Document:

<PAGE>

                                                                    EXHIBIT 10.9

                                PROMISSORY NOTE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Principal           Loan Date          Maturity        Loan No       Call       Collateral       Account       Officer    Initials
<S>                 <C>                <C>             <C>           <C>        <C>              <C>           <C>        <C>
$250,000.00         03-24-1999         03-26-2004      94-310166      6B            02                           941
----------------------------------------------------------------------------------------------------------------------------------
     References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
     loan or item.
----------------------------------------------------------------------------------------------------------------------------------
Borrower:  TIM C. JOHNSON                   Lender:  SCOTT VALLEY BANK
           1501 INDUSTRIAL ROAD                      CONTRA COSTA BANKING CENTER
           SAN CARLOS, CA 94070--4111                1500 N. CALIFORNIA BLVD.
                                                     WALNUT CREEK, CA 94596

==================================================================================================================================
Principal Amount: $250,000.00                           Interest Rate: 4.620%                         Date of Note: March 24, 1999
</TABLE>

PROMISE TO PAY. I promise to pay to SCOTT VALLEY BANK ("Lender"), or order, in
lawful money of the United States of America the principal amount of Two Hundred
Fifty Thousand & 00/100 Dollars ($250,000.00), together with interest at the
rate of 4.620% per annum on the unpaid principal balance from March 24, 1999,
until paid in full.

PAYMENT. I will pay this loan In one principal payment of S250,000.00 plus
interest on March 26, 2004. This payment due March 26, 2004, will be for all
principal and accrued interest not yet paid. Interest on this Note is computed
on a 365/365 simple interest basis; that is, by applying the ratio of the annual
interest rate over the number of days in a year, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. I will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.

PREPAYMENT. I agree that all loan fees and other prepaid finance charges are
earned fully as of the date of the loan and will not be subject to refund upon
early payment (whether voluntary or as a result of default), except as otherwise
required by law. Except for the foregoing, I may pay without penalty all or a
portion of the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve me of my obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due.

LATE CHARGE. If a payment is 10 days or more late, I will be charged 5.000% of
the regularly scheduled payment or $5.00, whichever Is greater.

DEFAULT. I will be in default if any of the following happens: (a) I fail to
make any payment when due. (b) I break any promise I have made to Lender, or I
fail to comply with or to perform when due any other term, obligation, covenant,
or condition contained in this Note or any agreement related to this Note, or in
any other agreement or loan I have with Lender. (C) Any representation or
statement made or furnished to Lender by me or on my behalf is false or
misleading in any material respect either now or at the time made or furnished.
(d) I die or become insolvent, a receiver is appointed for any part of my
property, I make an assignment for the benefit of creditors, or any proceeding
is commenced either by me or against me under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of my property on or in which Lender has a
lien or security interest. This includes a garnishment of any of my accounts
with Lender. (f) Any of the events described in this default section occurs with
respect to any guarantor of this Note.

If any default, other than a default in payment, is curable and if I have not
been given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured (and no event of default will have
occurred) if I, alter receiving written notice from Lender demanding cure of
such default: (a) cure the default within fifteen (15) days; or (b) if the cure
requires more than fifteen (15) days, immediately initiate steps which Lender
deems in Lender's sole discretion to be sufficient to cure the default and
thereafter continue and complete all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then I will pay that amount. Lender may hire or pay someone else to
help collect this Note if I do not pay. I also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. I also will pay any court costs,
in addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of California. If there is a lawsuit,
I agree upon Lender's request to submit to the jurisdiction of the courts of
CONTRA COSTA County, the State of California. Subject to the provisions on
arbitration, this Note shall be governed by and construed in accordance with the
laws of the State of California.

RIGHT OF SETOFF. I grant to Lender a contractual security interest in, and
hereby assign, convey, deliver, pledge, and transfer to Lender all my right,
title and interest in and to, my accounts with Lender (whether checking,
savings, or some other account), including without limitation all accounts held
jointly with someone else and all accounts I may open in the future, excluding
however all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. I authorize Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on this
Note against any and all such accounts.

COLLATERAL. This Note is secured by ASSIGNMENT OF CERTIFICATE OF DEPOSIT
#94-831152.

ARBITRATION. Lender and I agree that all disputes, claims and controversies
between us, whether individual, joint, or class in nature, arising from this
Note or otherwise, including without limitation contract and tort disputes,
shall be arbitrated pursuant to the Rules of the American Arbitration
Association, upon request of either party. No act to take or dispose of any
collateral securing this Note shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage; obtaining a writ
of attachment or imposition of a receiver; or exercising any rights relating to
personal property, including taking or disposing of such property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the lawfulness or
reasonableness of any act, or exercise of any right, concerning any collateral
securing this Note, including any claim to rescind, reform, or otherwise modify
any agreement relating to the collateral securing this Note, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Lender and I agree that in the
event of an action for judicial foreclosure pursuant to California Code of Civil
Procedure Section 726, or any similar provision in any other state, the
commencement of such an action will not constitute a waiver of the right to
arbitrate and the court shall refer to arbitration as much of such action,
including counterclaims, as lawfully may be referred to arbitration. Judgment
upon any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
<PAGE>

03-24-99                     PROMISSORY NOTE                            Page 2
Loan No. 94-310166             (Continued)
================================================================================

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. I and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral. All such parties also agree that Lender may modify
this loan without the consent of or notice to anyone other than the party with
whom the modification is made.

