Document:

<PAGE>   1

                                 March 16, 2001

[Full Name & Title]
c/o Spacelabs Medical, Inc.
15220 N.E. 40th Street
Redmond, Washington  98073

Dear [First Name]:

           In order to induce you to continue to give your continued attention
and dedication to the Company and your assigned duties at Spacelabs Medical,
Inc., a publicly traded company organized and incorporated under the laws of the
State of Delaware ("the Company"), the Company and you, intending to be legally
bound hereby and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agree as follows:

           1. In the event that, prior to your attaining age 65, your employment
with the Company is terminated either by the Company without Cause or by you
because the Company has made your working conditions so intolerable that a
reasonable executive in your position would feel compelled to resign
("Constructive Discharge"), then you will be entitled to receive the following
benefits from the Company:

            (i) within 30 days after the Effective Date , the Company will pay
to you in a lump sum in cash the aggregate of the following amounts:

                A. your Accrued Obligations; and

                B. the amount equal to the product of (1) ____ [three in the
case of Mr. Lombardi/two in the case of Mr. Richman and Mr. DeFelice] and (2)
the sum of (x) your Annual Base Salary and (y) your Highest Annual Bonus; and

                C. a separate lump sum supplemental retirement benefit equal to
the difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and any SERP which you would receive if your
employment continued at your Annual Base Salary and your Recent Average Bonus
for a period of three years following the Effective Date, assuming for this
purpose that all accrued benefits are fully vested and that benefit accrual
formulas are no less advantageous to you than those in effect during the 90-day
period immediately preceding the Effective Date, and (2) the actuarial
equivalent (utilizing for this purpose the actuarial assumptions utilized with
respect to the Retirement Plan during the 90-day period immediately preceding
the Effective Date) of

<PAGE>   2

[Full Name]
Page 2

your actual benefit (paid or payable), if any, under the Retirement Plan and the
SERP; and

            (ii) for a period of three years following the Effective Date, or
such longer period as any plan, program, practice or policy may provide, the
Company shall provide the Welfare Benefit Continuation to you and your family.
For purposes of determining your eligibility for retiree benefits pursuant to
such plans, practices, programs and policies, you shall be considered to have
remained employed for a period of three years following the Effective Date and
to have retired on the last day of such period; provided, however, that you
shall be entitled to the more favorable of the retiree benefits in effect on the
Effective Date or the retiree benefits in effect on the third anniversary of the
Effective Date if you had remained employed; and

            (iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide the Other Benefits to you and/or your family; and

          2. Upon the occurrence of a Change of Control that occurs while your
Change of Control Agreement dated July 24, 1998 ("Change of Control Agreement")
remains in effect, the rights and obligations of you and the Company will be
determined by the Change of Control Agreement and not by this agreement. Nothing
in this agreement is intended to reduce, modify, or eliminate any of your rights
pursuant to the Change of Control Agreement.

          3. Nothing herein shall prevent or limit your continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which you may qualify, nor shall
anything herein limit or otherwise affect such rights as you may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which you are otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent to the date of
the termination of your employment shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this agreement.

          4. Both parties agree to promptly take the following actions in the
event of an Effective Date and the payment or provision of the payments and
benefits described in Section 1 hereof shall be conditioned upon:

    (i)   your execution of a release, in a form reasonably satisfactory to the
          Company, releasing the Company, each of its affiliates and their
          respective stockholders, attorneys, officers, directors, agents,
          employees, successors and assigns, from claims that arise from or are
          connected with your employment with the Company and its affiliates or
          the terminations thereof (but not from claims arising out of any
          breach of this agreement or the Change of Control Agreement, claims
          for or rights of contribution or indemnity, or claims for

<PAGE>   3

[Full Name]
Page 3

          rights or benefits under any plan, policy, practice or program of or
          any contract or agreement with the Company and its affiliates);

    (ii)  the execution of a reasonably satisfactory mutual nondisparagement
          agreement between you and the Company; and

    (iii) your agreement that, for a period of one year after the Effective
          Date, you will not (a) directly solicit for employment, or interfere
          with the employment relationship of, any then-current officer or
          employee of the Company or any of its affiliates without the prior
          written consent of the Company, or (b) directly solicit any of the
          then-current customers of or suppliers to the Company or any of its
          affiliates so as to interfere with their relationship with the Company
          or any of its affiliates relating to the Company's primary products.

