loans as of the requested date of such borrowing, (ii)
        outstanding Offshore Currency Loans as of the last Banking Day of each
        month, and (iii) outstanding Offshore Currency Loans as of any
        redenomination date pursuant to subsection 2.8(e) or this Section 2.16
        (each such date under clauses (i) through (iii) a "Computation Date").

                      (b) OFFSHORE CURRENCY UNAVAILABLE. In the case of a
        proposed borrowing comprised of Offshore Currency Loans, Lenders shall
        be under no obligation to make Offshore Currency Loans in the requested
        Offshore Currency as part of such borrowing if Agent has received notice
        from any Lender by 5:00 p.m. (Seattle time) four (4) Business Days prior
        to the 



                                       
<PAGE>   10

        day of such borrowing that such Lender cannot provide Revolving Loans in
        the requested Offshore Currency, in which event Agent will give notice
        to Borrower no later than 9:00 a.m. (Seattle time) on the third Business
        Day prior to the requested date of such borrowing that the borrowing in
        the requested Offshore Currency is not then available, and notice
        thereof also will be given promptly by Agent to Lenders. If Agent shall
        have so notified Borrower that any such borrowing in a requested
        Offshore Currency is not then available, Borrower may, by notice to
        Agent not later than 5:00 p.m. (Seattle time) four Business Days prior
        to the requested date of such borrowing, withdraw the Notice of
        Borrowing relating to such requested borrowing. If Borrower does so
        withdraw such Notice of Borrowing, the borrowing requested therein shall
        not occur and Agent will promptly so notify each Lender. If Borrower
        does not so withdraw such Notice of Borrowing, Agent will promptly so
        notify each Lender and such Notice of Borrowing shall be deemed to be a
        Notice of Borrowing that requests a borrowing comprised of Base Rate
        Loans in an aggregate amount equal to the amount of the originally
        requested borrowing as expressed in Dollars in the Notice of Borrowing;
        and in such notice by Agent to each Lender, Agent will state such
        aggregate amount of such borrowing in Dollars and such Lender's
        Revolving Percentage Interest thereof.

                      (c) OFFSHORE RATE UNAVAILABLE. In the case of a proposed
        continuation of Offshore Currency Loans for an additional Applicable
        Interest Period as provided in subsection 2.8(c)(i), Lenders shall be
        under no obligation to continue such Offshore Currency Loans if Agent
        has received notice from any Lender by 5:00 p.m. (Seattle time) four (4)
        Business Days prior to the day of such continuation that such Lender
        cannot continue to provide Revolving Loans in the relevant Offshore
        Currency, in which event Agent will give notice to Borrower not later
        than 9:00 a.m. (Seattle time) on the third Business Day prior to the
        last day of the Applicable Interest Period with respect to such Offshore
        Currency Loans that the continuation of such Revolving Loans in the
        relevant Offshore Currency is not then available, and notice thereof
        also will be given promptly by Agent to Lenders. If Agent shall have so
        notified Borrower that any such continuation of Offshore Currency Loans
        is not then available, any Interest Rate Notice with respect thereto
        shall be deemed withdrawn and such Offshore Currency Loans shall be
        redenominated into Base Rate Loans in Dollars with effect from the last
        day of the Applicable Interest Period with respect to any such Offshore
        Currency Loans. Agent will promptly notify Borrower and Lenders of any
        such redenomination and in such notice by Agent to each Lender, Agent
        will state the aggregate Dollar Equivalent amount of the redenominated
        Offshore Currency Loans as of the Computation Date with respect thereto
        and such Lender's Revolving Percentage Interest thereof.

                      (d) OCCURRENCE OF EVENT OF DEFAULT. Notwithstanding
        anything herein to the contrary, if a Default or Event of Default shall
        have occurred and be continuing, upon the request of Majority Lenders,
        all or any part of any outstanding Offshore Currency Loans shall be
        redenominated and converted into Base Rate Loans in Dollars with effect
        from the last day of the Interest Period with respect to any such
        Offshore Currency Loans. Agent will promptly notify Borrower of any such
        redenomination and conversion request.

