Document:

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                                                                   EXHIBIT 10.47

                               SECURITY AGREEMENT

        THIS SECURITY AGREEMENT (the "Agreement") is made as of the 11th day of
August, 2000, by SPACELABS MEDICAL, INC., a California corporation (the
"Debtor"), in favor of BANK OF AMERICA, N.A., a national banking association, as
agent (hereinafter, in such capacity, together with any successors or assigns in
such capacity, the "Secured Party") for the benefit of BANK OF AMERICA, N.A., a
national banking association ("Bank of America"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (each individually a "Lender" and
collectively the "Lenders").

                                    RECITALS

        A. Debtor, Spacelabs Medical, Inc., a Delaware corporation, Lenders and
Secured Party are parties to that certain Amended and Restated Loan Agreement
dated as of August 11, 2000 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lenders have agreed to make loans to Debtor.

        B. Pursuant to the terms of the Loan Agreement, the execution and
delivery of this Agreement is a material condition precedent to the agreement of
Lenders to continue to make loans to Debtor under the Loan Agreement.

        NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration receipt of which Debtor hereby acknowledges, Debtor
agrees as follows:

                                    AGREEMENT

        1. DEFINED TERMS. Capitalized terms not otherwise defined herein shall
have the meanings given in the Loan Agreement. The agreements, documents,
instruments and undertakings entered into in connection with the Loan Agreement,
together with the Loan Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time are referred to herein as
the "Loan Documents."

        2. GRANT OF SECURITY INTEREST. Debtor hereby grants to Secured Party a
security interest in and a right of setoff against all of its now owned or
hereafter acquired goods and other personal property, including all tangible and
intangible items and including without limitation the following (collectively,
the "Collateral"):

            (a) INVENTORY, ETC. All of Debtor's right, title and interest in
inventory and stock in trade, including without limitation raw materials, work
in progress, materials used or consumed in Debtor's business, finished goods,
returned goods and goods traded in (any and all such inventory, accessions and
products shall collectively be referred to herein as the "Inventory").

            (b) ACCOUNTS, CONTRACT RIGHTS, ETC. All of Debtor's right, title and
interest in (i) all accounts, (ii) all contract rights, (iii) all chattel paper,
(iv) all documents, documents of title, drafts, checks, acceptances, bonds,
letters of credit, notes, instruments or other negotiable

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and non-negotiable instruments, bills of exchange, deposits, certificates of
deposit, insurance policies and any other writings evidencing a monetary
obligation or security interest in or a lease of personal property, (v) all
licenses, leases, contracts or agreements, (vi) all judgments, choses in action
and general intangibles which represent the right to receive the payment of
money or other considerations; and (vii) all guarantees and other personal
property securing the payment or performance of any of the foregoing (the
foregoing items shall collectively be referred to herein as the "Accounts").

            (c) INSURANCE. All insurances, including without limitation: (i) all
insurances now or hereafter in effect with respect to Inventory, proceeds of
Inventory, or other tangible Collateral, (ii) all claims and all returns of
premiums, dues, calls, and assessments that are not immediately applied to
premiums, dues, calls, and assessments that accrue from time to time, and all
other sums or claims for sums due or to become due under the foregoing
insurances and (iii) all right, title, and interest in, to, or under the
foregoing. The terms of the Deed of Trust shall control as to disbursement of
proceeds of insurance covered by the Deed of Trust.

            (d) PROCEEDS AND PRODUCTS. All proceeds of any and all of the
foregoing Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not Secured Party is a loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss, damage, or
otherwise, with respect to any of the foregoing Collateral.

        3. TRANSFER OF INSTRUMENTS, ETC. Debtor agrees to transfer to Secured
Party on the date hereof all instruments (including without limitation all
securities), all letters of credit, and all chattel paper now owned and to
transfer to Secured Party promptly upon receipt thereof, all instruments
(including without limitation all securities) and chattel paper hereafter
acquired. Without limiting the foregoing, if Debtor shall become entitled to
receive or shall receive, in connection with any of its securities, any: (i)
stock certificate, including without limitation any certificate representing a
stock dividend or in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off, split-off, split-up or liquidation; (ii) option, warrant,
or right, whether as an addition to or in substitution or in exchange for any of
its securities, or otherwise; (iii) dividend or distribution payable in
property, including securities issued by other than the issuer of any of its
securities; or (iv) dividends or distributions of any sort; then Debtor shall
accept the same as Secured Party's agent, in trust for Secured Party, and shall
deliver them forthwith to Secured Party in the exact form received, with, as
applicable, Debtor's endorsement when necessary, or appropriate stock powers
duly executed in blank, to be held by Secured Party, subject to the terms
hereof, as part of the Collateral. This Agreement does not grant Secured Party
power to control the voting or disposition of the securities prior to the
occurrence of an Event of Default.

        4. OBLIGATIONS SECURED. The security interest granted pursuant to this
Agreement secures the full and timely payment and performance of the following
indebtedness, liabilities and obligations (collectively, the "Obligations"):

            (a) all indebtedness, liabilities and obligations of Debtor to
Lenders (or any of them) now or hereafter existing, whether joint or several,
direct or indirect, absolute or contingent or due or to become due, howsoever
evidenced, created, incurred or owing and

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whether or not evidenced by promissory notes or other evidences of indebtedness,
and all modifications, renewals, extensions and rearrangements thereof and
substitutions and replacements therefor arising under or in connection with the
Loan Agreement and the other Loan Documents or any of the transactions
contemplated thereby;

            (b) all indebtedness, liabilities and obligations of Debtor to Bank
of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is
an interest rate swap agreement or equivalent interest rate risk management
agreement, basis swap, forward rate agreement, interest rate option, rate cap,
collar or floor agreement or any other, similar agreement, including all
schedules thereto, confirmations of transactions thereunder, and documents,
definitions, and agreements incorporated therein by reference or relating
thereto and including, without limitation, any interest due thereon, all fees,
costs, and expenses incurred by Bank of America in connection therewith, and
termination payments and indemnifications relating thereto;

            (c) all indebtedness, liabilities and obligations of Debtor to Bank
of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is a
foreign currency exchange agreement or equivalent forward currency agreement,
currency swap, cross-currency rate swap or currency option agreement or any
other, similar agreement, including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated
therein by reference or relating thereto and including, without limitation, any
interest due thereon, all fees, costs, and expenses incurred by Bank of America
in connection therewith, and termination payments and indemnifications relating
thereto;

            (d) all indebtedness, liabilities and obligations of Debtor to Bank
of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including all
schedules thereto, confirmations of transactions thereunder, and documents,
definitions, and agreements incorporated therein by reference or relating
thereto) pursuant to which Bank of America has agreed to permit daylight
overdrafts to occur on accounts maintained by Debtor with Bank of America,
provide remote disbursement services for Debtor, process automated clearing
house (ACH) transactions for the account of Debtor or extend credit to Debtor,
in the form of credit card accounts, including, without limitation, any interest
due thereon, all fees, costs, and expenses incurred by Bank of America in
connection therewith, and termination payments and indemnifications relating
thereto;

            (e) all indebtedness, liabilities and obligations of Debtor to
Secured Party now or hereafter existing, whether joint or several, direct or
indirect, absolute or contingent or due or to become due, howsoever evidenced,
created, incurred or owing and whether or not evidenced by promissory notes or
other evidences of indebtedness, and all modifications, renewals, extensions and
rearrangements thereof and substitutions and replacements therefor, arising
under

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or in connection with this Agreement and the other Security Documents; and

            (f) all accrued interest on any of the foregoing indebtedness,
liabilities and obligations, whether accruing prior to or subsequent to the
commencement of a bankruptcy or similar proceeding.