          5. Section 10 of your Change of Control Agreement (relating to
Confidential Information) is incorporated by reference herein as though set
forth her in full and you agree to company with that provision as your
obligation hereunder independent of your obligations under the Change of Control
Agreement.

          6. The Company's obligation to make the payments provided for in this
agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against you or others. In no event shall
you be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable under any of the provisions of this agreement
and, except as provided in Section 6(a)(ii) of the Change of Control Agreement,
such amounts shall not be reduced whether or not you obtain other employment.
The Company agrees to pay promptly upon invoice, to the full extent permitted by
law, all legal fees and expenses which you may incur as a result of any contest
(regardless of the outcome thereof) by the Company, you or others of the
validity or enforceability of, or liability under, any provision of this
agreement or any guarantee of performance thereof (including as a result of any
contest by you about the amount of any payment pursuant to this agreement). The
Company may withhold from any amounts payable under this agreement such Federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          7. If there shall be any dispute between the Company and you (i) in
the event of any termination of your employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of employment
by you, whether Constructive Discharge existed, or (iii) arising out of the form
or finalization by the Company of documents set forth in section 4 of this
agreement, then, unless and until there is a final, nonappealable judgment by a
court of competent jurisdiction declaring that such termination was for Cause or
that the determination by you of the existence of Constructive Discharge was not
made in good faith, the Company shall pay all amounts, and provide all benefits,
to you and/or your family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 1 as

<PAGE>   4

[Full Name]
Page 4

though such termination were by the Company without Cause or by you for
Constructive Discharge; provided, however, that the Company shall not be
required to pay any disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by you or on your behalf to repay all such amounts to
which you are ultimately adjudged by such court not to be entitled.

           8. This agreement is personal to you and without the prior written
consent of the Company shall not be assignable by you otherwise than by will or
the laws of descent and distribution. This agreement shall inure to the benefit
of and be enforceable by your legal representatives. This agreement shall inure
to the benefit of and be binding upon the Company and its successors and
assigns. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this agreement by operation of law, or otherwise.

           9. This agreement shall be governed by and construed in accordance
with the laws of the State of Washington, without reference to principles of
conflict of laws. This agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives. The invalidity or unenforceability of any
provision of this agreement shall not affect the validity or enforceability of
any other provision of this agreement. The failure of either party to insist
upon strict compliance with any provision hereof or the failure to assert any
right such party may have hereunder, including without limitation, your right to
terminate employment for Constructive Discharge, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
agreement. All notices and other communications hereunder shall be given in the
manner provided in the Change of Control Agreement.

           10. Capitalized terms used herein but not defined herein shall have
the meaning as defined in your Change of Control Agreement (even if the Change
of Control Agreement has been terminated), except that as used herein and (for
purposes hereof) in defined terms in the Change of Control Agreement the term
"Effective Date" shall mean the date on which your employment with the Company
terminates for any reason and the term "Employment Period" shall mean the period
following the date of this agreement during which you are employed by the
company; provided however that employment pursuant to this agreement shall be
"at-will" and may be terminated by either the Company or you at any time with or
without Cause, subject to your rights under this agreement. It is the intention
of the parties that this agreement shall have immediate legal force and effect
and that they be bound by same as of the date hereof.

<PAGE>   5

[Full Name]
Page 5

           If the foregoing accurately describes our agreement, please sign the
enclosed copy of this agreement.

Sincerely,

SPACELABS MEDICAL, INC.

By __________________________
   [Name]
   [Title]

Agreed and Accepted:

_____________________________
[Full Name]<PAGE>   1

                              SETTLEMENT AGREEMENT

               SETTLEMENT AGREEMENT, dated as of March 22, 2001 (the
"Agreement"), by and among Providence Capital, Inc., a Delaware corporation
("Providence Capital"), Providence Investors, LLC (together with Providence
Capital, "Providence"), Herbert A. Denton ("Denton"), Stephen A. Drury ("Drury")
and David A. Hilton ("Hilton", and together with Drury, Denton and Providence,
the "Denton Group") and Spacelabs Medical, Inc., a Delaware corporation (the
"Company").

