<PAGE>

                                                                    EXHIBIT 10.6


                                                                        NATUS(R)


                          Natus Medical Incorporated


                            DISTRIBUTION AGREEMENT


TERRITORY:        JAPAN
                  -----

DISTRIBUTOR:      NIPPON EUROTEC CO., LTD.
ADDRESS:          Akasaka Daiichi Building, 9-17
                  Akasaka 4-chome, Minato-ku
                  Tokyo, 107
                  Japan

EFFECTIVE DATE:   June 11, 1997
                  -------------

EXPIRATION:       June 10, 2001
                  -------------

Natus Medical Inc. 1501 Industrial Road, San Carlos, CA 94070 415-802-0400
FAX 415-802-0401

Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
<PAGE>

                             DISTRIBUTOR AGREEMENT

     This Distributor Agreement ("Agreement"), effective as of the 11th day of
June, 1997 (the "Effective Date"), is entered into by and between Natus Medical
Inc., a California corporation having offices at 1501 Industrial Road, San
Carlos, California 94070, United States of America ("Natus"), and Nippon
Eurotec, a corporation organized under the laws of Japan, having offices at
Akasaka Daiichi Building, 9-17, Akasaka 4-chome, Minato-ku, Tokyo, 107 Japan
("Nippon Eurotec").

                                  BACKGROUND

A.   Nippon Eurotec desires to distribute Natus's Products (as defined below)
in Japan on the terms and conditions set forth below.

B.   Natus desires to appoint Nippon Eurotec as Natus's exclusive distributor
of the Products in Japan on the terms and conditions set forth below.

1.        DEFINITIONS

     1.1  "Customers" shall mean end-user customers for the Products solicited
           ---------
by Nippon Eurotec within the Territory.

     1.2  "Documentation" shall mean the end-user manuals, Software license
           -------------
agreement and related materials provided by Natus to Nippon Eurotec hereunder,
as set forth in Exhibit A.
                ---------

     1.3  "Product" or "Products" shall mean Natus ALGO Newborn Hearing
           -------      --------
Screener(TM) and associated disposable products, and related documentation
listed on Exhibit A attached hereto, as such products may be changed by Natus in
          ---------
Natus's discretion from time to time during the term of this Agreement.
Notwithstanding the foregoing, Natus shall not materially change the Products
without first providing [***] notice to Nippon Eurotec.

     1.4  "Software" shall mean the computer program(s) listed in Exhibit A in
           --------                                               ---------
machine executable object code format and Updates thereto which are incorporated
in the Product.

     1.5  "Territory" shall mean Japan.
           ---------

     1.6  "Updates" shall mean error corrections and bug fixes that Natus
           -------
generally makes available to its customers free of charge, but excluding new
versions of the Software that contains significant new features or
functionality, as determined by Natus in Natus' sole discretion.

2.   APPOINTMENT

     2.1  Grant. Natus hereby appoints Nippon Eurotec, and Nippon Eurotec hereby
          -----
accepts the appointment, as Natus's exclusive distributor to distribute Products
in the Territory only for use in the Territory. Natus agrees not to distribute
Products directly in the Territory or to appoint any

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               1
<PAGE>

in the Territory. Natus agrees not to distribute Products directly in the
Territory or to appoint any third party to distribute Products in the Territory.
Inquiries for the Products received by Natus from the Territory shall be
referred to Nippon Eurotec.

     2.2  No Other Rights.  Except as expressly provided herein, no right, title
          ---------------
or interest is granted by Natus to Nippon Eurotec. Natus may distribute products
other than Products in the Territory, either directly or indirectly, for any and
all uses, and no right, title or interest is granted by Natus to Nippon Eurotec
relating to products other than the Products.

     2.3  Software License. Prior to providing any Customer with any Software,
          ----------------
Nippon Eurotec shall ensure that each Customer has read and agreed to the terms
and conditions of the Software license agreement contained in each Software
package (the "Software License Agreement"). Nippon Eurotec shall diligently
enforce Software License Agreements and use its best efforts to ensure that
Customers abide by the terms of Software License Agreements. Nippon Eurotec
shall not, and shall not authorize any third party to, copy, modify, alter,
reverse engineer, disassemble or decompile the Products, and Nippon Eurotec
shall not distribute or market any Product containing any Software
electronically, or by interactive cable, remote processing services, online
services, linkups or multi-user local or area networks. Software provided to
Nippon Eurotec hereunder is subject to license and not sale.

     2.4  No Conflicts. Except for the Products and the products listed in
Exhibit B attached hereto, the parties acknowledge and agree that any efforts by
---------
Nippon Eurotec to sell, license, or distribute products in the market for
newborn hearing screening ("Competing Products") in the Territory would
constitute a conflict of interest with respect to Nippon Eurotec's obligations
to market and distribute the Products, and except for the Products and the
products listed in Exhibit B attached hereto, Nippon Eurotec represents and
                   ---------
warrants that as of the Effective Date of the Agreement, it does not represent
any Competing Products and will not represent any Competing Products during the
term of this Agreement.

2.   OBLIGATIONS OF NIPPON EUROTEC

     3.1  Diligence. Nippon Eurotec shall use its best efforts to promote
          ---------
vigorously the marketing and distribution of the Products to realize the maximum
sales potential for the Products in the Territory. Except as expressly set forth
herein, Nippon Eurotec shall be solely responsible for all costs and expenses
related to the advertising, marketing, promotion, and distribution of the
Products and for performing its obligations hereunder.

     3.2  Import. Nippon Eurotec shall be responsible for the importation of
          ------
the Products, including shipping and duties.

     3.3  Staffing. Nippon Eurotec will dedicate sufficient staff to undertake
          --------
its activities.

     3.4  Inventory. Nippon Eurotec shall maintain a sufficient inventory of
          ---------
Products.



                                                                               2
<PAGE>

     3.5  Reports. Nippon Eurotec shall report to Natus, within thirty (30)
          -------
working days after the end of each quarter, on the Nippon Eurotec Sales Report
Form contained in Exhibit C hereto.

     3.6  Application for Government Approvals. The Parties anticipate that
          ------------------------------------
applications will need to be submitted, and approvals obtained, from the
Japanese Ministry of Health and Welfare ("MHW") concerning the importation and
sale of Products in the Territory.