        5. OWNERSHIP AND LIENS. Debtor represents and warrants to Secured Party
and Lenders that (a) Debtor owns the Collateral and is not prohibited by
contract or otherwise from subjecting the same to the security interest created
hereby; and (b) the Collateral is free and clear of all security interests and
encumbrances of every kind other than Liens created hereunder or under the other
Security Documents in favor of Secured Party and Liens expressly permitted by
the Loan Agreement. Debtor will not create or suffer to exist any Lien on the
Collateral other than Liens created hereunder or under the other Security
Documents in favor of Secured Party and other than Liens expressly permitted by
the Loan Agreement. Neither Debtor nor its agents, servants or employees will
sell, transfer, assign, lease or otherwise dispose of any item of Collateral in
whole or in part except as expressly permitted by the Loan Agreement. The
Collateral is now and shall remain personal property, and Debtor will not permit
any Collateral to become a fixture without prior written notice to and consent
of Secured Party and without first making all arrangements, and delivering, or
causing to be delivered, to Secured Party all instruments and documents,
including, without limitation, waivers and subordination agreements by any
landlords or mortgagees, requested by and satisfactory to Secured Party to
preserve and protect the primary security interest granted herein against all
persons. Debtor will fully and punctually perform any duty required of it in
connection with the Collateral and will not take any action which will impair,
damage or destroy Secured Party's rights with respect to the Collateral or
hereunder or the value thereof.

        6. SPECIAL REPRESENTATION RELATING TO ACCOUNTS. The Accounts arise in
bona fide transactions in the ordinary course of business and to Debtor's
knowledge without impediment to enforcement or collection thereof and there are
no material offsets or counterclaims or defenses to payment which may be
asserted against Debtor by Debtor's account debtors or payment obligors in
respect of the Collateral.

        7. APPOINTMENT OF SECURED PARTY. So long as any Obligation remains
unpaid or Lenders (or any of them) have any commitment to lend under the Loan
Agreement, Debtor does hereby designate and appoint Secured Party its true and
lawful attorney with power irrevocable, for it and in its name, place and stead,
after an Event of Default has occurred and is continuing, to ask, demand,
receive, receipt and give acquittance for any and all amounts which may be or
become due or payable to Debtor with respect to the Collateral, and in Secured
Party's sole discretion to file any claim or take any action or proceeding, or
either, in its own name or in the name of Debtor, or otherwise, which Secured
Party deems necessary or desirable in order to collect or enforce payment of any
and all amounts which may become due or owing with respect to the Collateral.
The acceptance of this appointment by Secured Party shall not obligate it to
perform any duty, covenant or obligation required to be performed by Debtor
under or by virtue of the Collateral or to take any action in connection
therewith. Secured Party may also execute, on behalf of Debtor, any financing
statements or other instruments which in its opinion may be necessary or
desirable to perfect or protect its position with respect to the Collateral.
Without

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limiting the generality of the foregoing, Secured Party is authorized at any
time after an Event of Default has occurred and is continuing to exercise any
right of Debtor, or enforce any obligation owed to Debtor pursuant to the terms
of any agreements to which Debtor is a party or in which it has any beneficial
interest. Secured Party may, in its sole discretion, perform any obligation of
Debtor under any of Debtor's contracts or in respect of any of Debtor's
accounts, and any expenses incurred in such performance shall bear interest at a
rate per annum equal from time to time to the Prime Rate plus 2% (the "Default
Rate") from the date incurred until repaid by Debtor. Any such amounts shall be
secured hereby and shall be repaid by Debtor on demand.

        8. TAXES. Debtor will pay before delinquency any Taxes which are or may
become through assessment or distraint or otherwise a lien or charge on the
Collateral and will pay any Tax which may be levied on any Obligation secured
hereby, except any Tax whose validity or amount is being contested in good faith
by appropriate proceedings upon stay of execution of the enforcement thereof and
with provision having been made to the satisfaction of Secured Party for the
payment thereof in the event the contest is determined adversely to Debtor.

        9. DEBTOR'S PLACE OF BUSINESS; LOCATION OF RECORDS AND COLLATERAL.
Debtor represents that the address set forth below its signature to this
Agreement is and will remain its principal place of business and the location of
its chief executive offices and the address at which it will keep its records
concerning the Collateral. Debtor represents and covenants that it has not done
within the preceding five (5) years and that after the date hereof it will not
do, business under any name other than the names specified in Schedule 1
attached hereto and by this reference incorporated herein; provided that Debtor
may, upon thirty (30) days' prior written notice to Secured Party, designate one
or more additional names under which it will do business. From time to time,
promptly upon request, Debtor will advise Secured Party of each location where
any Inventory or other tangible Collateral is located. Debtor represents and
covenants that Schedule 2 attached hereto and by this reference incorporated
herein sets forth the locations where Inventory is and will be kept in each
state where Inventory with an aggregate value of $250,000 or more is or will be
located. Debtor will not move the location of its chief executive offices nor
move its records concerning the Collateral unless Debtor shall have given
Secured Party prior written notice of such move and unless Debtor shall have
first executed all documents, agreements and instruments (including Uniform
Commercial Code financing statements) and shall take all such other actions as
Secured Party may reasonably request or shall be necessary to ensure that
Secured Party's security interest in the Collateral continues at all times to be
perfected as a Lien of first priority (subject only to Liens expressly permitted
by the Loan Agreement) enforceable against all third parties in all
jurisdictions as security for full and timely performance of the Obligations. If
Inventory with an aggregate value of $250,000 is at any time kept in a state or
jurisdiction not set forth on Schedule 2 attached hereto, Debtor shall give
Secured Party prompt written notice thereof and shall execute all documents,
agreements and instruments (including Uniform Commercial Code financing
statements) and shall take all such other actions as Secured Party may
reasonably request or shall be necessary to ensure that Secured Party's security
interest in the Inventory is perfected as a Lien of first priority (subject only
to Liens expressly permitted by the Loan Agreement) in such jurisdiction,
enforceable against all third parties as security for full and timely
performance of the Obligations.

        10. BOOKS AND RECORDS; INSPECTION. Debtor agrees to maintain full and
accurate

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books of account prepared and maintained in accordance with GAAP, to the extent
applicable, covering the Collateral and to deliver, upon request, to Secured
Party such of the books and records as relate to the Collateral including,
without limitation, all of the invoices, shipping documents, contracts, orders,
order acknowledgments, correspondence and other instruments, electronically
stored materials and papers in Debtor's possession relating to the Collateral.
Secured Party shall at all reasonable times have free access to Debtor's
ledgers, books of account and other written or electronic records evidencing or
relating to the Collateral and the right to make and retain copies or memorandum
of same, and shall after the occurrence and during the continuation of an Event
of Default have the right to be present at Debtor's place of business to receive
all communications and remittances relating to the Collateral.

        11. COLLECTIONS OF ACCOUNTS, ETC. Until contrary notice is given by
Secured Party after an Event of Default has occurred and is continuing, Debtor
is specifically authorized to enforce and collect the Collateral described in
Section 2(b) above in such manner as shall be commercially reasonable, to accept
the return of goods and to reclaim, withhold or repossess goods as an unpaid
seller. Until receipt of such notice, Debtor agrees to collect the payments upon
or from said Collateral, at Debtor's expense, with due diligence. Upon
notification by Secured Party to Debtor after the occurrence and during the
continuation of an Event of Default to cease collecting upon said Collateral,
Secured Party will proceed to collect said Collateral in a commercially
reasonable manner and may deduct from the proceeds its reasonable expenses of
collection. Secured Party is authorized to receive in full satisfaction of any
obligor's obligation to Debtor a commercially reasonable sum less than the face
amount thereof. Debtor agrees that if any sums are received by it in respect to
the Collateral after such notification by Secured Party, such sums shall be
received in trust by Debtor and immediately shall be paid over by Debtor to
Secured Party. Debtor agrees to hold Secured Party harmless from any claim, loss
or damage caused by any failure to collect any obligation or to enforce any
contract or by any act or omission on the part of Secured Party, its agents and
employees, relating to the Collateral except for Secured Party's willful
misconduct or gross negligence. The covenant set forth in the preceding sentence
shall survive the termination of this Agreement.