               WHEREAS, on November 21, 2000, the Denton Group furnished the
Company with a submission (the "Advance Notice Submission") of their intention
to nominate, and solicit proxies (the "Proxy Contest") in support of, four (4)
candidates to stand for election to the Company's Board of Directors (the
"Board") at the Company's 2001 Annual Meeting of Stockholders (the "2001 Annual
Meeting"); and

               WHEREAS, the Company and the members of the Denton Group have
determined that the interests of the Company and its stockholders, and the
interests of the members of the Denton Group, would best be served by (i)
avoiding the substantial expense and disruption that could be expected to result
from the Proxy Contest, (ii) nominating the persons set forth herein for
election as directors of the Company and (iii) the receipt of other agreements,
covenants, rights and benefits as provided herein.

               NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and representations set forth herein, intending to be legally bound
hereby, the parties hereby agree as follows:

               1.  Board Composition; Related Matters.

                   (a)  The Company and the Denton Group agree that the eight
nominees standing for election at the 2001 Annual Meeting scheduled to be held
on May 24, 2001, shall be (i) six nominees designated by the current Board and
(ii) Messrs. Drury and Hilton (the "Denton Group Nominees"), who have been
selected by the Company from the four nominees included in the Advance Notice
Submission. The foregoing persons are collectively referred to herein as the
"2001 Nominees," and shall stand for election to serve on the Board for a term
expiring at the Company's 2002 Annual Meeting of Stockholders (the "2002 Annual
Meeting") and until their respective successors shall have been duly elected and
qualified. Effective upon execution of this Agreement, the Denton Group
irrevocably withdraws its Advance Notice Submission and agrees to terminate the
Proxy Contest. Each of the Company and the Denton Group acknowledge that (i) to
the best of their knowledge, there are no circumstances that would preclude
either Messrs. Drury or Hilton from serving as a member of the Board and (ii)
each of Messrs. Drury and Hilton are suitable nominees for election to the
Company's Board.

                   (b)  The members of the Denton Group and their Affiliates and
Associates

<PAGE>   2

(as such terms are hereinafter defined), and the Company, shall publicly support
and recommend that the Company's stockholders vote for the election of each of
the 2001 Nominees at the 2001 Annual Meeting, and the members of the Denton
Group shall vote, and shall cause their Affiliates and Associates to vote, all
shares of the Company's Common Stock (the "Common Stock") which they are
entitled to vote at the 2001 Annual Meeting in favor of the election of each of
the 2001 Nominees. The Company agrees that it shall cause its designated proxy
holders to vote in favor of the election of each of the 2001 Nominees with
respect to any valid proxy received by the Company for the 2001 Annual Meeting
for which no contrary voting instructions are provided.

                   (c)  If any Denton Group Nominee shall be unable or unwilling
to serve as a nominee for any reason prior to his election at the 2001 Annual
Meeting or, after election as a director of the Company at the 2001 Annual
Meeting, shall cease to be a member of the Board by reason of his death,
disability or resignation, the majority of the Board who are not Denton Group
Nominees shall be entitled to designate another person from among the five (5)
candidates identified in the Denton Group's counsel's fax to the Company's
counsel dated March 20, 2001. If any nominee, other than a Denton Group Nominee,
shall be unable or unwilling to serve as a nominee prior to his or her election
at the 2001 Annual Meeting or, after election as a director of the Company at
the 2001 Annual Meeting, shall cease to be a member of the Board by reason of
his or her death, disability or resignation, the members of the Board who are
not Denton Group Nominees shall be entitled to designate another person to serve
as a director or a nominee, as the case may be.