          3.6.1  Shonin. With respect to each Natus product included as a
                 ------
          Product hereunder, Nippon Eurotec agrees to prepare and submit an
          application for Shonin and to exert every effort to obtain Shonin on
                          ------                                     ------
          Products. Shonin for the first Product and all subsequent Products
                    ------
          shall be obtained by no later than the date agreed to in writing by
          Nippon Eurotec and Natus. Natus reserves the right to terminate this
          Agreement pursuant to paragraph 16 herein in the event any Shonin for
                                                                     ------
          any Product is not obtained by such date. Natus will provide up to two
          (2) units of Product for each Shonin application. Nippon Eurotec will
                                        ------
          bear all costs incurred in Shonin application, and Natus shall
                                     ------
          reimburse Nippon Eurotec as set forth below. Natus shall receive draft
          copies of all documents prior to submittal to the MHW, and Natus
          reserves the right to require changes in any such application
          documents.

          3.6.2  Kyoka. The parties anticipate that Kyoka will likely be
                 -----                              -----
          required at the time of importation of Products. Nippon Eurotec shall
          at its own cost obtain Kyoka.
                                 -----

          3.6.3  MHW Reimbursement Schedule. The parties contemplate that it
                 --------------------------
          will be advantageous to obtain MHW approval for Products to allow
          reimbursement under Japan's medical insurance reimbursement system.
          Nippon Eurotec shall obtain medical insurance reimbursement approval,
          the costs for which shall be borne by Nippon Eurotec.

          3.6.4  Ownership of Approvals The parties agree that Shonin may be
                 ----------------------                        ------
          applied for and obtained in Nippon Eurotec's name, and if so, that
          Nippon Eurotec shall hold such Shonin solely for the benefit of Natus
                                         ------
          subject to the terms of this Agreement. Nippon Eurotec agrees that at
          Natus's unilateral request, Nippon Eurotec shall take all actions
          required to transfer Product Shonin to Natus or its nominee, and at
                                       ------
          such time Nippon Eurotec shall be reimbursed for its direct out-of-
          pocket expenses in connection with each Product Shonin obtained by
                                                          ------
          Nippon Eurotec in an amount [***] to [***] by a number the [***] of
          which shall be the [***] of this Agreement and the [***] of which
          shall be the number of [***] in the [***] of this Agreement.
          Notwithstanding the foregoing, Nippon Eurotec shall not be reimbursed
          for its expenses if this Agreement is terminated (i) by Natus for
          Nippon Eurotec's breach; (ii) by expiration of this Agreement; or
          (iii) by Natus for Nippon Eurotec's inability to obtain Shonin under
                                                                  ------
          this section.

     3.7  Product Support. Nippon Eurotec shall be solely responsible for
          ---------------
supporting all Products distributed hereunder. Nippon Eurotec shall provide
reasonable technical support to

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               3
<PAGE>

Customers, including without limitation (i) maintaining trained and competent
technical and engineering support personnel for the Products who are
sufficiently knowledgeable with respect to the Products to answer Customer
questions regarding the use and operation of Products, (ii) designating a
technical liaison to coordinate Nippon Eurotec's technical support provided to
Customers, (iii) responding promptly to requests for technical support from
Customers, and (iv) providing technical support services to address and resolve
Customers' support requests with respect to the Products. Nippon Eurotec shall
ensure that Nippon Eurotec's technical and engineering support personnel attend
any training provided by Natus with respect to the Products.

     3.8  Customer Inquiries. Nippon Eurotec shall ensure that all Customer
          ------------------
questions regarding the use or operation of Products are initially addressed to
and answered by Nippon Eurotec.

     3.9  Product Support Reports. Without limiting the foregoing and in
          -----------------------
addition to any other obligations set forth in Natus' then current support terms
and conditions, Nippon Eurotec also shall be responsible for (i) providing
sufficient information to Natus for Natus to duplicate any reported error in the
Products; (ii) incorporating Updates into the Products promptly upon receipt
thereof; (iii) reporting errors promptly in English and in writing in accordance
with Natus' standard support procedures; and (iv) providing reasonable
cooperation and full information to Natus in the furnishing of support for the
Products.

     3.10 Insurance. During the term of this Agreement, Nippon Eurotec shall
          ---------
obtain and keep in force comprehensive, general liability, and product liability
insurance, with limits at least equal to the total retail value of all Products
sold by Nippon Eurotec, and naming Natus as a loss payee.

4.   OBLIGATIONS OF NATUS

     4.1  Information and Support. Natus shall use reasonable efforts to provide
          -----------------------
to Nippon Eurotec such back-up telephone or electronic-mail technical support as
Natus makes generally available to its distributors other than Nippon Eurotec.
Such telephone support shall be provided during Natus' normal business hours.

     4.2  Marketing Materials. Natus, at its expense, shall periodically provide
          -------------------
Nippon Eurotec with reasonable quantities of Natus' advertising and promotional
materials, pricing information and technical data related to the Products in
English, in each case to the extent Natus in its discretion makes such materials
generally available to its distributors other than Nippon Eurotec; provided that
Nippon Eurotec shall pay the freight costs and other taxes and duties applicable
to any such items provided or the delivery thereof. Nippon Eurotec, at its
expense, shall produce Japanese language versions of such marketing materials,
but only with Natus' prior written approval; and shall provide Natus with copies
of all Japanese language materials which it has prepared.

     4.3  Translation; Software Localization.
          ----------------------------------

          4.3.1  Translation of Documentation. Documentation including end-user
                 ----------------------------
          manuals, Software License Agreement, promotional and advertising
          materials and related

                                                                               4
<PAGE>

          materials provided by Natus pertaining to Products shall be translated
          into Japanese by Nippon Eurotec's expense. Prior to using any such
          translated materials, however, Nippon Eurotec shall provide to Natus
          full Japanese text drafts of all such translated Documentation, and
          shall refrain from releasing to any third party any such translated
          Documentation without the prior written approval of Natus. Natus owns
          the copyright to all such translated Documentation. The schedule for
          preparing such translated Documentation shall be agreed to by the
          parties.

          4.3.2  Software Localization. Natus Software shall be "localized"
                 ---------------------
          according to a schedule and budget to be agreed to by the parties. It
          is expected that after an initial number of Products have been
          purchased and are being used by end-users, that Natus and Nippon
          Eurotec will meet and confer to determine which functions and features
          of Software need to be "localized." Natus, as project manager, and
          Nippon Eurotec will [***] in the "localization" expenses, provided
          that no expenses for "localization" shall be incurred by either party
          without the prior written consent of both parties. Natus shall hold
          copyright to all such "localized" Software.

     4.4  Training and Personnel Exchanges. The parties agree that technical
          --------------------------------
service training, product training, and ongoing personnel exchanges, shall occur
as follows:

          4.4.1  Nippon Eurotec shall dispatch [***] competent technical
          service employees to Natus to be trained in Product technical
          service. Training for a period of up to [***] shall be offered at
          [***] by Natus. Travel, housing, and all other incidental costs to be
          incurred by such Nippon Eurotec Employees shall be the responsibility
          of Nippon Eurotec.