        12. INSPECTION OF COLLATERAL; INSURANCE. Secured Party may inspect the
Collateral at reasonable times and intervals and may for this purpose enter any
premises upon which the Collateral is located, including, but not limited to,
the locations specified in Schedule 2 attached hereto. Debtor will continuously
maintain, or cause to be continuously maintained, insurance on all Inventory and
other tangible Collateral against loss or damage by fire, theft and such other
risks as are customarily insured against by persons and businesses similarly
situated to Debtor, in such amounts, with such insurers and under policies in
such form, as shall be reasonably satisfactory to Secured Party. Secured Party
shall be named as a loss payee on all such policies, and all such policies shall
provide that they are not cancelable without thirty (30) days' prior written
notice to Secured Party. At least fifteen (15) days prior to the expiration of
the term of any insurance policy, Debtor shall furnish Secured Party with
written evidence of renewal or issuance of a satisfactory replacement policy.
Debtor shall, if requested by Secured Party, obtain and deliver to Secured
Party, from time to time, satisfactory original or duplicate policies or
certificates of insurance, including any endorsements, to evidence Debtor's
satisfaction of the insurance requirements hereunder. In the event of loss or
damage with respect to any or all of the tangible Collateral, Secured Party
shall have the right to collect any and all insurance upon the

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tangible Collateral and to apply the same at its option to any of the
Obligations, whether or not matured, or to the restoration or repair of any or
all of the tangible Collateral.

        13. COMPLIANCE WITH LAWS. Debtor will ensure that its use of the
Collateral will comply in all material respects with all applicable laws,
ordinances, and regulations of Governmental Authorities.

        14. FURTHER ASSURANCES. Debtor, at its sole cost and expense, will at
any time and from time to time hereafter (a) execute such financing statements
and other instruments and perform such other acts as may be necessary or as
Secured Party may reasonably request to establish and maintain the security
interests herein granted by Debtor to Secured Party and the first priority and
continued perfection thereof; (b) obtain and promptly furnish to Secured Party
evidence of all such Government Approvals as may be required to enable Debtor to
comply with its obligations under this Agreement; and (c) execute and deliver
all such other instruments and perform all such other acts as Secured Party may
reasonably request to carry out the transactions contemplated by this Agreement.

        15. EXPENSES INCURRED BY SECURED PARTY. Secured Party is not required
to, but may, at its option, pay any Tax, insurance premium, filing or recording
fees, or other charges payable by Debtor hereunder and any such amount shall
bear interest at the Default Rate from the date of payment until repaid. Such
amounts shall be repayable by Debtor on demand and Debtor's obligation to make
such repayment shall constitute an additional Obligation secured hereby.

        16. GENERAL REMEDIES. If an Event of Default shall occur, Secured Party
shall have all remedies provided by law and, without limiting the generality of
the foregoing or the remedies provided in any other section hereof or in any
other Security Document, shall have the following remedies:

            (a) The remedies of a secured party under the Uniform Commercial
Code; and

            (b) The right to make notification and pursue collection or, at
Secured Party's option, to sell all or part of the Collateral and make
application of all proceeds or sums due on the Collateral in accordance with the
Loan Agreement; and

            (c) The right to enter any premises where any of the Collateral is
situated and take possession of such Collateral without notice or demand and
without legal proceedings; and

            (d) The right to exercise and enforce all of Debtor's rights under
any contracts or any other agreement to which Debtor is a party or of which
Debtor is a beneficiary; and

            (e) All other remedies which may be available in law or equity.

At the request of Secured Party after an Event of Default has occurred and is
continuing, Debtor will assemble the Inventory and other tangible Collateral and
make it available to Secured Party at a place reasonably designated by Secured
Party. To the extent that notice of sale shall be required by law to be given,
Debtor agrees that a period of ten (10) days from the time the notice is sent
shall be a reasonable period of notification of a sale or other disposition of
Collateral by

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Secured Party, and that any notice or other communication from Secured Party to
Debtor pursuant to this Agreement or required by any statute may be given to
Debtor at the address set forth under its name on the signature page hereof.
Debtor agrees to pay on demand the amount of all expenses incurred by Secured
Party in protecting and realizing on the Collateral and Debtor further agrees
that if this Agreement or any Obligation is referred to an attorney for
protecting or defending the priority of Secured Party's interest in the
Collateral or for collecting or realizing thereon, Debtor shall pay all of
Secured Party's reasonable expenses, including without limitation attorneys' fee
and costs and expenses of title search and all court costs and costs of public
officials and Debtor further agrees that its obligation to pay such amounts
shall bear interest at the Default Rate from the date such expenditures are made
by Secured Party until repaid and shall be secured hereby. Debtor agrees to pay
any deficiency remaining after collection or realization by Secured Party on the
Collateral.

        17. SECURITIES REMEDIES. If an Event of Default shall occur and if
Secured Party shall elect to exercise its right to sell or otherwise dispose of
all or any part of the Collateral constituting securities, Debtor recognizes
that Secured Party may be unable or may deem it unadvisable to effect a public
sale of all or a part of the securities and may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire the securities for their own account, for
investment and not with a view to the distribution or resale thereof. Debtor
acknowledges that any such private sales may be at prices and on terms less
favorable to Secured Party than those of public sales, and agrees that such
private sales shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to delay sale of any
securities to permit the issuer thereof to register such securities for public
sale under the Securities Act of 1933 as amended from time to time. Debtor will
promptly deliver to Secured Party all written notices, and will promptly give
Secured Party written notice of any other notices, received by it with respect
to the securities. Following the occurrence of an Event of Default hereunder and
upon request of Secured Party, Debtor will deliver to Secured Party irrevocable
proxies with respect to the securities in form satisfactory to Secured Party.
Until receipt thereof, this Agreement shall constitute Debtor's proxy to Secured
Party or its nominee to vote all shares of the securities then registered in
Debtor's name following the occurrence of such an Event of Default.

        18. RELEASE OF COLLATERAL, ETC. The obligations of Debtor shall not be
affected by the release or substitution of any collateral or by the release of
or any renewal or extensions of time to any party to any instrument, obligation
or liability secured hereby or to which Debtor is a party. Secured Party shall
not be bound to resort to or exhaust its recourse or to take any action against
other parties or other collateral. Debtor hereby waives presentment, demand,
protest, notice of protest and notice of non-acceptance or non-payment with
respect to any indebtedness, obligation or liability secured hereby.

        19. HOLD HARMLESS. Debtor will indemnify and hold Secured Party and its
agents, successors, heirs and assigns (each an "Indemnified Party") harmless
from all liability, loss, damage or expense, including reasonable attorneys'
fees and costs, that the Indemnified Party may incur resulting from, arising out
of or relating to Indemnified Party's good faith efforts to comply with or
enforce the terms of this Agreement or the Obligations, provided, however, said
indemnification shall not apply to the extent that any such liability, loss,
damage or expense

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arises out of or is based solely upon the Indemnified Party's willful misconduct
or gross negligence. The covenants set forth in this Section 19 shall survive
the termination of this Agreement.

        20. ASSIGNMENT. Secured Party may assign or transfer the whole or any
part of the Obligations and may transfer therewith as collateral security the
whole or any part of the Collateral and all obligations, rights, powers and
privileges herein provided shall inure to the benefit of the assignee to the
extent of such assignment.

        21. WAIVERS. This Agreement shall not be qualified or supplemented by
course of dealing. No waiver or modification by Secured Party of any of the
terms and conditions hereof shall be effective unless in writing signed by
Secured Party. No waiver or indulgence by Secured Party as to any required
performance by Debtor shall constitute a waiver as to any required performance
or other obligations of Debtor hereunder.

