DORA A. BROWN VICE PRESIDENT Seafirst Agency Services December 23, 1998 Scott Stewart Spacelabs Medical, Inc. Fax: 425-885-4877 15220 NE 40th Street Redmond, WA 98073-9713 RE: Spacelabs Medical, Inc., a California corporation ("Company") Amended and...

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                                                                   EXHIBIT 10.38

                                                              Seafirst Bank 
                                                              A BankAmerica
                                                              Company 
                                                              000 Xxxxx Xxxxxx,
                                                              00xx Xxxxx
                                                              Xxxxxxx XX, 00000 
                                                              Fax 206/000-0000
                                                              206/358-0101

                                                              XXXX X. XXXXX
                                                              VICE PRESIDENT
                                                              Seafirst Agency 
                                                              Services



December 23, 1998

Xxxxx Xxxxxxx
Spacelabs Medical, Inc.                      Fax:  000-000-0000
00000 XX 00xx Xxxxxx
Xxxxxxx, XX  00000-0000

RE:  Spacelabs Medical, Inc., a California corporation ("Company")
     Amended and Restated Loan Agreement dated July 16, 1997 ("Loan Agreement")

Dear Xxxxx:

Bank of America National Trust and Savings Association dba Seafirst Bank, as
Agent for and with consent of the Lenders, agrees to the modification of Section
5.11 of the Loan Agreement, whereby the Funded Debt to EBITDA Ratio will not
exceed 3.8:1 for the fiscal quarter ending December 31, 1998, only. The Funded
Debt to EBITDA Ratio maximum of 3.5:1 will resume with the Company's fiscal
quarter ending March 31, 1999 and every quarter thereafter. All other terms and
conditions to the Loan Agreement remain unchanged, unless otherwise agreed to in
writing by the Agent and the Lenders.

Please call me it I can be of further assistance.

Sincerely,

Seafirst Bank, as Agent

Xxxx Xxxxx
V.P./Senior Agency Officer