                   (d)  At the first meeting of the Board following the
certification of the vote of the election of directors at the 2001 Annual
Meeting, the Board shall create a committee of the Board, to be designated the
Strategic Planning Committee (the "Committee"), consisting of three directors,
one of whom shall be Carl A. Lombardi, who shall act as Chairman of the
Committee, one of whom shall be Stephen A. Drury, and one of whom shall be
Phillip M. Nudelman. The Committee's purpose is to review with the Company's
financial advisor and management the progress of the Company's process for
evaluating and pursuing strategic alternatives for maximizing stockholder value.
The Committee shall be entitled to make recommendations to the Board regarding
any proposed transaction. The Company agrees that prior to the Standstill
Termination Date (as hereinafter defined), it shall not take any action to (i)
disband or otherwise take any action to cause the Committee to cease to
function, (ii) decrease or limit the responsibilities of the Committee or (iii)
alter the composition of the Committee as provided in the first sentence of this
paragraph (d).

                   (e)  At the first meeting of the Board following the
certification of the vote of the election of directors at the 2001 Annual
Meeting, the Board shall create a Nominating Committee of the Board, consisting
of three directors, one of whom shall be Carl A. Lombardi, who shall act as
Chairman of the Nominating Committee, one of whom shall be Stephen A. Drury, and
one of whom shall be Peter van Oppen. The Nominating Committee shall have
responsibility for making recommendations to the Board with respect to the
Board's nominees for election to the Board.

                   (f)  At the first meeting of the Board following the
certification of the vote

                                                                               2
<PAGE>   3

of the election of directors at the 2001 Annual Meeting, the Board shall appoint
David A. Hilton to the Executive Committee of the Board.

                   (g)  Within thirty days of the date that the Denton Group
Nominees enter into a confidentiality agreement in the form attached hereto as
Exhibit A, management of the Company shall present the Denton Group Nominees
with an overview of the Company's business and a description of the Company's
strategies for enhancing stockholder value, including the steps taken to
implement those strategies.

               2.  Covenants of the Denton Group.

                   (a)  The date on which the covenants and agreements contained
in this Section 2 terminate is referred to herein as the "Standstill Termination
Date." The Standstill Termination Date shall be one year from the date of this
Agreement.

                   (b)  Each member of the Denton Group jointly and severally
agrees that during the period commencing on the date hereof and ending on the
Standstill Termination Date, without the prior written consent of the Board
specifically expressed in a resolution adopted by a majority of the directors
other than the Denton Group Nominees, they will not, and will use their best
efforts to cause each of their Affiliates and Associates not to, directly or
indirectly:

                        (i) acquire, offer or propose to acquire, or agree to
        acquire (except, in any case, by way of stock dividends or other
        distributions or offerings made available to holders of Voting
        Securities (as such term is hereinafter defined) generally or to the
        Company's non-employee directors pursuant to any compensatory plan of
        the Company, provided, that any such securities so received shall be
        subject to the provisions hereof), directly or indirectly, whether by
        purchase, tender or exchange offer, through the acquisition of control
        of another Person (as hereinafter defined), by joining a partnership,
        limited partnership, syndicate or other "group" (within the meaning of
        Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
        "Exchange Act")) or otherwise, any Voting Securities, if when taken
        together with the Voting Securities owned by the Denton Group would
        constitute more than 3% of the then outstanding Voting Securities;

                        (ii) except as specifically provided for in Section 1
        hereof, make, or in any way participate, directly or indirectly, in any
        "solicitation" (as such term is used in the proxy rules of the
        Securities and Exchange Commission (the "SEC")) of proxies or consents
        (whether or not relating to the election or removal of directors), seek
        to advise, encourage or influence any Person with respect to the voting
        of any Voting Securities, initiate, propose or otherwise "solicit" (as
        such term is used in the proxy rules of the SEC) stockholders of the
        Company for the approval of stockholder proposals whether made pursuant
        to Rule 14a-8 under the Exchange Act or otherwise, induce or attempt to
        induce any other Person to initiate any such stockholder proposal, or
        otherwise communicate with the Company's stockholders or others pursuant
        to Rule 14a-1(1)(2)(iv) under the Exchange Act;