PRIOR TO SIGNING THIS NOTE, I READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE. I AGREE TO THE TERMS OF THE NOTE AND ACKNOWLEDGE RECEIPT OF A COMPLETED
COPY OF THE NOTE.

BORROWER:

/s/ Tim C. Johnson
-------------------------------
TIM C. JOHNSON

================================================================================<PAGE>

                                                                  EXHIBIT 10.9.1

                         ASSIGNMENT OF DEPOSIT ACCOUNT

<TABLE>
<CAPTION>
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  Principal          Loan Date           Maturity        Loan No     Call     Collateral        Account         Officer    Initials
 <S>                 <C>                <C>             <C>          <C>      <C>               <C>             <C>        <C>
 $250,000.00         03-24-1999         03-26-2004      94-310166     6B          02                              941
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
                                                             or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:    TIM C. JOHNSON                                       Lender:  SCOTT VALLEY BANK
             1501 INDUSTRIAL ROAD                                          CONTRA COSTA BANKING CENTER
             SAN CARLOS, CA 94070-4111                                     1500 N. CALIFORNIA BLVD.
                                                                           WALNUT CREEK, CA 94596
Grantor:     NATUS MEDICAL, INC.
             1501 INDUSTRIAL ROAD
             SAN CARLOS, CA 94070-4111

====================================================================================================================================
</TABLE>

THIS ASSIGNMENT OF DEPOSIT ACCOUNT Is entered into among TIM C. JOHNSON
(referred to below as "Borrower"); NATUS MEDICAL, INC. (referred to below as
"Grantor"); and SCOTT VALLEY BANK (referred to below as "Lender").

ASSIGNMENT. For valuable consideration, Grantor assigns and grants to Lender a
security interest in the Collateral, including without limitation the deposit
accounts described below, to secure the Indebtedness and agrees that Lender
shall have the rights stated in this Agreement with respect to the Collateral,
in addition to all other rights which Lender may have by law.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

     Account. The word "Account" means the deposit account described below in
     the definition for "Collateral."

     Agreement. The word "Agreement" means this Assignment of Deposit Account,
     as this Assignment of Deposit Account may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Assignment of Deposit Account from time to time.

     Borrower. The word "Borrower" means each and every person or entity signing
     the Note, including without limitation TIM C. JOHNSON.

     Collateral. The word "Collateral" means the following described deposit
     account:

          CERTIFICATE OF DEPOSIT #94-831152 issued by Lender in an amount not
          less than $250,000.00

     together with (a) all interest, whether now accrued or hereafter accruing:
     (b) all additional deposits hereafter made to the Account; (c) any and all
     proceeds from the Account; and (d) all renewals, replacements and
     substitutions for any of the foregoing.

     In addition, the word "Collateral" includes all property of Grantor
     (however owned if owned by more than one person), in the possession of
     Lender (or in the possession of a third party subject to the control of
     Lender), whether existing now or later and whether tangible or intangible
     in character, including without limitation each and all of the following:

          (a)  All property to which Lender acquires title or documents of
          title.

          (b)  All property assigned to Lender.

          (c)  All promissory notes, bills of exchange, stock certificates,
          bonds, savings passbooks, time certificates of deposit, insurance
          policies, and all other instruments and evidences of an obligation.

          (d)  All records relating to any of the property described in this
          Collateral section, whether In the form of writing, microfilm,
          microfiche, or electronic media. SEE (e) BELOW

          (e)  UNDER NO CIRCUMSTANCE SHALL GRANTOR BE REQUIRED TO PROVIDE
          ADDITIONAL COLLATERAL BEYOND THE ABOVE ACCOUNT PLUS ACCRUED INTEREST

     Event of Default. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section
     titled "Events of Default."

     Grantor. The word "Grantor" means NATUS MEDICAL, INC. Any Grantor who signs
     this Agreement, but does not sign the Note, is signing this Agreement only
     to grant a security interest in Grantor's interest in the Collateral to
     Lender and is not personally liable under the Note except as otherwise
     provided by contract or law (e.g., personal liability under a guaranty or
     as a surety).

     Guarantor. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the Indebtedness.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and interest, together with all other
     indebtedness and costs and expenses for which Grantor or Borrower is
     responsible under this Agreement or under any of the Related Documents.