          4.4.2  Natus shall dispatch up to [***] of its personnel to conduct
          Product training in Japan of Nippon Eurotec sales personnel, as well
          as end-users as appropriate. Such Product training for up to [***]
          in duration shall be offered [***] by Natus. International air
          transportation and Tokyo lodging costs shall be borne by [***];
          domestic Japanese travel outside Tokyo, including transportation,
          lodging, and meals, shall be borne by Nippon Eurotec. Training
          necessitated by Product Software updates shall be conducted as
          necessary.

          4.4.3  The parties agree that it is mutually beneficial to regularly
          exchange sales, technical, or executive personnel, at a frequency of
          at least annually, during the term of this Agreement. Accordingly,
          each party shall reasonably accommodate the other at such time as one
          party desires to send sales, technical, or executive personnel to the
          other party. Each party shall pay all its own expenses in connection
          with any such exchanges.

5.   PRICE/PRICE CHANGE

     5.1  Price. The prices and fees to be paid by Nippon Eurotec to Natus for
          -----
Products shall be as set forth in price purchase schedules issued by Natus from
time to time during the term of this

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                             5
<PAGE>

Agreement ("Price"). The Prices of Products as of the Effective Date are as set
forth in EXHIBIT D attached hereto.

     5.2  Price Changes Generally. Prices are subject to change by Natus at any
          -----------------------
time in its sole discretion. However, price changes shall be effective after
[***] written notice to Nippon Eurotec, and Natus shall reasonably accept
orders at the earlier price received during such [***] period.

6.   TAXES AND OTHER CHARGES. Prices do not include and are net of any Japanese
or United States governmental taxes or charges of any kind. All payments by
Nippon Eurotec shall be made free and clear of, and without reduction for, any
withholding taxes.

7.   PAYMENT Unless otherwise specified, Products are priced FCA ("Free
Carrier," INCOTERMS 1990) Natus shipping dock, San Carlos, California. Payment
shall be by international, irrevocable, negotiable letters of credit, permitting
partial shipment and partial payment, payable in no longer than thirty (30)
days, in U.S. Dollars, and confirmed through such bank as Natus may from time to
time require, presented at least thirty days prior to requested shipment, and on
such other commercially reasonable terms as Natus requires from time to time. At
the request of Nippon Eurotec, Natus may provide for or allow other reasonable
payment terms on any particular sale.

8.   ORDERS

     8.1  Order and Acceptance. All orders for Products submitted by Nippon
          --------------------
Eurotec shall be initiated by written purchase order sent to Natus and
requesting a shipment date during the term of this Agreement; provided, however,
that an order may be initially placed orally, by telecopy or fax if a
conformational written purchase order is received by Natus within ten (10) days
of said oral, telecopy or fax order. All orders for Products are subject to
acceptance by Natus in writing, and Natus shall have no liability to Nippon
Eurotec with respect to purchase orders that are not accepted. No partial
acceptance of a purchase order shall constitute the acceptance of an entire
order, absent the written acceptance of such entire order. To facilitate Natus's
production scheduling, Nippon Eurotec shall submit purchase orders to Natus in
accordance with Natus's lead times then in effect which shall be communicated to
Nippon Eurotec upon Nippon Eurotec's request. Notwithstanding the foregoing,
Nippon Eurotec acknowledges and agrees that the shipment and delivery dates are
estimates only.

     8.2  Minimum Purchase Requirements For Products. Nippon Eurotec shall
          ------------------------------------------
purchase the minimum quantities of Products set forth in Exhibit D.
                                                         ---------

     8.3  Failure to Meet Purchase Requirements. If, at the end of any period
          -------------------------------------
referred to in Exhibit D, Nippon Eurotec has not, for any reason, purchased the
corresponding minimum amount, such failure shall be deemed a material breach of
this Agreement under Section 16(b) below.

     9.   SHIPMENT/RISK OF LOSS Products delivered pursuant to the terms of this
Agreement shall be suitably packed for export in Natus's standard shipping
cartons, marked for shipment to the

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               6
<PAGE>


destination specified in Nippon Eurotec's purchase order, and delivered to the
carrier FCA Natus shipping point.

10.  ORDER CHANGES Purchase orders for Products may be canceled or rescheduled
only with Natus's prior written approval.

11.  REJECTION Nippon Eurotec shall inspect all Products promptly upon receipt
thereof and may reject any defective Product, provided that Nippon Eurotec
shall (i) within the earlier of [***] after receipt of such alleged defective
Product or [***] after discovery of such alleged defect, notify Natus of its
rejection and request a Return Material Authorization ("RMA") number, and (ii)
within [***] of receipt of the RMA number from Natus, return such rejected
Product to Natus, such shipment to be FCA ("Free Carrier", INCOTERMS 1990) into
the custody of Natus' shipping agent in Japan, using the carrier and shipping
mode specified by Natus. Products not rejected within the foregoing time periods
shall be deemed accepted by Nippon Eurotec. In the event that Natus determines
that the returned Product is defective and properly rejected by Nippon Eurotec,
Natus shall at its option repair or replace such defective Product, or accept
return for credit of such defective Product. Natus shall return to Nippon
Eurotec, freight prepaid, all repaired or replaced Products properly rejected by
Nippon Eurotec. In the event that any rejected Product is determined by Natus to
not be defective or to have been modified or subjected to unusual electrical or
physical stress, misuse, abuse or unauthorized repair, Nippon Eurotec shall
reimburse Natus for all costs and expenses related to the shipping, insurance,
inspection, repair, if any, and return of such Product to and from Nippon
Eurotec. Except as set forth in this Section 11, Nippon Eurotec shall only
return Products to Natus with Natus's prior written approval.

12.  PRODUCT CHANGES Natus reserves the right from time to time in its sole
discretion, without incurring any liability to Nippon Eurotec with respect to
any previously placed purchase order, to discontinue or to limit its
production of any Product; to allocate, terminate or limit deliveries of any
Product in time of shortage; to alter the design or construction of any
Product; to add new and additional products to the "Products;" and upon at
least [***] notice to Nippon Eurotec, to change its sales and distribution
policies, not inconsistent with the terms of this Agreement.

13.  FORECASTS By the end of the first week of each quarter, Nippon Eurotec
shall provide Natus with a good faith six (6) month rolling forecast commencing
with the next calendar quarter showing Nippon Eurotec's prospective requirements
for the Products and anticipated purchase order submittal dates, including all
sales and business prospects, in such format as specified by Natus ("Forecast").
Forecasts shall commence on the first day of the quarter following submission of
the Forecast to Natus. Forecasts are for Natus's planning purposes only and
shall not constitute a binding obligation on the part of Natus to supply
Products in accordance with such Forecasts, nor shall Forecasts constitute firm
purchase orders by Nippon Eurotec.