                        (iii) make any public announcement with respect to any
        proposal

                                                                               3
<PAGE>   4

        or offer involving any merger, consolidation, business combination,
        tender or exchange offer, sale or purchase of assets, sale or purchase
        of securities, dissolution, liquidation, restructuring, recapitalization
        or similar transactions of or involving the Company or any of its
        Affiliates;

                        (iv) form, join or in any way participate in any
        "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
        with respect to any Voting Securities;

                        (v) deposit any Voting Securities in any voting trust
        or subject any Voting Securities to any arrangement or agreement with
        respect to the voting of any Voting Securities, except as specifically
        set forth in Section 1 hereof;

                        (vi) execute any written consent as stockholders with
        respect to the Company or its Voting Securities, except as set forth in
        Section 1 hereof;

                        (vii) otherwise act, alone or in concert with others, to
        control or seek to control or influence or seek to influence the
        management, the Board or policies of the Company, including through
        communications with stockholders of the Company or otherwise, other than
        through non-public communications with the directors of the Company,
        including the Denton Group Nominees acting in their capacity as
        directors of the Company;

                        (viii) seek, alone or in concert with others, (a) to
        call a meeting of stockholders, (b) representation on the Board, except
        as specifically set forth in Section 1 hereof, or (c) the removal of any
        member of the Board;

                        (ix) solicit, initiate or encourage any person
        concerning any merger, tender offer, purchase of assets, purchase of
        securities, business combination or strategic transaction involving the
        Company or any of its subsidiaries;

                        (x) make any publicly disclosed proposal regarding any
        of the foregoing;

                        (xi) publicly disclose any request to amend, waive or
        terminate any provision of this Agreement; or

                        (xii) take or cause others to take any action
        inconsistent with any of the foregoing.

                   (c)  Denton Group Nominees will comply with their fiduciary
duties as directors of the Company.

                   (d)  Notwithstanding this Section 2, the Denton Group may
provide the Company with written notice, in accordance with the Company's
by-laws, of the Denton Group's nomination of candidates for election as
directors to be elected at the 2002 Annual Meeting; provided, however, that in
the event that the Denton Group participates directly or indirectly, other than
through the Nominating Committee of the Board, in nominating candidates for

                                                                               4
<PAGE>   5

election as directors to be elected at the 2002 Annual Meeting, Section 4(b) and
the last sentence of Section 1(d) shall no longer apply.

               3.  Representations and Warranties of the Denton Group.

                   (a)  Each member of the Denton Group which is not a natural
person represents and warrants on its own behalf that it has the corporate power
and authority to execute, deliver and carry out the provisions of this Agreement
and to consummate the transactions contemplated hereby.

                   (b)  Each member of the Denton Group which is not a natural
person represents and warrants on its own behalf that this Agreement has been
duly authorized, executed, and delivered, constitutes its valid and binding
obligation, and is enforceable against it in accordance with its terms.

                   (c)  Each member of the Denton Group who is a natural person
represents and warrants on his own behalf that he has the power and authority to
execute, deliver and carry out the provisions of this Agreement and to
consummate the transactions contemplated hereby.

                   (d)  Each member of the Denton Group who is a natural person
represents and warrants on his own behalf that this Agreement has been duly
executed and delivered, constitutes his valid and binding obligation, and is
enforceable against him in accordance with its terms.

                   (e)  The members of the Denton Group represent and warrant
that they, together with their Affiliates and Associates, beneficially own an
aggregate of 170,600 shares of Voting Securities as set forth by beneficial
owner and amount on Schedule A hereto and such Voting Securities constitute all
of the Voting Securities of the Company beneficially owned by the Denton Group
and their Affiliates and Associates.

               4.  Representations, Warranties and Covenants of the Company.

                   (a)  The Company hereby represents and warrants as follows:

                        (i) The Company has the corporate power and authority to
        execute, deliver and carry out the terms and provisions of this
        Agreement and to consummate the transactions contemplated hereby, and
        has taken all necessary action to authorize the execution, delivery and
        performance of this Agreement and the transactions contemplated hereby.

                        (ii) This Agreement has been duly and validly
        authorized, executed and delivered by the Company and constitutes a
        valid and binding agreement of the Company, enforceable in accordance
        with its terms.