                      (e) AGREED ALTERNATIVE CURRENCIES. Borrower shall be
        entitled to request that Revolving Loans hereunder also be permitted to
        be made in any other lawful currency constituting a eurocurrency (other
        than Dollars), in addition to the eurocurrencies specified in the
        definition of "Offshore Currency" herein, that in the opinion of the
        Majority Lenders is at such time freely traded in the offshore interbank
        foreign exchange markets and is freely transferable and freely
        convertible into Dollars (an "Agreed Alternative Currency"). Borrower
        shall deliver to Agent any request for designation of an Agreed
        Alternate Currency in accordance with Section 9.4, to be received by
        Agent not later than 10:00 a.m. (Seattle time) at least ten (10)
        Business Days in advance of the date of any borrowing hereunder proposed
        to be made in such Agreed Alternate Currency. Upon receipt of any such
        request Agent will promptly notify 



                                       
<PAGE>   11

        Lenders thereof, and each Lender will use its best efforts to respond to
        such request within two (2) Business Days of receipt thereof. Each
        Lender may grant or accept such request in its sole discretion. Agent
        will promptly notify Borrower of the acceptance or rejection of any such
        request.

        3. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not become effective until each of
the following conditions is fully and simultaneously satisfied:

               (a) DELIVERY OF AMENDMENT. Borrower, Agent, Guarantor and each
Lender shall have executed and delivered counterparts of this Amendment to
Agent;

               (b) CORPORATE AUTHORITY. Agent shall have received in form and
substance reasonably satisfactory to it (1) a copy of a resolution adopted by
the Board of Directors of Borrower authorizing the execution, delivery and
performance of this Amendment certified by the Secretary of Borrower; (2)
evidence of the authority of the persons who have signed this Amendment on
behalf of Borrower and Guarantor; and (3) such other evidence of corporate
authority as Agent or any Lender shall request;

               (c) CONSENT OF GUARANTOR. Guarantor shall have executed the
subjoined Guarantor's Consent;

               (d) REPRESENTATIONS TRUE; NO DEFAULT. The representations of
Borrower as set forth in Article 4 of the Loan Agreement shall be true on and as
of the date of this Amendment with the same force and effect as if made on and
as of this date. No Event of Default and no event which, with notice or lapse of
time or both, would constitute an Event of Default, shall have occurred and be
continuing or will occur as a result of the execution of the Amendment
Documents; and

               (e) OTHER DOCUMENTS. Agent and Lenders shall have received such
other documents, instruments, and undertakings as Agent and such Lender may
reasonably request.

        4. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lenders and Agent that each of the representations and warranties
set forth in Article 4 of the Loan Agreement is true and correct in each case as
if made on and as of the date of this Amendment and Borrower expressly agrees
that it shall be an additional Event of Default under the Loan Agreement if any
representation or warranty made hereunder shall prove to have been incorrect in
any material respect when made.

        5. NO FURTHER AMENDMENT. Except as expressly modified by this Amendment,
the Loan Agreement and the other Loan Documents shall remain unmodified and in
full force and effect and the parties hereby ratify their respective obligations
thereunder. Without limiting the foregoing, Borrower expressly reaffirms and
ratifies its obligation to pay or reimburse Agent and Lenders on request for all
reasonable expenses, including legal fees, actually incurred by Agent or such
Lender in connection with the preparation of this Amendment and the closing of
the transactions contemplated hereby.

        6.     MISCELLANEOUS.

               (a) ENTIRE AGREEMENT. This Amendment comprises the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, representations or commitments.

               (b) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same Amendment.



                                       
<PAGE>   12

               (C) GOVERNING LAW. This Amendment and the other agreements
provided for herein and the rights and obligations of the parties hereto and
thereto shall be construed and interpreted in accordance with the laws of the
State of Washington.

               (D)    ORAL AGREEMENTS NOT ENFORCEABLE.

        ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO 
        FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER 
        WASHINGTON LAW.

        EXECUTED AND DELIVERED by the duly authorized officers of the parties as
of the date first above written.