14.  RETURNED PRODUCT Any Product returned to Natus by Nippon Eurotec as
authorized under this Agreement shall be shipped FCA (INCOTERMS, 1990) into the
custody of the carrier and using the shipping method as specified by Natus, to
Natus' San Carlos U.S.A. facility or such other

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                             7
<PAGE>

location as Natus may instruct Nippon Eurotec, and shall be packed in its
original packing material. Natus may refuse to accept any Product not packed and
shipped as herein provided.

15.  LIMITED WARRANTY

     15.1 Limited Warranty. Subject to the provisions of this Section 15, Natus
          ----------------
warrants to Nippon Eurotec that Products, as delivered, will be free from
defects in materials and workmanship for a period the shorter of [***]
from sale to the Customer by Nippon Eurotec and [***] from shipping the
Product to Nippon Eurotec ("Warranty Period"). The foregoing warranty is
contingent upon proper use of the Products in the applications for which they
were intended and shall not apply to Products that are modified or subjected
to unusual physical or electrical stress, misuse, abuse, or unauthorized
repair. Natus's sole liability and Nippon Eurotec's exclusive remedy shall be
limited to repair, replacement, credit or refund, at Natus's sole option and
election. Natus shall pay all freight charges for shipment of any replacement
Product to Nippon Eurotec during the Warranty Period. Replacement or repair of
a Product shall not extend the original warranty for that unit, and Nippon
Eurotec may return Product only during the original Warranty Period.

     15.2 Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 15.1
          ------------------------
ABOVE, NATUS MAKES NO WARRANTIES OR CONDITIONS, EXPRESS, STATUTORY, IMPLIED, OR
OTHERWISE, AND NATUS SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
NOTWITHSTANDING THE FOREGOING, NATUS DOES NOT EXCLUDE LIABILITY TO THE EXTENT
THAT SUCH LIABILITY MAY NOT BE EXCLUDED OR LIMITED BY LAW.

     15.3 Nippon Eurotec Limitations. Except to the extent required by
          --------------------------
applicable law, Nippon Eurotec shall not pass on to its customers a warranty of
greater scope or protection than the warranty (including the limited remedy,
exclusions, and limitation of liability) set forth in this Section 15 and
Section 20 below. Nippon Eurotec shall indemnify, defend and hold harmless Natus
from any claim or liability arising out of or relating to breach of the
foregoing provisions of this Section 15.3 or representations or warranties which
exceed Natus's express warranties set forth in this Section 15.

     15.4 Product Returns. In order to return Product that fails to conform to
          ---------------
the foregoing warranty set forth in this Section 15, Nippon Eurotec shall (i)
notify Natus in writing that such Product failed to conform with the warranty
set forth in this Section 15 and furnish a detailed explanation of any alleged
nonconformity; (ii) obtain a RMA number for the nonconforming Product from
Natus; and (iii) within ten (10) days of receipt of the RMA number, return such
Product to Natus as specified by Natus with the RMA number prominently attached,
shipped FCA (INCOTERMS 1990) into the custody of Natus' agent in Japan, to
Natus' San Carlos U.S.A. facility address first set forth above or such other
location as Natus may designate in writing in each case during the Warranty
Period.

16.  TERM AND TERMINATION

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               8
<PAGE>

     16.1 Term. This Agreement shall commence upon the Effective Date and
          ----
continue in full force and effect for a fixed term of four (4) years, and shall
terminate on that date unless earlier terminated in accordance with the
provisions of this Agreement or unless otherwise agreed to in writing by the
parties.

     16.2 Termination for Cause. Natus may terminate this Agreement effective
          ---------------------
upon written notice to Nippon Eurotec stating its intention to terminate in the
event Nippon Eurotec breaches any of the provisions of Sections 2 or 17. Without
limiting the foregoing, either party may terminate this Agreement effective upon
written notice to the other party stating such party's intention to terminate,
in the event the other party:

               (i)   ceases to function as a going concern or to conduct
               operations in the normal course of business or enters into any
               composition proceedings, or

               (ii)  has a petition filed by or against it under any state or
               federal bankruptcy or insolvency law which petition has not been
               dismissed or set aside within sixty (60) days of its filing; or

               (iii) fails to perform any of its obligations under this
               Agreement so as to be in default hereunder and fails to cure such
               default within thirty (30) days after written notice of such
               default.

     16.3 Minimum Purchase Amounts and Forecasts. Natus shall have the right to
          --------------------------------------
terminate this Agreement with six (6) months notice to Nippon Eurotec if Nippon
Eurotec does not purchase the minimum amounts set forth in Exhibit D hereto.

     16.4 Purchase Orders: No Waiver. Nippon Eurotec shall be obligated to
          --------------------------
accept deliveries of Products for which purchase orders were accepted by Natus
prior to the effective date of termination. After any notice of termination has
been delivered by either party hereunder, deliveries of Product from Natus to
Nippon Eurotec, unless otherwise agreed by Natus, shall require prepayment by
Nippon Eurotec to Natus. The acceptance of any purchase order from, or the sale
or license of any Product, to Nippon Eurotec after the termination or expiration
of this Agreement shall not be construed as a renewal or extension of this
Agreement nor as a waiver of termination of this Agreement.

     16.5 No Liability for Termination. Except as expressly required by law, in
          ----------------------------
the event of termination of this Agreement by either party in accordance with
any of the provisions of this Agreement, neither party shall be liable to the
other, because of such termination, for compensation, reimbursement or damages
on account of the loss of prospective profits or anticipated sales or on account
of expenditures, inventory, investments, leases or commitments in connection
with the business or goodwill of Natus or Nippon Eurotec. Termination shall not,
however, relieve either party of obligations incurred prior to the termination.

     16.6 Survival. Nippon Eurotec may sell Products existing in its inventory
          --------
as of the effective date of termination of this Agreement for a period of
[***]

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                             9
<PAGE>

after the effective date of such termination ("Wind-Down Period"). During the
Wind-Down Period, the provisions of Sections 6, 7 and 9 shall survive. In
addition to the provisions set forth in this Section 16.6, the following
provisions shall survive expiration or any termination of this Agreement:
Sections 1, 15, 16.4-16.7, 17, 20, 21, 22 and the last sentence of Section 19.2.