                   (b)  Except as required by law or the fiduciary obligations
of the Board, the Company will not amend its certificate of incorporation or
by-laws during the term of this Agreement in a manner that avoids the
performance by the Company of the terms or intent of this

                                                                               5
<PAGE>   6

Agreement.

               5.  Proxy Statement. The Company and the Denton Group shall
mutually agree on the description of the Denton Nominees, this Agreement and the
circumstances related thereto to be included in the Company's proxy statement
for the 2001 Annual Meeting. Prior to the Standstill Termination Date, none of
the parties hereto will make any statements to third parties (including any
statements in any filing with the SEC or any other governmental agency) relating
to this Agreement and the circumstances related thereto (i) except, in the case
of a statement by the Company, as approved by Denton, and in the case of a
statement by any member of the Denton Group, as approved by the Company;
provided, however, that in either case such approval shall not be unreasonably
withheld, or (ii) that are inconsistent with, or are otherwise contrary to, the
statements in the proxy statement. Nothing shall preclude or prevent the Company
from making any required filings with the SEC or any other governmental agency.
In addition to the foregoing, and notwithstanding any other provision of this
Agreement, the Denton Group Nominees may not make any statements to third
parties at any time that would breach their fiduciary duties to the Company and
its stockholders or their obligations as members of the Board to maintain the
confidentiality of confidential information obtained in the course of their
service as directors of the Company.

               6.  Mutual Release and Waiver. Effective immediately, the Company
and the Denton Group (each, a "Releasing Party") hereby covenant not to sue and
forever release and discharge the Denton Group and any actual or alleged member
of a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
Providence, on the one hand, and the Company, on the other hand, respectively
(and each of their respective directors, officers, representatives, employees,
counsel, Affiliates and Associates) (each, a "Released Party") from all manner
of claims, actions, causes of action or suits, at law or in equity, known or
unknown, which each now has as of the date hereof by reason of any matter, cause
or thing whatsoever relating to or arising out of the Advance Notice Submission
or the Proxy Contest, including any violation or alleged violation of Section
13(d) or Section 14(a) of the Exchange Act or the rules promulgated thereunder.
Nothing in this Agreement shall in any way constitute an agreement by any party
hereto to indemnify any other party hereto against any third party claim and
nothing in this Agreement shall in any way constitute a covenant not to sue or a
release or discharge with respect to matters, causes or things relating to or
arising out of events occurring after the date hereof.

               7.  Expenses. The Company hereby agrees to reimburse the Denton
Group for their reasonable, documented, out-of-pocket expenses incurred in
connection with the Proxy Contest and the negotiation of this Agreement, in an
aggregate amount not to exceed $87,500. The Company agrees to pay such expenses
by check or wire transfer within five days of receipt of an invoice of the same,
together with supporting documentation (such as a law firm billing statement),
from the Denton Group.

               8.  Specific Performance. Each of the members of the Denton
Group, on the one hand, and the Company on the other, acknowledges and agrees
that irreparable injury to the other party or parties (as the case may be)
hereto would occur in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached and
that such injury would not be compensable in damages. It is accordingly agreed

                                                                               6
<PAGE>   7

that each party hereto (the "Moving Party") shall be entitled to specific
enforcement of the terms hereof and the other parties hereto will not take
action, directly or indirectly, in opposition to the Moving Party seeking such
relief on the grounds that any other remedy or relief is available at law or in
equity.

               9.  No Waiver. Any waiver by any party hereto of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party hereto to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.

               10. Certain Definitions. As used in this Agreement, (a) the term
"Person" shall mean any individual, partnership, corporation, limited liability
company, group, syndicate, trust, government or agency thereof, or any other
association or entity; (b) the terms "Affiliates" and "Associates" shall have
the meanings set forth in Rule 12b-2 under the Exchange Act and shall include
persons who become Affiliates or Associates of any Person subsequent to the date
hereof; and (c) the term "Voting Securities" shall mean the shares of Common
Stock and any other securities of the Company entitled to vote in the election
of directors, or securities convertible into, or exercisable or exchangeable
for, such Common Stock or other securities, whether or not subject to the
passage of time or other contingencies.