        22. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement is invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such provision or
provisions will not in any way be affected or impaired thereby in any other
jurisdiction; and the validity, legality and enforceability of the remaining
provisions contained herein will not in any way be affected or impaired thereby.

        23. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Washington (excluding its conflict of
laws rules) except where the location of Collateral requires that the creation,
validity, perfection, or enforcement of the security interests provided for
herein may be governed by the laws of the jurisdiction where such Collateral is
located.

        24. CONSENT TO JURISDICTION. Debtor hereby irrevocably submits to the
non-exclusive jurisdiction of any state or federal court sitting in Seattle,
King County, Washington, in any action or proceeding brought to enforce or
otherwise arising out of or relating to this Agreement and irrevocably waives to
the fullest extent permitted by law any objection which it may now or hereafter
have to the laying of venue in any such action or proceeding in any such forum,
and hereby further irrevocably waives any claim that any such forum is an
inconvenient forum. Debtor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by law. Nothing herein
shall impair the right of Secured Party to bring any action or proceeding
against Debtor or its property in the courts of any other jurisdiction.

        25. SUCCESSORS. This Agreement inures to the benefit of Secured Party,
the Lenders and their respective successors and assigns, and shall bind the
successors and assigns of Debtor. Debtor may not assign its rights and
obligations hereunder without the prior written consent of Secured Party.

        26. OTHER AGREEMENTS. The terms of this Agreement are intended to
supplement and not to replace or be replaced by the terms of the other Security
Documents and the rights and remedies herein provided to Secured Party are
intended to be cumulative of and in addition to all

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rights and remedies conferred by the other Security Documents. To the extent any
of the Collateral is subject to the Deed of Trust at any time, no provision
hereof applicable to such Collateral shall be applied to supersede or narrow the
applicability of any provision of the Deed of Trust.

        27. AGREEMENT FILED AS FINANCING STATEMENT. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

        IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of
the date and year first above written.

        DEBTOR:              SPACELABS MEDICAL, INC., a California corporation

                             By
                                Its

                             Address:

                             15220 N.E. 40th Street
                             P.O. Box 97013
                             Seattle, WA  98073-9713
                             Attn:  James A. Richman
                                    Vice President & Corporate Controller

                             Telecopy No.:   (425) 885-4877
                             Telephone No.:  (425) 882-3700

SCHEDULES:

Schedule 1     Trade Names
Schedule 2     Locations of Inventory

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                                   SCHEDULE 1

                                   TRADE NAMES

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                                   SCHEDULE 2

                             LOCATIONS OF INVENTORY

State:           Washington
County:          King
Street Address:  15120 NE 40th Street
                 Redmond, WA 98073

State:           Connecticut
County:          New Haven
Street Address:  925 Sherman Avenue
                 Hamden, CT  06514

                                       12<PAGE>   1
                                                                   EXHIBIT 10.48

                               SECURITY AGREEMENT

        THIS SECURITY AGREEMENT (the "Agreement") is made as of the 11th day of
August, 2000, by SPACELABS BURDICK, INC., a Delaware corporation, and VITA-STAT
MEDICAL SERVICES, INC., a Florida corporation (each individually a "Debtor" and
together, the "Debtors"; provided that after the date hereof, "Debtors" shall
include any Additional Debtors (as hereinafter defined)), in favor of BANK OF
AMERICA, N.A., a national banking association, as agent (hereinafter, in such
capacity, together with any successors or assigns in such capacity, the "Secured
Party") for the benefit of BANK OF AMERICA, N.A., a national banking association
("Bank of America"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association (each individually a "Lender" and collectively the "Lenders").

                                    RECITALS

        A. Spacelabs Medical, Inc., a California corporation (the "Borrower"),
Spacelabs Medical, Inc., a Delaware corporation (the "Guarantor"), Lenders and
Secured Party are parties to that certain Amended and Restated Loan Agreement
dated as of August 11, 2000 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lenders have agreed to make loans to Borrower.

        B. Each Debtor is a direct or indirect wholly-owned subsidiary of
Borrower and Borrower is a wholly owned subsidiary of Guarantor. The proceeds of
the loans to be made by Lenders pursuant to the Loan Agreement will result in a
direct or indirect material economic benefit to each Debtor.

        C. Pursuant to the terms of the Loan Agreement, the execution and
delivery of this Agreement is a material condition precedent to the agreement of
Lenders to make loans to Borrower under the Loan Agreement.

        NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration receipt of which Debtors hereby acknowledge, Debtors
agree as follows:

                                    AGREEMENT

        1. DEFINED TERMS. Capitalized terms not otherwise defined herein shall
have the meanings given in the Loan Agreement. The agreements, documents,
instruments and undertakings entered into in connection with the Loan Agreement,
together with the Loan Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time are referred to herein as
the "Loan Documents."

        2. GRANT OF SECURITY INTEREST. Each Debtor hereby grants to Secured
Party a security interest in and a right of setoff against all of its now owned
or hereafter acquired goods and other personal property, including all tangible
and intangible items and including without limitation the following
(collectively, the "Collateral"):

            (a) INVENTORY, ETC. All of such Debtor's right, title and interest
in inventory and stock in trade, including without limitation raw materials,
work in progress, materials used or

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consumed in Debtor's business, finished goods, returned goods and goods
traded in (any and all such inventory, accessions and products shall
collectively be referred to herein as the "Inventory").

            (b) ACCOUNTS, CONTRACT RIGHTS, ETC. All of such Debtor's right,
title and interest in (i) all accounts, (ii) all contract rights, (iii) all
chattel paper, (iv) all documents, documents of title, drafts, checks,
acceptances, bonds, letters of credit, notes, instruments or other negotiable
and non-negotiable instruments, bills of exchange, deposits, certificates of
deposit, insurance policies and any other writings evidencing a monetary
obligation or security interest in or a lease of personal property, (v) all
licenses, leases, contracts or agreements, (vi) all judgments, choses in action
and general intangibles which represent the right to receive the payment of
money or other considerations; and (vii) all guarantees and other personal
property securing the payment or performance of any of the foregoing (the
foregoing items shall collectively be referred to herein as the "Accounts").

            (c) INSURANCE. All insurances, including without limitation: (i) all
insurances now or hereafter in effect with respect to Inventory, proceeds of
Inventory, or other tangible Collateral, (ii) all claims and all returns of
premiums, dues, calls, and assessments that are not immediately applied to
premiums, dues, calls, and assessments that accrue from time to time, and all
other sums or claims for sums due or to become due under the foregoing
insurances and (iii) all right, title, and interest in, to, or under the
foregoing.

            (d) PROCEEDS AND PRODUCTS. All proceeds of any and all of the
foregoing Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not Secured Party is a loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss, damage, or
otherwise, with respect to any of the foregoing Collateral.

        3. TRANSFER OF INSTRUMENTS, ETC. Each Debtor agrees to transfer to
Secured Party on the date hereof all instruments (including without limitation
all securities), all letters of credit, and all chattel paper now owned and to
transfer to Secured Party promptly upon receipt thereof, all instruments
(including without limitation all securities) and chattel paper hereafter
acquired. Without limiting the foregoing, if any Debtor shall become entitled to
receive or shall receive, in connection with any of its securities, any: (i)
stock certificate, including without limitation any certificate representing a
stock dividend or in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off, split-off, split-up or liquidation; (ii) option, warrant,
or right, whether as an addition to or in substitution or in exchange for any of
its securities, or otherwise; (iii) dividend or distribution payable in
property, including securities issued by other than the issuer of any of its
securities; or (iv) dividends or distributions of any sort; then such Debtor
shall accept the same as Secured Party's agent, in trust for Secured Party, and
shall deliver them forthwith to Secured Party in the exact form received, with,
as applicable, such Debtor's endorsement when necessary, or appropriate stock
powers duly executed in blank, to be held by Secured Party, subject to the terms
hereof, as part of the Collateral. This Agreement does not grant Secured Party
power to control the voting or disposition of the securities prior to the
occurrence of an Event of Default.