     16.7 Return of Materials. All Products, trademarks, marks, trade names,
          -------------------
patents, copyrights, any customer information not yet provided to Natus under
Section 3(f), designs, drawings, formulas or other data, photographs, samples,
literature, and sales and promotional aids of every kind shall remain the
property of Natus. Within thirty (30) days after the effective date of
termination of this Agreement, Nippon Eurotec shall at Natus's option destroy
all tangible items bearing, containing, or contained in, any of the foregoing,
in its possession or control and provide written certification of such
destruction, or prepare such tangible items for shipment to Natus or Natus's
designee, as Natus may direct, at Natus's expense. Nippon Eurotec shall not make
or retain any copies of any Confidential Information (as defined in Section 17
below) which may have been entrusted to it.

17.  CONFIDENTIALITY AND PROPRIETARY RIGHTS

     17.1 Confidentiality. Nippon Eurotec acknowledges that by reason of its
          ---------------
relationship to Natus hereunder it will have access to certain information and
materials concerning Natus's business, plans, Customers, technology, and
products that are confidential and of substantial value to Natus, which value
would be impaired if such information were disclosed to third parties
("Confidential Information"). Nippon Eurotec agrees that it will not use in any
way for its own account or the account of any third party, nor disclose to any
third party, any Confidential Information revealed to it by Natus. Nippon
Eurotec shall take every reasonable precaution to protect the confidentiality of
Confidential Information. Upon request by Nippon Eurotec, Natus shall advise
whether or not it considers any particular information or materials to be
confidential. Nippon Eurotec shall not publish any technical description of the
Products beyond the description published by Natus. In the event of termination
of this Agreement, there shall be no use or disclosure by Nippon Eurotec of any
Confidential Information of Natus, and Nippon Eurotec shall not manufacture or
have manufactured any devices, components or assemblies utilizing any of Natus's
confidential information.

     17.2 Proprietary Rights. Nippon Eurotec agrees that Natus retains all of
          ------------------
its right, title and interest in and to all patent rights, trademarks, trade
names, inventions, copyrights, know-how and trade secrets relating to the
Products or the product lines that include the Products, and the design,
manufacture, operation or service of the Products. The use by Nippon Eurotec of
any of these property rights is authorized only for the purposes herein set
forth and upon termination of this Agreement for any reason such authorization
will cease. Nippon Eurotec shall not (and shall require that its customers do
not) remove, alter, cover or obfuscate any proprietary rights notices placed or
embedded by Natus on or in any Product. Nippon Eurotec shall not apply to
register any proprietary rights covered by the Products in its own name.

18.  PATENT/COPYRIGHT/TRADEMARK AND PRODUCT LIABILITY INDEMNIFICATION

                                                                              10
<PAGE>

     18.1 Indemnity. Nippon Eurotec agrees that Natus has the right to defend,
          ---------
or at its option to settle, and Natus agrees, at its own expense, to defend or
at its option to settle, any third party claim, suit or proceeding
(collectively, "Action") brought against Nippon Eurotec alleging the Products
infringe any patent, copyright or trademark in existence as of the Effective
Date, subject to the limitations hereinafter set forth. Natus will have sole
control of any such Action or settlement negotiations, and Natus agrees to pay,
subject to the limitations hereinafter set forth, any final judgment entered
against Nippon Eurotec on such issue in any such Action defended by Natus.
Nippon Eurotec agrees that Natus will be relieved of the foregoing obligations
unless Nippon Eurotec notifies Natus promptly in writing of such Action, gives
Natus authority to proceed as contemplated herein, and gives Natus proper and
full information and assistance to settle and/or defend any such Action. If it
is adjudicatively determined, or if Natus believes, that the Products, or any
part thereof, infringe any patent, copyright or trademark, or if the sale or use
of the Products, or any part thereof, is, as a result, enjoined, then Natus may,
at its election, option, and expense: (i) procure for Nippon Eurotec the right
under such patent, copyright or trademark to sell or use, as appropriate, the
Products or such part thereof; or (ii) replace the Products, or part thereof,
with other noninfringing suitable Products or parts; or (iii) suitably modify
the Products or part thereof; or (iv) remove the Products, or part thereof,
terminate distribution or sale thereof and refund the payments paid by Nippon
Eurotec for such Products less a reasonable amount for use and damage. Natus
will not be liable for any costs or expenses incurred without its prior written
authorization, or for any installation costs of any replaced Products.

     18.2 Limitations. Notwithstanding the provisions of Section 18.1 above,
          -----------
Natus has no liability to Nippon Eurotec for (i) any infringement of patent or
copyright claims alleging infringement by completed equipment or any assembly,
combination, method or process in which any of the Products may be used but not
covering the Products standing alone; (ii) any trademark infringements involving
any marking or branding not applied by or requested by Natus, or involving any
marking or branding applied by Natus at the request of Nippon Eurotec; or (iii)
the modification of the Products, or any part thereof, unless such modification
was made by Natus, where such infringement would not have occurred but for such
modifications.

     18.3 Disclaimer. NATUS' LIABILITY ARISING OUT OF OR RELATING TO THIS
          ----------
SECTION 18 SHALL NOT EXCEED THE AGGREGATE AMOUNTS PAID BY NIPPON EUROTEC TO
NATUS FOR THE ALLEGEDLY INFRINGING PRODUCTS THAT ARE THE SUBJECT OF THE
INFRINGEMENT CLAIM. THE FOREGOING PROVISIONS OF THIS SECTION 18 STATE THE ENTIRE
LIABILITY AND OBLIGATIONS OF NATUS AND THE EXCLUSIVE REMEDY OF NIPPON EUROTEC
AND ITS CUSTOMERS, WITH RESPECT TO ANY ALLEGED PATENT, COPYRIGHT OR TRADEMARK
INFRINGEMENT BY THE PRODUCTS OR ANY PART THEREOF.

     18.4 Product Liability Indemnification. Natus shall at its own expense
          ---------------------------------
indemnify and hold harmless Nippon Eurotec, and its directors, officers,
employees and agents, from and against any and all third party claims for
losses, damages (actual, consequential or indirect), liabilities, penalties,
demands, suits or actions, and related costs and expenses of any kind
(including, without limitation, Nippon Eurotec's reasonable out-of-pocket
expenses of investigation and recall, counsel fees, judgements and settlements)
for injury to or death of any person or property damage or any other

                                                                              11
<PAGE>

loss suffered or allegedly suffered by any person or entity and arising out of
or otherwise in connection with any defect or alleged defect of the Products
sold by Natus to Nippon Eurotec under this Agreement (the "Claim"). Natus will
have sole control of any such Claim or settlement negotiations. Nippon Eurotec
agrees that Natus will be relieved of the foregoing obligations unless Nippon
Eurotec notifies Natus promptly in writing of such Claim, gives Natus authority
to proceed as contemplated herein, and gives Natus proper and full information
and assistance to settle and/or defend any such Claim.