        BORROWER:              SPACELABS MEDICAL, INC., a California corporation



                               By                                
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        GUARANTOR:             SPACELABS MEDICAL, INC., a Delaware corporation



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        LENDERS:               BANK OF AMERICA NATIONAL TRUST AND SAVINGS
                               ASSOCIATION, successor by merger to Seattle-First
                               National Bank, a national banking association



                               By                                
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                                 Its                             
                                    --------------------------------------------

                               U.S. BANK NATIONAL ASSOCIATION, a national
                               banking association



                               By                                
                                  ----------------------------------------------
                                 Its                             
                                    --------------------------------------------


        AGENT:                 BANK OF AMERICA NATIONAL TRUST AND SAVINGS 
                               ASSOCIATION, a national banking association



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<PAGE>   13


                               GUARANTOR'S CONSENT

        SPACELABS MEDICAL, INC., a Delaware corporation (the "Guarantor") is a
guarantor of the indebtedness, liabilities and obligations of SPACELABS MEDICAL,
INC., a California corporation (the "Borrower") under the Amended and Restated
Loan Agreement and the other Loan Documents described in the Loan Agreement.
Guarantor hereby acknowledges that it has received a copy of the First Amendment
to Amended and Restated Loan Agreement dated as of October 16, 1997 by and among
Borrower, Bank of America National Trust and Savings Association doing business
as Seafirst Bank and U.S. Bank National Association, as lenders, Bank of America
National Trust and Savings Association doing business as Seafirst Bank, as
agent, and Guarantor (the "Amendment") and hereby consents to its contents,
including all prior and current amendments to the Loan Agreement and the other
Loan Documents described therein (notwithstanding that such consent is not
required). Guarantor hereby confirms that its guarantee of the obligations of
Borrower remains in full force and effect, and that the obligations of Borrower
under the Loan Documents shall include the obligations of Borrower under the
Loan Documents as amended by the Amendment.


        GUARANTOR:             SPACELABS MEDICAL, INC., a Delaware corporation



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<PAGE>   14



                                    EXHIBIT H

                 NOTICE OF BORROWING FOR MULTICURRENCY ADVANCES

TO:     Bank of America NT & SA
        Seafirst Agency Services
        701 Fifth Avenue, Floor 16
        Seattle, WA  98104
        Attn:         Charles Barnett/Dora Brown
        Phone: 206-358-0125/0101
        FAX:          206-358-0971

        BORROWING INSTRUCTIONS:

        Date of Borrowing:
                                         ---------------------------------------
        Specify new Loan or Rollover:
                                         ---------------------------------------
        Currency type:
                                         ---------------------------------------
        Amount requested in applicable
          Currency:
                                         ---------------------------------------
        Interest Period (INSERT months):
                                         ---------------------------------------

        WIRE INSTRUCTIONS:    Bank Name:
                                         ---------------------------------------
                              Swift Code:
                                          --------------------------------------
                              Account Name:
                                           -------------------------------------
                              Account Number:
                                             -----------------------------------
                              Attention:
                                         ---------------------------------------
                              Phone Number:
                                           -------------------------------------

        Borrower hereby represents and warrants to Lenders that as of the date
hereof (a) the statements set forth in Article 4 of that certain Amended and
Restated Loan Agreement dated as of July 16, 1997 (as amended, the "Loan
Agreement") are true and correct; and (b) no Default (as defined in the Credit
Agreement) has occurred and is continuing or will result from the disbursement
of the requested Loan.

        DATED as of this _____ day of __________________, 199____.

                               SPACELABS MEDICAL, INC.


                               By                                
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BANK OF AMERICA NT & SA USE ONLY:

        Currency Borrowing Rate:
        Plus applicable Interest         ---------------------------------------



                                       
<PAGE>   15

          Rate Margin:
                                         ---------------------------------------
        All-in Currency Borrowing Rate:
                                         ---------------------------------------
        Accrual Basis (actual/360 or
          actual/365/366)
                                         ---------------------------------------
        U.S. Interest Rate Equivalent:
                                         ---------------------------------------
        US$ Equivalent:
                                         ---------------------------------------

The information contained in this Notice is privileged and confidential
information, intended only for the use of the individual or entity named above.
If the reader of this message is not the recipient, you are hereby notified that
any retention, dissemination, distribution, or copying of the message is
strictly prohibited. If you have received this message in error, immediately
notify the sender by telephone and return the original message to us at the
above address via the U.S. Postal Service.