        4. OBLIGATIONS SECURED. The security interest granted pursuant to this
Agreement secures the full and timely payment and performance of the following
indebtedness, liabilities

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<PAGE>   3

and obligations (collectively, the "Obligations"):

            (a) all indebtedness, liabilities and obligations of Borrower to
Lenders and Secured Party (or any of them) now or hereafter existing, whether
joint or several, direct or indirect, absolute or contingent or due or to become
due, howsoever evidenced, created, incurred or owing and whether or not
evidenced by promissory notes or other evidences of indebtedness, and all
modifications, renewals, extensions and rearrangements thereof and substitutions
and replacements therefor arising under or in connection with the Loan Agreement
and the other Loan Documents or any of the transactions contemplated thereby;

            (b) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is
an interest rate swap agreement or equivalent interest rate risk management
agreement, basis swap, forward rate agreement, interest rate option, rate cap,
collar or floor agreement or any other, similar agreement, including all
schedules thereto, confirmations of transactions thereunder, and documents,
definitions, and agreements incorporated therein by reference or relating
thereto and including, without limitation, any interest due thereon, all fees,
costs, and expenses incurred by Bank of America in connection therewith, and
termination payments and indemnifications relating thereto;

            (c) all indebtedness, liabilities and obligations of Borrower to
Bank of America or any affiliate of Bank of America now or hereafter existing,
whether joint or several, direct or indirect, absolute or contingent or due or
to become due, arising under or in connection with any agreement (including any
master agreement and any agreement relating to any single transaction) that is a
foreign currency exchange agreement or equivalent forward currency agreement,
currency swap, cross-currency rate swap or currency option agreement or any
other, similar agreement, including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated
therein by reference or relating thereto and including, without limitation, any
interest due thereon, all fees, costs, and expenses incurred by Bank of America
in connection therewith, and termination payments and indemnifications relating
thereto;

            (d) all indebtedness, liabilities and obligations of Borrower or
Debtors (or any of them) to Bank of America or any affiliate of Bank of America
now or hereafter existing, whether joint or several, direct or indirect,
absolute or contingent or due or to become due, arising under or in connection
with any agreement (including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated
therein by reference or relating thereto) pursuant to which Bank of America has
agreed to permit daylight overdrafts to occur on accounts maintained by Borrower
or Debtors (or any of them) with Bank of America, provide remote disbursement
services for Borrower or Debtors (or any of them), process automated clearing
house (ACH) transactions for the account of Borrower or extend credit to
Borrower or Debtors (or any of them), in the form of credit card accounts,
including, without limitation, any interest due thereon, all fees, costs, and
expenses incurred by Bank of America in connection therewith, and termination
payments and indemnifications relating thereto;

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<PAGE>   4

            (e) all indebtedness, liabilities and obligations of Debtors (or any
of them) to Secured Party now or hereafter existing, whether joint or several,
direct or indirect, absolute or contingent or due or to become due, howsoever
evidenced, created, incurred or owing and whether or not evidenced by promissory
notes or other evidences of indebtedness, and all modifications, renewals,
extensions and rearrangements thereof and substitutions and replacements
therefor, arising under or in connection with this Agreement; and

            (f) all accrued interest on any of the foregoing indebtedness,
liabilities and obligations, whether accruing prior to or subsequent to the
commencement of a bankruptcy or similar proceeding.

        5. OWNERSHIP AND LIENS. Each Debtor represents and warrants to Secured
Party and Lenders that (a) Debtors own the Collateral and are not prohibited by
contract or otherwise from subjecting the same to the security interest created
hereby; and (b) the Collateral is free and clear of all security interests and
encumbrances of every kind other than Liens created hereunder or under the other
Security Documents in favor of Secured Party and Liens expressly permitted by
the Loan Agreement. Debtors will not create or suffer to exist any Lien on the
Collateral other than Liens created hereunder or under the other Security
Documents in favor of Secured Party and other than Liens expressly permitted by
the Loan Agreement. Neither Debtors nor their agents, servants or employees will
sell, transfer, assign, lease or otherwise dispose of any item of Collateral in
whole or in part except as expressly permitted by the Loan Agreement. The
Collateral is now and shall remain personal property, and Debtors will not
permit any Collateral to become a fixture without prior written notice to and
consent of Secured Party and without first making all arrangements, and
delivering, or causing to be delivered, to Secured Party all instruments and
documents, including, without limitation, waivers and subordination agreements
by any landlords or mortgagees, requested by and satisfactory to Secured Party
to preserve and protect the primary security interest granted herein against all
persons. Debtors will fully and punctually perform any duty required of it in
connection with the Collateral and will not take any action which will impair,
damage or destroy Secured Party's rights with respect to the Collateral or
hereunder or the value thereof.

        6. SPECIAL REPRESENTATION RELATING TO ACCOUNTS. The Accounts arise in
bona fide transactions in the ordinary course of business and to Debtors'
knowledge without impediment to enforcement or collection thereof and there are
no material offsets or counterclaims or defenses to payment which may be
asserted against Debtor by Debtor's account debtors or payment obligors in
respect of the Collateral.

        7. APPOINTMENT OF SECURED PARTY. So long as any Obligation remains
unpaid or Lenders (or any of them) have any commitment to lend under the Loan
Agreement, each Debtor does hereby designate and appoint Secured Party its true
and lawful attorney with power irrevocable, for it and in its name, place and
stead, after an Event of Default has occurred and is continuing, to ask, demand,
receive, receipt and give acquittance for any and all amounts which may be or
become due or payable to any Debtor with respect to the Collateral, and in
Secured Party's sole discretion to file any claim or take any action or
proceeding, or either, in its own name or in the name of such Debtor, or
otherwise, which Secured Party deems necessary or desirable in order to collect
or enforce payment of any and all amounts which may become due or owing with
respect to the Collateral. The acceptance of this appointment by Secured Party
shall

                                       4
<PAGE>   5

not obligate it to perform any duty, covenant or obligation required to be
performed by any Debtor under or by virtue of the Collateral or to take any
action in connection therewith. Secured Party may also execute, on behalf of any
Debtor, any financing statements or other instruments which in its opinion may
be necessary or desirable to perfect or protect its position with respect to the
Collateral. Without limiting the generality of the foregoing, Secured Party is
authorized at any time after an Event of Default has occurred and is continuing
to exercise any right of any Debtor, or enforce any obligation owed to any
Debtor pursuant to the terms of any agreements to which such Debtor is a party
or in which it has any beneficial interest. Secured Party may, in its sole
discretion, perform any obligation of any Debtor under any of such Debtor's
contracts or in respect of any of such Debtor's accounts, and any expenses
incurred in such performance shall bear interest at a rate per annum equal from
time to time to the Prime Rate plus 2% (the "Default Rate") from the date
incurred until repaid by Debtors. Any such amounts shall be secured hereby and
shall be repaid by Debtors on demand.

        8. TAXES. Debtors will pay before delinquency any Taxes which are or may
become through assessment or distraint or otherwise a lien or charge on the
Collateral and will pay any Tax which may be levied on any Obligation secured
hereby, except any Tax whose validity or amount is being contested in good faith
by appropriate proceedings upon stay of execution of the enforcement thereof and
with provision having been made to the satisfaction of Secured Party for the
payment thereof in the event the contest is determined adversely to any Debtor.