19.  USE OF TRADEMARKS/TRADE NAMES

     19.1 Trademarks. Natus, at its expense, shall seek registration of
          ----------
appropriate Natus trademarks in the Territory. During the term of this
Agreement, Nippon Eurotec shall have the right to indicate to the public that it
is an authorized distributor of the Products and to advertise such Products
under the trademarks, marks, and trade names of Natus set forth in Exhibit E
                                                                   ---------
("Natus' Trademarks") and in the promotion and distribution of the Products;
provided, however, that upon ninety (90) days prior written notice to Nippon
Eurotec, Natus may substitute alternative marks for any or all of the Natus's
Trademarks. All representations of Natus' Trademarks that Nippon Eurotec intends
to use shall first be submitted to Natus for approval (which shall not be
unreasonably , withheld) of design, color and other details or shall be exact
copies of those used by Natus. In addition, Nippon Eurotec shall fully comply
with all reasonable guidelines, if any, communicated by Natus concerning the use
of Natus' Trademarks.

     19.2 Use. Nippon Eurotec shall not alter or remove any of Natus' Trademarks
          ---
affixed to the Products by Natus. Except as set forth in this Section 19,
nothing contained in this Agreement shall grant or shall be deemed to grant to
Nippon Eurotec any right, title or interest in or to Natus's Trademarks. All
uses of Natus' Trademarks will inure solely to Natus and Nippon Eurotec shall
obtain no rights with respect to any of Natus' Trademarks, other than the right
to distribute Products as set forth herein, and Nippon Eurotec irrevocably
assigns to Natus all such right, title and interest, if any, in any of Natus'
Trademarks. At no time during or after the term of this Agreement shall Nippon
Eurotec challenge or assist others to challenge Natus' Trademarks (except to the
extent expressly prohibited by applicable law) or the registration thereof or
attempt to register any trademarks, marks or trade names confusingly similar to
those of Natus. Upon termination of this Agreement, Nippon Eurotec shall
immediately cease to use all Natus' Trademarks and any listing by Nippon Eurotec
of Natus' name in any telephone book, directory, public record or elsewhere,
shall be removed by Nippon Eurotec as soon as possible, but in any event not
later than the subsequent issue of such publication.

20.  LIMITATION OF LIABILITY Natus's liability arising out of or relating to
this Agreement, including liability under Section 16(e), shall not exceed the
aggregate amounts paid by Nippon Eurotec to Natus hereunder. IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR LOST PROFITS, COST OF PROCUREMENT OF SUBSTITUTE
GOODS, OR ANY OTHER SPECIAL, RELIANCE, INCIDENTAL, OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY WHETHER BASED IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), OR OTHERWISE. THE FOREGOING LIMITATIONS SHALL APPLY
REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE

                                                                              12
<PAGE>

POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE
OF ANY LIMITED REMEDY STATED HEREIN.

21.  COMPLIANCE WITH LAWS

     21.1 Export Control. Nippon Eurotec understands and acknowledges that Natus
          --------------
is subject to regulation by agencies of the United States Government, including,
but not limited to, the U.S. Department of Commerce, which prohibit export or
diversion of certain products and technology to certain countries. Any and all
obligations of Natus to provide the Products, as well as any other technical
information or assistance shall be subject in all respects to such United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad by persons subject to the jurisdiction of the
United States, including the Export Administration Act of 1979, as amended, any
successor legislation, and the Export Administration Regulations issued by the
Department of Commerce, Bureau of Export Administration. Nippon Eurotec agrees
to cooperate with Natus including without limitation, providing required
documentation, in order to obtain export licenses or exemptions therefrom.
Nippon Eurotec warrants that it will comply with the Export Administration
Regulations and other United States laws and regulations governing exports in
effect from time to time. Nippon Eurotec further agrees not to resell Products
to any organization, public or private, which engages in the research or
production of military devices, armaments, or any instruments of warfare,
including biological, chemical and nuclear warfare.

     21.2 Governmental Approvals. Nippon Eurotec represents and warrants that it
          ----------------------
has obtained or will obtain all required approvals and registrations (which
include Shonin ("Approvals") of the government of Japan in connection with this
        ------
Agreement and that the provisions of this Agreement and the rights and
obligations of the parties hereunder, are enforceable under the laws of Japan.
Nippon Eurotec shall notify Natus of all Approvals obtained by it and shall
provide Natus with copies of all material documents relating thereto.

22.  MISCELLANEOUS PROVISIONS

     22.1 Independent Contractors. The relationship of Natus and Nippon Eurotec
          -----------------------
established by this Agreement is that of independent contractors, and neither
party is an employee, agent, partner or joint venturer of the other. All
financial obligations associated with Nippon Eurotec's business are the sole
responsibility of Nippon Eurotec. All sales and other agreements between Nippon
Eurotec and its customers are Nippon Eurotec's exclusive responsibility and will
have no effect on Nippon Eurotec's obligations under this Agreement.

     22.2 Assignment. Nippon Eurotec may not transfer or assign its rights or
          ----------
obligations under this Agreement without the prior written consent of Natus.
Subject to the foregoing sentence, this Agreement will be binding upon and inure
to the benefit of the parties hereto, their successors and assigns. Successors
of Natus shall include any party which acquires Natus or into which Natus
merges.

                                                                              13
<PAGE>

     22.3  Indemnity. Except for warranty claims for which Natus is liable under
           ---------
Section 15 and infringement claims covered by Section 18, Nippon Eurotec agrees
to indemnify and hold Natus harmless against any cost, loss, liability or
expense (including attorneys' fees) arising out of third party claims against
Natus relating to Nippon Eurotec's use and distribution of the Products.

     22.4  No Implied Waivers. The failure of either party at any time to
           ------------------
require performance by the other of any provision hereof shall not affect the
right of such party to require performance at any time thereafter, nor shall the
waiver of either party of a breach of any provision hereof be taken or held to
be a waiver of a provision itself.

     22.5  Severability. If any provision of this Agreement is held to be
           ------------
invalid by a court of competent jurisdiction, then the remaining provisions will
nevertheless remain in full force and effect. The parties agree to renegotiate
in good faith those provisions so held to be invalid to be valid, enforceable
provisions which provisions shall reflect as closely as possible the original
intent of the parties, and further agree to be bound by the mutually agreed
substitute provision.

     22.6  Force Majeure. Except for payment of monies, neither party shall be
           -------------
liable for failure to fulfill its obligations under this Agreement or any
purchase order issued hereunder or for delays in delivery due to causes beyond
its reasonable control, including, but not limited to, acts of God, man-made or
natural disasters, earthquakes, fire, riots, flood, material shortages, strikes,
delays in transportation or inability to obtain labor or materials through its
regular sources. The time for performance of any such obligation shall be
extended for the time period lost by reason of the delay.