               11. Successors and Assigns. All the terms and provisions of this
Agreement shall inure to the benefit of and shall be enforceable by the
successor and assigns of the parties hereto.

               12. Survival of Representations. All representations, warranties
and agreements made by the parties in this Agreement or pursuant hereto shall
survive the date hereof.

               13. Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties hereto with respect to its subject matter.
There are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings other than those expressly set forth herein. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto or their respective successors or assigns.

               14. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not effect in any way the meaning or
interpretation of this Agreement.

               15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given if so given) by hand delivery, telecopy
(confirmed in writing), overnight courier or by mail (registered or certified,
postage prepaid, return receipt requested) to the respective parties hereto as
follows:

              If to the Company:

                                                                              7
<PAGE>   8

                     Spacelabs Medical, Inc.
                     15220 N.E. 40th Street
                     P.O. Box 97013
                     Redmond, Washington 98073
                     Attention: Eugene V. DeFelice,
                                Vice President, General
                                Counsel and Secretary
                     Telecopy: 425/883-7091

              with a copy to:

                    Skadden, Arps, Slate, Meagher & Flom, LLP
                    1440 New York Avenue, N.W.
                    Washington, DC 20005
                    Attention: Michael P. Rogan, Esq.
                    Telecopy: 202/393-5760

              If to any member of the Denton Group:

                     Herbert A. Denton
                     Providence Capital, Inc.
                     730 Fifth Avenue
                     New York, New York 10019
                     Telecopy: 212/888-3203

              with a copy to:

                    Proskauer Rose LLP
                    1585 Broadway
                    New York, New York 10036
                    Attention: Arnold S. Jacobs, Esq.
                    Telecopy: 212/969-2900

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

               16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without reference to the conflict of laws principles thereof.

               17. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but each of which together shall constitute
one and the same Agreement.

                                                                               8
<PAGE>   9

               18. Denton Group Representative. Each member of the Denton Group
hereby irrevocably appoints Herbert A. Denton as such member's attorney-in-fact
and representative (the "Representative"), in such member's place and stead, to
do any and all things and to execute any and all documents and give and receive
any and all notices or instructions in connection with this Agreement and the
transactions contemplated hereby. The Company shall be entitled to rely, as
being binding on each member of the Denton Group, upon any action taken by the
Representative or upon any document, notice, instruction or other writing given
or executed by the Representative.

                                                                               9
<PAGE>   10

               IN WITNESS WHEREOF, and intending to be legally bound hereby,
each of the undersigned parties has executed or caused this Agreement to be
executed on the date first above written.

                                         SPACELABS MEDICAL, INC.

                                         By: /s/ Carl A. Lombardi
                                             ----------------------------------
                                             Name:  Carl A. Lombardi
                                             Title: Chairman and Chief
                                                    Executive Officer

                                         PROVIDENCE CAPITAL, INC.

                                         By: /s/ Herbert A. Denton
                                             ----------------------------------
                                             Name:  Herbert A. Denton
                                             Title: President

                                         PROVIDENCE INVESTORS, LLC

                                         By: /s/ Herbert A. Denton
                                             ----------------------------------
                                             Name: Herbert A. Denton
                                             Title:

                                        HERBERT A. DENTON

                                        /s/ Herbert A. Denton
                                        ---------------------------------------
                                        Name: Herbert A. Denton

                                        STEPHEN A. DRURY

                                        /s/ Stephen A. Drury
                                        ---------------------------------------
                                        Name: Stephen A. Drury

                                        DAVID A. HILTON

                                        /s/ David A. Hilton
                                        ---------------------------------------
                                        Name: David A. Hilton

                                                                              10
<PAGE>   11

                                                                      SCHEDULE A

                                  DENTON GROUP

                             COMMON STOCK OWNERSHIP

<TABLE>
<CAPTION>
PERSON                                         SHARES
<S>                                           <C>
Herbert A. Denton                                   0
Providence Capital, Inc.                            0
Providence Investors, LLC                      48,000
Stephen A. Drury                                    0
David A. Hilton                                 4,000
U.S. Value Investment Company plc             122,600
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]