        9. DEBTOR'S PLACE OF BUSINESS; LOCATION OF RECORDS AND COLLATERAL. Each
Debtor represents that the address set forth below its signature to this
Agreement is and will remain its principal place of business and the location of
its chief executive offices and the address at which it will keep its records
concerning the Collateral. Each Debtor represents and covenants that it has not
done within the preceding five (5) years and that after the date hereof it will
not do, business under any name other than the names specified in Schedule 1
attached hereto and by this reference incorporated herein; provided that any
Debtor may, upon thirty (30) days' prior written notice to Secured Party,
designate one or more additional names under which it will do business. From
time to time, promptly upon request, Debtors will advise Secured Party of each
location where any Inventory or other tangible Collateral is located. Each
Debtor represents and covenants that Schedule 2 attached hereto hereto and by
this reference incorporated herein sets forth the locations where Inventory is
and will be kept in each state where Inventory with an aggregate value of
$250,000 or more is or will be located. No Debtor will move the location of its
chief executive offices nor move its records concerning the Collateral unless
such Debtor shall have given Secured Party prior written notice of such move and
unless such Debtor shall have first executed all documents, agreements and
instruments (including Uniform Commercial Code financing statements) and shall
take all such other actions as Secured Party may reasonably request or shall be
necessary to ensure that Secured Party's security interest in the Collateral
continues at all times to be perfected as a Lien of first priority (subject only
to Liens expressly permitted by the Loan Agreement) enforceable against all
third parties in all jurisdictions as security for full and timely performance
of the Obligations. If Inventory with an aggregate value of $250,000 is at any
time kept in a state or jurisdiction not set forth on Schedule 2 attached
hereto, Debtors shall give Secured Party prompt written notice thereof and shall
execute all documents, agreements and instruments (including Uniform Commercial
Code financing statements) and shall take all such other actions as Secured
Party may reasonably request or shall be necessary to ensure that Secured
Party's security interest in the Inventory is perfected as a

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<PAGE>   6

Lien of first priority (subject only to Liens expressly permitted by the Loan
Agreement) in such jurisdiction, enforceable against all third parties as
security for full and timely performance of the Obligations.

        10. BOOKS AND RECORDS; INSPECTION. Debtors agree to maintain full and
accurate books of account prepared and maintained in accordance with GAAP, to
the extent applicable, covering the Collateral and to deliver, upon request, to
Secured Party such of the books and records as relate to the Collateral
including, without limitation, all of the invoices, shipping documents,
contracts, orders, order acknowledgments, correspondence and other instruments,
electronically stored materials and papers in any Debtor's possession relating
to the Collateral. Secured Party shall at all reasonable times have free access
to any Debtor's ledgers, books of account and other written or electronic
records evidencing or relating to the Collateral and the right to make and
retain copies or memorandum of same, and shall after the occurrence and during
the continuation of an Event of Default have the right to be present at any
Debtor's place of business to receive all communications and remittances
relating to the Collateral.

        11. COLLECTIONS OF ACCOUNTS, ETC. Until contrary notice is given by
Secured Party after an Event of Default has occurred and is continuing, Debtors
are specifically authorized to enforce and collect the Collateral described in
Section 2(b) hereof in such manner as shall be commercially reasonable, to
accept the return of goods and to reclaim, withhold or repossess goods as an
unpaid seller. Until receipt of such notice, Debtors agree to collect the
payments upon or from said Collateral, at Debtors' expense, with due diligence.
Upon notification by Secured Party to any Debtor after the occurrence and during
the continuation of an Event of Default to cease collecting upon said
Collateral, Secured Party will proceed to collect said Collateral in a
commercially reasonable manner and may deduct from the proceeds its reasonable
expenses of collection. Secured Party is authorized to receive in full
satisfaction of any obligor's obligation to any Debtor a commercially reasonable
sum less than the face amount thereof. Debtors agree that if any sums are
received by it in respect to the Collateral after such notification by Secured
Party, such sums shall be received in trust by Debtors and immediately shall be
paid over by Debtors to Secured Party. Debtors agree to hold Secured Party
harmless from any claim, loss or damage caused by any failure to collect any
obligation or to enforce any contract or by any act or omission on the part of
Secured Party, its agents and employees, relating to the Collateral except for
Secured Party's willful misconduct or gross negligence. The covenant set forth
in the preceding sentence shall survive the termination of this Agreement.

        12. INSPECTION OF COLLATERAL; INSURANCE. Secured Party may inspect the
Collateral at reasonable times and intervals and may for this purpose enter any
premises upon which the Collateral is located, including, but not limited to,
the locations specified in Schedule 2 attached hereto. Debtors will continuously
maintain, or cause to be continuously maintained, insurance on all Inventory and
other tangible Collateral against loss or damage by fire, theft and such other
risks as are customarily insured against by persons and businesses similarly
situated to Debtors, in such amounts, with such insurers and under policies in
such form, as shall be reasonably satisfactory to Secured Party. Secured Party
shall be named as a loss payee on all such policies, and all such policies shall
provide that they are not cancelable without thirty (30) days' prior written
notice to Secured Party. At least fifteen (15) days prior to the expiration of
the term of any insurance policy, Debtors shall furnish Secured Party with
written evidence of renewal or issuance of a satisfactory replacement policy.
Debtors shall, if requested by Secured Party,

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<PAGE>   7

obtain and deliver to Secured Party, from time to time, satisfactory original or
duplicate policies or certificates of insurance, including any endorsements, to
evidence Debtors' satisfaction of the insurance requirements hereunder. In the
event of loss or damage with respect to any or all of the tangible Collateral,
Secured Party shall have the right to collect any and all insurance upon the
tangible Collateral and to apply the same at its option to any of the
Obligations, whether or not matured, or to the restoration or repair of any or
all of the tangible Collateral.

        13. COMPLIANCE WITH LAWS. Each Debtor will ensure that its use of the
Collateral will comply in all material respects with all applicable laws,
ordinances, and regulations of Governmental Authorities.

        14. FURTHER ASSURANCES. Debtors, at their sole cost and expense, will at
any time and from time to time hereafter (a) execute such financing statements
and other instruments and perform such other acts as may be necessary or as
Secured Party may reasonably request to establish and maintain the security
interests herein granted by Debtors to Secured Party and the first priority and
continued perfection thereof; (b) obtain and promptly furnish to Secured Party
evidence of all such Government Approvals as may be required to enable Debtor to
comply with its obligations under this Agreement; and (c) execute and deliver
all such other instruments and perform all such other acts as Secured Party may
reasonably request to carry out the transactions contemplated by this Agreement.

        15. EXPENSES INCURRED BY SECURED PARTY. Secured Party is not required
to, but may, at its option, pay any Tax, insurance premium, filing or recording
fees, or other charges payable by Debtors hereunder and any such amount shall
bear interest at the Default Rate from the date of payment until repaid. Such
amounts shall be repayable by Debtors on demand and Debtors' obligation to make
such repayment shall constitute an additional Obligation secured hereby.

        16. GENERAL REMEDIES. If an Event of Default shall occur, Secured Party
shall have all remedies provided by law and, without limiting the generality of
the foregoing or the remedies provided in any other section hereof or in any
other Security Document, shall have the following remedies:

            (a) The remedies of a secured party under the Uniform Commercial
Code; and

            (b) The right to make notification and pursue collection or, at
Secured Party's option, to sell all or part of the Collateral and make
application of all proceeds or sums due on the Collateral in accordance with the
Loan Agreement; and

            (c) The right to enter any premises where any of the Collateral is
situated and take possession of such Collateral without notice or demand and
without legal proceedings; and

            (d) The right to exercise and enforce all of any Debtor's rights
under any contracts or any other agreement to which any Debtor is a party or of
which any Debtor is a beneficiary; and

            (e) All other remedies which may be available in law or equity.