     22.7  Conflicting Terms. The parties agree that the terms and conditions of
           -----------------
this Agreement shall prevail, notwithstanding contrary or additional terms, in
any purchase order, sales acknowledgment, confirmation or any other document
issued by either party effecting the purchase and/or sale of Products, unless
the parties agree otherwise in writing.

     22.8  Headings. Headings of paragraphs herein are inserted for convenience
           --------
of reference only and shall not affect the construction or interpretation of
this Agreement.

     22.9  Liability of Natus. The provisions of this Agreement under which the
           ------------------
liability of Natus is excluded or limited shall not apply to the extent that
such exclusions or limitations are declared illegal or void under the laws
applicable in the Territory in which Products are sold, unless the illegality or
invalidity is cured under the laws of the Territory by the fact that the law of
California governs this Agreement.

     22.10 Notice. Any notice required or permitted to be given under this
           ------
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party
first set forth above, or to such other address as a party may designate by
written notice in accordance with this Section 22.10, (iii) by overnight
courier, or (iv) by fax with confirming letter mailed under the conditions
described in (ii) above. Notice so given shall be deemed effective when
received, or if not received by reason of fault of addressee, when delivered.

                                                                              14
<PAGE>

     22.11 Entire Agreement. This Agreement contains the entire understanding of
           ----------------
the parties with respect to the subject matter hereof and supersedes all prior
agreements relating thereto, written or oral, between the parties. Amendments to
this Agreement must be in writing, signed by the duly authorized officers of the
parties. The terms of any purchase order are expressly excluded.

     22.12 Governing Law. This Agreement shall be governed by and construed
           -------------
under the law of the State of California, without regard to conflict of laws
principles or the U.N. Convention on Contracts for the International Sale of
Goods.

     22.13 Arbitration. Any dispute or claim arising out of or in relation to
           -----------
this Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding arbitration under the
Rules of Conciliation and Arbitration of the International Chamber of Commerce
as presently in force ("Rules") and by three (3) arbitrators appointed in
accordance with said Rules. Judgment on the award rendered may be entered in any
court having jurisdiction thereof. The place of arbitration shall be San
Francisco, California, U.S.A. Any monetary award shall be in U.S. dollars and
the arbitration shall be conducted in the English language. The parties may
apply to any court of competent jurisdiction for temporary or permanent
injunctive relief, without breach of this Section 22.13 and without any
abridgment of the powers of the arbitrator. The prevailing party at any such
arbitration or in any legal proceeding brought to enforce terms of this
Agreement shall be entitled to an award of attorney's fees and other costs of
such arbitration or proceeding.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the Effective Date.


NIPPON EUROTEC Co., Ltd.                  NATUS MEDICAL INC.


By: /s/ Toshifumi Wakayama               By: /s/ Tom C. Johnson
    --------------------------------         ----------------------------------

Name: Toshifumi Wakayama                 Name: Tom C. Johnson
      ------------------------------           --------------------------------
      (Typed or Printed)                         (Typed or Printed)

Title: President                         Title: President
       -----------------------------            -------------------------------


Exhibit A:  Product List

Exhibit B:  Nippon Eurotec Products
Exhibit C:  Nippon Eurotec Sales Report Form
Exhibit D:  Product Prices; Minimum Purchase Requirements
Exhibit E:  Natus' Trademarks


                                                                              15
<PAGE>

                                   EXHIBIT A

                    NATUS PRODUCT LISTING AND DOCUMENTATION

ALGO(TM)2 NEWBORN HEARING SCREENER
----------------------------------
Product Manual
Technical Service Manual
Product (Inservice) Video
Software License Agreement

ALGO(TM)2e NEWBORN HEARING SCREENER
-----------------------------------
Product Manual
Technical Service Manual
Product (Inservice) Video
Software License Agreement

Replacement Parts for ALGO(TM) Newborn Hearing Screeners
Natus Screening Supplies for ALGO(TM) Newborn Hearing Screeners
Natus Software for ALGO(TM) Newborn Hearing Screeners
Natus Neonatal Supplies

(See price list in EXHIBIT D for descriptions of the above products.)
----------------------------------------------------------------------

MARKETING MATERIALS:/1/
-----------------------
Newborn Hearing Screening Program Handbook
Parent Education Video
"Ten Fingers Ten Toes..." poster
"The importance of Newborn Hearing Screening..." brochure
ALGO DataBook(TM) NHS Data Tracking System Product Sheet
ALGO 2e(TM) Newborn Hearing Screener Product Sheet
AABR(TM) Automated Auditory Brainstem Response Product Sheet


___________________
/1/ Marketing Materials provided in English final printed format

                                                                              16
<PAGE>

                                   EXHIBIT B

                            NIPPON EUROTEC PRODUCTS

[To be listed by Nippon Eurotec; to include a detailed list of all products now
being sold by Nippon Eurotec in the newborn market category.]



                                                                              17
<PAGE>

                                    EXHIBIT C

                       Nippon Eurotec Sales Repart Form

1.   Sales during Quarter ended ____/____/____:
                     a.  Units sold
                     b.  Disposables sold
                     c.  Purchaser's name, address, telephone number, fax
               number; responsible contact person.

2.   Projection for upcoming Quarter ending  ____/____/___:



                                                                              18
<PAGE>

                                   EXHIBIT D

                 PRICE LIST AND MINIMUM PURCHASE REQUIREMENTS

Prices quoted in U.S. dollars                                             Nippon
-----------------------------
                                                                         Eurotec
Part Number                                                                Price
-----------                                                          -----------

010011     ALGO(TM)2 Newborn Hearing Screener                        $     [***]
           Includes: Screener with keyboard, Printer,
           Rollstand, Workstation with Platform, Acoustic
           Transducer Assembly (ATA) Cable, Patient
           Cable Assembly (PCA) and pre-amplifier
           cable, Acoustic Check Kit, Starter Kit of
           supplies


41000      ALGO(TM)2E Newborn Hearing Screener                       $     [***]
           Includes: Detachable screening module with
           laptop computer, Natus screening station with
           built-in storage, Printer for self-adhesive
           patient results labels, Patient Cable Assembly
           (PCA) and pre-amplifier cable, Acoustic
           Transducer Assembly (ATA) Cable, Acoustic
           Check Kit, Starter Kit of supplies

Replacement Parts for ALGO(TM) Newborn Hearing Screeners

040176     Acoustic Transducer Assembly (ATA) Cable                  $     [***]
040144     Acoustic Check Kit                                        $     [***]
040127     Patient Cable Assembly (PCA)                              $     [***]
040119     Pre-amplifier Cable                                       $     [***]

           ALGO 2 Carrying Case                            Please Call for Quote
           ALGO 2e Carrying Case                           Please Call for Quote

700090     Power Cord                                                $     [***]
900081     ALGO 2e Label Printer                                     $     [***]

Natus Screening Supplies for ALGO(TM) Newborn Hearing Screeners

040112     ALGO-COLORADO PAK - Case Of 288 Screenings                $     [***]
           Includes: 8 boxes/ 288 pairs Ear Coupiers(R)
           disposable ear phones, 320 Jelly Button(R)Sensors

__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
                                                                              19
<PAGE>

                                   EXHIBIT D

                 PRICE LIST AND MINIMUM PURCHASE REQUIREMENTS

Prices quoted in U.S. dollars.                                            NIPPON
------------------------------
                                                                         Eurotec
Part Number                                                                Price
-----------                                                          -----------

Printing Supplies for ALGO(TM)2e Newborn Hearing Screeners

900079    Printer Labels - Four rolls (560 labels)                   $     [***]

Individual Screening Supplies for ALGO(TM) Newborn Hearing Screeners
030097    Jelly Button(R) Sensors - Box of 50 triplets               $     [***]
040069    DriPrep(TM) Prepping Pads - Pouch of 25 pads               $     [***]
900072    NuPrep(R)Prepping Gel - One 1 oz. tube (28.35 g)           $     [***]

Natus Neonatal Supplies

040048    MiniMuffs(TM) Neonatal Noise Attenuators - 36 pairs        $     [***]
040048    MiniMuffs(TM) Neonatal Noise Attenuators - 288 pairs       $     [***]


Natus Software for ALGO(TM) Newborn Hearing Screeners

040181    70/40(TM) Screening Application Software                   $     [***]
040240    Algo DataBook(TM) NHS Data Tracking Software               $     [***]
900123    Time/Date Software                                         $     [***]


MINIMUM PURCHASE REQUIREMENTS
-----------------------------

Period                                 Minimum Purchases
------                                 -----------------
Effective Date through First Six Months:    [***] Units                    [***]
Months Seven through Eighteen:              [***] Units                    [***]
Months Nineteen through Thirty:             [***] Units                    [***]
Months Thirty-One through Forty-two:        [***] Units                    [***]
Months Forty-three through Forty-eight:     [***] Units                    [***]
                                            -----
                                            [***] Units
                                            =====
__________
[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                              20
<PAGE>

                                    EXHIBIT E

                                NATUS TRADEMARKS

NATUS(R)
ALGO 2(TM) Newborn Hearing Screener
ALGO  2e(TM) Newborn  Hearing  Screener
ALGO(TM) Newborn Hearing Screener
ALGO  DataBook(TM) NHS Data Tracking System
AABR(TM) Automated Auditory Brainstem Response
Ear Couplers(TM) Disposables
Jelly Button(TM) Sensors
DriPrep(TM) Prepping Pads
MiniMuffs(TM)Neonatal Noise Attenuators
70/40/(TM) Screening Aplication
<PAGE>

                    Exhibit F to the Distributor Agreement

                    LOAN AGREEMENT: UNIVERSAL TEST FIXTURE


This Agreement is made between Natus Medical Incorporated ("Natus"), a
California corporation, and Nippon EUROTEC Co., Ltd.("Distributor"), and is
                            ------------------------
intended to serve as Exhibit F to the Distributor Agreement between the parties
dated June 22, 1998. Accordingly, the terms and conditions of the Distributor
           --
Agreement are incorporated by reference herein.

The parties agree as follows:

1.  Loan AGreement. Natus will loan a Universal Test Fixture ("UTF") to the
Distributor identified above for use as a service and maintenance tool for a
maximum period of time which is described in Paragraph 5 below. Distributor
agrees that the UTF remains the property of Natus, and that Distributor must, at
the request of Natus, return the UTF to Natus. Distributor agrees to follow all
written procedures for operation of UTF, and to use UTF solely for the purposes
for which it is intended, as described is the UTF Operating Procedures.

2.  Definitions.  The definitions in the Distributor  Agreement apply throughout
this Agreement. The UTF, including all information contained within the UTF, and
the UTF Operating Procedures, which may include but is not limited to all
written documentation, hardware, software or firmware contained within the UTF
and its accompanying UTF Operating Procedures, constitute Confidential
Information pursuant to Section 17 of the Distributor Agreement.

3. Trade Secrets. Distributor acknowledges and agrees that the contents of the
UTF and the UTF Operating Procedures (Trade Secrets) are valuable property of
Natus. Distributor will hold in confidence any Trade Secrets which are disclosed
to Distributor pursuant to this Agreement, and will not disclose such Trade
Secrets to any other person, firm, or corporation. Distributor agrees to take
all reasonable steps to protect the secrecy of and avoid disclosure or
unauthorized use of the Trade Secrets. Distributor will not, nor will
Distributor allow or encourage any third party to modify, repair, reverse
engineer, decompile, or disassemble the UTF without the express and prior
written consent of Natus Medical Inc. The UTF is expressly recognized as
proprietary and confidential under the provisions of the Distribution Agreement
with respect to ss 17, "Confidentiality and Proprietary Rights."

4. Sole Authorized User. The UTF will be used only by trained and authorized
technical services representatives of the Distributor. Distributor will provide
the names of trained and authorized technical service representatives to the
Company, and will not permit use of the UTF by other individuals or entities,
nor will Distributor permit physical relocation of the UTF without the prior
written consent of Natus Medical Inc.

5. Miscellaneous. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof, and supersedes all prior oral and
written agreements, negotiations, understandings and communications regarding
subject matter. If any of the provisions of this Agreement are different from
those in the Distributor Agreement, these terms apply insofar as
<PAGE>

the UTF is concerned. Otherwise, the terms of the Distributor Agreement are
incorporated herein mutatis mutandis. This Exhibit will be governed by and
construed in accordance with the laws of the State of California, United States
of America, as applied to agreements made and performed in the State of
California, United States of America.

6. Term of Agreement. Breach by Distributor of any of these terms constitutes
breach of the Distributor Agreement. The Agreement is effective only during the
term of the Distributor Agreement between Natus Medical and Distributor.

Natus Representative                     Distributor Representative

By     /s/ W. H. Lawrenson                By  /s/ Nippon EUROTEC Co., Ltd.
       ------------------------               ----------------------------

Name      W. H. Lawrenson                Name  /s/ Kenji Tomita
       ------------------------                ---------------------------

Title     CEO                            Title    Director
       ------------------------                ---------------------------

Date      7/13/98                        Date    June 22 1998
       ------------------------                 --------------------------