At the request of Secured Party after an Event of Default has occurred and is
continuing, Debtors

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will assemble the Inventory and other tangible Collateral and make it available
to Secured Party at a place reasonably designated by Secured Party. To the
extent that notice of sale shall be required by law to be given, Debtors agree
that a period of ten (10) days from the time the notice is sent shall be a
reasonable period of notification of a sale or other disposition of Collateral
by Secured Party, and that any notice or other communication from Secured Party
to any Debtor pursuant to this Agreement or required by any statute may be given
to such Debtor at the address set forth under its name on the signature page
hereof. Debtors agree to pay on demand the amount of all expenses incurred by
Secured Party in protecting and realizing on the Collateral and Debtors further
agree that if this Agreement or any Obligation is referred to an attorney for
protecting or defending the priority of Secured Party's interest in the
Collateral or for collecting or realizing thereon, Debtors shall pay all of
Secured Party's reasonable expenses, including without limitation attorneys' fee
and costs and expenses of title search and all court costs and costs of public
officials and Debtors further agree that their obligation to pay such amounts
shall bear interest at the Default Rate from the date such expenditures are made
by Secured Party until repaid and shall be secured hereby. Debtors agree to pay
any deficiency remaining after collection or realization by Secured Party on the
Collateral.

        17. SECURITIES REMEDIES. If an Event of Default shall occur and if
Secured Party shall elect to exercise its right to sell or otherwise dispose of
all or any part of the Collateral constituting securities, Debtors recognize
that Secured Party may be unable or may deem it unadvisable to effect a public
sale of all or a part of the securities and may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire the securities for their own account, for
investment and not with a view to the distribution or resale thereof. Debtors
acknowledge that any such private sales may be at prices and on terms less
favorable to Secured Party than those of public sales, and agree that such
private sales shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to delay sale of any
securities to permit the issuer thereof to register such securities for public
sale under the Securities Act of 1933 as amended from time to time. Debtors will
promptly deliver to Secured Party all written notices, and will promptly give
Secured Party written notice of any other notices, received by it with respect
to the securities. Following the occurrence of an Event of Default hereunder and
upon request of Secured Party, Debtors will deliver to Secured Party irrevocable
proxies with respect to the securities in form satisfactory to Secured Party.
Until receipt thereof, this Agreement shall constitute each Debtor's proxy to
Secured Party or its nominee to vote all shares of the securities then
registered in such Debtor's name following the occurrence of such an Event of
Default.

        18. NOTICES. All notices and other communications provided for in this
Agreement shall be in writing (unless otherwise specified) and shall be mailed
(with first class postage prepaid) or sent or delivered to each party by
facsimile or courier service at (a) the address or facsimile number of Secured
Party set forth in the Loan Agreement, (b) the address or facsimile number of
each Debtor set forth under its name on the signature page hereof or (c) at such
other address as shall be designated by such party in a written notice to the
other parties. Except as otherwise specified all notices sent by mail, if duly
given, shall be effective three (3) Business Days after deposit into the mails,
all notices sent by a nationally recognized courier service, if duly given,
shall be effective one Business Day after delivery to such courier service, and
all other notices and communications if duly given or made shall be effective
upon receipt.

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<PAGE>   9

        19. HOLD HARMLESS. Debtors will indemnify and hold Secured Party and its
agents, successors, heirs and assigns (each an "Indemnified Party") harmless
from all liability, loss, damage or expense, including reasonable attorneys'
fees and costs, that the Indemnified Party may incur resulting from, arising out
of or relating to Indemnified Party's good faith efforts to comply with or
enforce the terms of this Agreement or the Obligations, provided, however, said
indemnification shall not apply to the extent that any such liability, loss,
damage or expense arises out of or is based solely upon the Indemnified Party's
willful misconduct or gross negligence. The covenants set forth in this Section
19 shall survive the termination of this Agreement.

        20. SOLVENCY. Each Debtor represents and warrants to Secured Party and
Lenders that such Debtor is Solvent and shall be Solvent immediately after the
consummation of the transactions contemplated by this Agreement. As used herein,
a Debtor is "Solvent" on a particular date, if, on such date both (i) (a) the
then fair saleable value of the property of such Debtor on a going concern basis
is (1) greater than the total amount of liabilities (including contingent
liabilities) of such Debtor as they mature in the ordinary course and (2) not
less than the amount that will be required to pay the probably liabilities on
such Debtor's then-existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to such Debtor; (b) such Debtor's capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (c)
such Debtor does not intend to incur, or believe) nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due; and (ii) such Debtor is "solvent" within the meaning given that term
and similar terms under applicable laws relating to fraudulent transfers and
conveyances. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability in the
ordinary course.

        21. DEBTOR'S CONSENT. Each Debtor hereby consents to all terms and
condition of agreements heretofore or hereafter made between Secured Party or
Lenders (or any of them) and Borrower or Debtors (or any of them) (including
without limitation the Loan Agreement and related documents) and further
consents that Secured Party and Lenders (or any of them) may without further
consent or disclosure and without affecting or releasing the obligations of any
Debtor hereunder: (a) surrender, exchange, release, assign, or sell any
collateral (including the Collateral) or waive, release, assign, sell, or
subordinate any security interest, in whole or in part; (b) waive or delay the
exercise of any rights or remedies of Secured Party or Lenders (or any of them)
against Borrower; (c) waive or delay the exercise of any rights or remedies of
Secured Party or Lenders (or any of them) against any surety or guarantor
(including, without limitation, rights or remedies of Secured Party or Lenders
(or any of them) against Debtors (or any of them) under this Agreement); (d)
waive or delay the exercise of any rights or remedies of Secured Party or
Lenders (or any of them) in respect of any collateral (including the Collateral)
or security interest now or hereafter held; (e) release any surety or guarantor
(including any Debtor); (f) renew, extend, waive or modify the terms of any
Obligation or the obligations of any surety or guarantor (including any Debtor),
or any instrument or agreement evidencing the same; (g) renew, extend, waive or
modify the terms of any deed of trust, mortgage, pledge, assignment, security
agreement or other security document (h) apply payments received from Borrower
or any surety or guarantor (including any Debtor) or from any collateral
(including the Collateral), to

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any indebtedness, liability, or obligations of Borrower or such sureties or
guarantors whether or not an Obligation hereunder; and (i) realize on any
security interest, judicially or nonjudicially, with or without preservation of
a deficiency judgment.

        22. DEBTOR'S WAIVERS. Each Debtor waives any action on delinquency in
respect of the Obligations or any part thereof, including any right to require
Secured Party or Lenders (or any of them) to sue Borrower or any guarantor or
surety obligated with respect to the Obligations or any part thereof, or
otherwise to enforce payment thereof against any collateral securing the
Obligations or the obligations of any guarantor of surety or any part thereof.
Debtors further waive notice of (a) Secured Party's acceptance of this Agreement
or its intention to act or its actions in reliance hereon; (b) the present
existence or future incurring of any Obligations or any terms or amounts thereof
or any change therein; (c) any default by Borrower or any surety or guarantor;
(d) the obtaining of any guaranty or surety agreement (in addition to this
Agreement); (e) the obtaining of any pledge, assignment or other security for
any Obligations; (f) the release of any surety or guarantor (including any
Debtor); (g) the release of any collateral; (h) any change in Borrower's
business or financial condition; (i) any renewal, extension or modification of
the terms of any Obligation or of the obligations or liabilities of any surety
or guarantor or any instruments or agreements evidencing the same; (j) any acts
or omissions of Secured Party or Lenders (or any of them) consented to in
Section 21 hereof; and (k) any other demands or notices whatsoever with respect
to the Obligations or this Agreement. Debtors further waive notice of
presentment, demand, protest, notice of nonpayment and notice of protest in
relation to any instrument or agreement evidencing any Obligation.

        23. DEBTORS' KNOWLEDGE OF BORROWER'S ECONOMIC CONDITIONS. Each Debtor
represents and warrants to Secured Party and Lenders that it has reviewed such
documents and other information as it has deemed appropriate in order to permit
it to be fully apprised of Borrower's financial condition and operations and
has, in entering into this Agreement made its own credit analysis independently
and without reliance upon any information communicated to it by Secured Party or
any Lender. Each Debtor covenants for the benefit of Secured Party and Lenders
to remain apprised of all material economic or other developments relating to or
affecting Borrower, its property or its business. Each Debtor expressly waives
any requirement that Secured Party or Lenders (or any of them) advise, disclose,
discuss or deliver notice to any Debtor regarding Borrower's financial condition
or operations or with respect to any default by Borrower in its performance of
the Obligations whether or not knowledge of such condition, operations or
default is or reasonably could be in the possession of a Debtor and whether or
not such knowledge is in the possession of Secured Party or any Lender before or
after the extension of any credit giving rise to Obligations by Borrower.

        24. LIMITATIONS ON DEBTOR'S RIGHTS. Debtors hereby agree that no Debtor
will exercise any rights of subrogation which any Debtor may acquire by payment
or performance of the Obligations until all Obligations shall have been paid in
full and Lenders (or any of them) shall have no further commitment to make loans
or otherwise extend credit to Borrower. In the event that any Debtor shall
receive any payment on account of such rights of subrogation while any
Obligations remain outstanding or while Lenders (or any of them) remain
committed to make loans or otherwise extend credit to Borrower, such Debtor
agrees to pay such amounts so received to Secured Party for the ratable benefit
of Lenders for immediate application to the outstanding Obligations or, in
Secured Party's sole discretion, to be held as cash collateral to

                                       10
<PAGE>   11

secure repayment of the Obligations.

        25. JOINT AND SEVERAL LIABILITY. All obligations of Debtors hereunder
are the joint and several obligation of each Debtor and each Debtor expressly
disclaims any intent to execute this Agreement merely as an accommodation party
or as a guarantor of any the other Debtor's obligations hereunder or thereunder.

        26. ADDITIONAL DEBTORS. From time to time after the date hereof,
additional persons may become parties hereto as additional Debtors (each an
"Additional Debtor"), by executing a counterpart of this Agreement substantially
in the form of Exhibit A attached hereto. Upon delivery of any such counterpart
to Secured Party, notice of which is hereby waived by Debtors, each such
Additional Debtor shall be a Debtor and shall be as fully a party hereto as if
such Additional Debtor were an original signatory hereto. Each Debtor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Debtor hereunder. This
Agreement shall be fully effective as to any Debtor that is or becomes a party
hereto regardless of whether any other person becomes or fails to become or
ceases to be a Debtor hereunder.

        27. ASSIGNMENT. Secured Party may assign or transfer the whole or any
part of the Obligations and may transfer therewith as collateral security the
whole or any part of the Collateral and all obligations, rights, powers and
privileges herein provided shall inure to the benefit of the assignee to the
extent of such assignment.

        28. WAIVERS. This Agreement shall not be qualified or supplemented by
course of dealing. No waiver or modification by Secured Party of any of the
terms and conditions hereof shall be effective unless in writing signed by
Secured Party; provided that any amendment hereto pursuant to Section 26 shall
be effective upon execution by any Additional Debtor and Debtors hereby waive
any requirement of notice of or consent to any such amendment. No waiver or
indulgence by Secured Party as to any required performance by Debtor shall
constitute a waiver as to any required performance or other obligations of
Debtor hereunder.

        29. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement is invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such provision or
provisions will not in any way be affected or impaired thereby in any other
jurisdiction; and the validity, legality and enforceability of the remaining
provisions contained herein will not in any way be affected or impaired thereby.

        30. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Washington (excluding its conflict of
laws rules) except where the location of Collateral requires that the creation,
validity, perfection, or enforcement of the security interests provided for
herein may be governed by the laws of the jurisdiction where such Collateral is
located.

        31. CONSENT TO JURISDICTION. Each Debtor hereby irrevocably submits to
the non-exclusive jurisdiction of any state or federal court sitting in Seattle,
King County, Washington, in any action or proceeding brought to enforce or
otherwise arising out of or relating to this Agreement and irrevocably waives to
the fullest extent permitted by law any objection which it

                                       11
<PAGE>   12

may now or hereafter have to the laying of venue in any such action or
proceeding in any such forum, and hereby further irrevocably waives any claim
that any such forum is an inconvenient forum. Debtors agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law. Nothing herein shall impair the right of Secured Party
to bring any action or proceeding against any Debtor or its property in the
courts of any other jurisdiction.

        32. SUCCESSORS. This Agreement inures to the benefit of Secured Party,
the Lenders and their respective successors and assigns, and shall bind the
successors and assigns of each Debtor. No Debtor may assign its rights and
obligations hereunder without the prior written consent of Secured Party.

        33. OTHER AGREEMENTS. The terms of this Agreement are intended to
supplement and not to replace or be replaced by the terms of the other Security
Documents and the rights and remedies herein provided to Secured Party are
intended to be cumulative of and in addition to all rights and remedies
conferred by the other Security Documents.

        34. AGREEMENT FILED AS FINANCING STATEMENT. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

        IN WITNESS WHEREOF, each Debtor has executed this Security Agreement as
of the date and year first above written.

        DEBTORS:                SPACELABS BURDICK, INC., a Delaware corporation

                                By
                                   Its

                                VITA-STAT MEDICAL SERVICES, INC., a Florida
                                corporation

                                By
                                   Its

                                Address:

                                15220 N.E. 40th Street
                                P.O. Box 97013
                                Seattle, WA  98073-9713
                                Attn:  James A. Richman
                                       Vice President & Corporate Controller

                                Telecopy No.:   (425) 885-4877
                                Telephone No.:  (425) 882-3700

                                       12
<PAGE>   13

SCHEDULES:

Schedule 1     Trade Names
Schedule 2     Locations of Inventory

EXHIBIT:

Exhibit A      Form of Counterpart

                                       13
<PAGE>   14

                                   SCHEDULE 1

                                   TRADE NAMES

                                       14
<PAGE>   15

                                   SCHEDULE 2

                             LOCATIONS OF INVENTORY

State:           Wisconsin
County:          Dane
Street Address:  500 Burdick Parkway
                 Deerfield, WI 53531

State:           Washington
County:          King
Street Address:  15220 NE 40th Street
                 Redmond WA 98073

                                       15
<PAGE>   16

                                    EXHIBIT A

                              [FORM OF COUNTERPART]

        THIS SECURITY AGREEMENT COUNTERPART (this "Counterpart"), dated as of
__________, 20___, is delivered pursuant to Section 26 of the Security Agreement
referred to below. The undersigned hereby agrees that this Counterpart may be
attached to the Security Agreement, dated as of August 11, 2000 (as amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement") made initially by Spacelabs Burdick, Inc. and Vita-Stat Medical
Services, Inc. in favor of Bank of America, N.A., as agent for the benefit of
the Lenders named therein, as Secured Party. Capitalized terms not otherwise
defined herein shall have the meanings given in the Security Agreement.

        The undersigned by executing and delivering this Counterpart hereby
becomes a Debtor under the Security Agreement in accordance with Section 26
thereof and agrees to be bound by all of the terms thereof, and by so executing
and delivering this Counterpart represents and warrants to Secured Party that
(a) the schedules attached hereto (i) set forth the names under which the
undersigned has done business and (ii) set forth the locations where the
undersigned keeps all tangible Collateral (other than tangible Collateral in
transit) in which the undersigned owns an interest, and (b) that that the
address set forth below its signature to this Counterpart is and will remain the
undersigned's principal place of business, the location of its chief executive
offices and the address at which it will keep its records concerning the
Collateral in which it owns an interest. The information set forth in the
attached schedules shall be deemed a part of Schedules 1 and 2 to the Security
Agreement, as applicable.

                                            [NAME OF ADDITIONAL DEBTOR]

                                            By
                                               Its

                                            Address:

                                                      Attn:

                                            Telecopy No.:
                                            Telephone No.:

                                       16

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