     Lender. The word "Lender" means SCOTT VALLEY BANK, its successors and
     assigns.

     Note. The word "Note" means the note or credit agreement dated March 24,
     1999, in the principal amount of $250,000.00 from Borrower to Lender,
     together with all renewals of, extensions of, modifications of,
     refinancings of, consolidations of and substitutions for the note or credit
     agreement.

     Related Documents. The words "Related Documents" mean and include without
     limitation all promissory notes, credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (a) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (b) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (c) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender in
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
Agreement is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (c) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (d) tender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS. Except as prohibited by applicable law, Grantor waives any
right to require Lender to (a) make any presentment, protest,
<PAGE>

03-24-1999                ASSIGNMENT OF DEPOSIT ACCOUNT                 Page 2
Loan No 94-310166                  (Continued)
================================================================================

demand, or notice of any kind, including notice of change of any terms of
repayment of the Indebtedness, default by Borrower or any other guarantor or
surety, any action or nonaction taken by Borrower, Lender, or any other
guarantor or surety of Borrower, or the creation of new or additional
Indebtedness; (b) proceed against any person, including Borrower, before
proceeding against Grantor; (c) proceed against any collateral for the
Indebtedness, including Borrower's collateral, before proceeding against
Grantor; (d) apply any payments or proceeds received against the Indebtedness in
any order; (e) give notice of the terms, time, and place of any sale of any
collateral pursuant to the Uniform Commercial Code or any other law governing
such sale; (f) disclose any information about the Indebtedness, the Borrower,
any collateral, or any other guarantor or surety, or about any action or
nonaction of Lender; or (g) pursue any remedy or course of action in Lender's
power whatsoever.

Grantor also waives any and all rights or defenses arising by reason of (h) any
disability or other defense of Borrower, any other guarantor or surety or any
other person; (i) the cessation from any cause whatsoever, other than payment in
full, of the Indebtedness; (j) the application of proceeds of the Indebtedness
by Borrower for purposes other than the purposes understood and intended by
Grantor and Lender; (k) any act of omission or commission by Lender which
directly or indirectly results in or contributes to the discharge of Borrower or
any other guarantor or surety, or the Indebtedness, or the loss or release of
any collateral by operation of law or otherwise; (I) any statute of limitations
in any action under this Agreement or on the Indebtedness; or (m) any
modification or change in terms of the Indebtedness, whatsoever, including
without limitation, the renewal, extension, acceleration, or other change in the
time payment of the Indebtedness is due and any change in the interest rate.

Grantor waives all rights and defenses arising out of an election of remedies by
Lender, even though that election of remedies, such as nonjudicial foreclosure
with respect to security for a guaranteed obligation, has destroyed Grantor's
rights of subrogation and reimbursement against Borrower by the operation of
Section 580d of the California Code of Civil Procedure, or otherwise.

This waiver includes, without limitation, any loss of rights Grantor may suffer
by reason of any rights or protections of Borrower in connection with any
anti-deficiency laws, or other laws limiting or discharging the Indebtedness or
Borrower's obligations (including, without limitation, Section 726, 580a, 580b,
and 580d of the California Code of Civil Procedure). Grantor waives all rights
and protections of any kind which Grantor may have for any reason, which would
affect or limit the amount of any recovery by Lender from Grantor following a
nonjudicial sale or judicial foreclosure of any real or personal property
security for the Indebtedness including, but not limited to, the right to any
fair market value hearing pursuant to California Code of Civil Procedure Section
580a.

Grantor understands and agrees that the foregoing waivers are waivers of
substantive rights and defenses to which Grantor might otherwise be entitled
under state and federal law. The rights and defenses waived include, without
limitation, those provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Grantor acknowledges that
Grantor has provided these waivers of rights and defenses with the intention
that they be fully relied upon by Lender. Until all Indebtedness is paid in
full, Grantor waives any right to enforce any remedy Lender may have against
Borrower or any other guarantor, surety, or other person, and further, Grantor
waives any right to participate in any collateral for the Indebtedness now or
hereafter held by Lender.

If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Grantor hereby forever waives and relinquishes in favor of
Lender and Borrower, and their respective successors, any claim or right to
payment Grantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Grantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.

GRANTOR'S REPRESENTATIONS AND PROMISES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

     Ownership. Grantor is the lawful owner of the Collateral free and clear of
     all loans, liens, encumbrances, and claims except as disclosed to and
     accepted by Lender in writing.

     Right to Grant Security Interest. Grantor has the full right, power, and
     authority to enter into this Agreement and to assign the Collateral to
     Lender.

     No Further Transfer. Grantor will not sell, assign, encumber, or otherwise
     dispose of any of Grantor's rights in the Collateral except as provided in
     this Agreement.

     No Defaults. There are no defaults relating to the Collateral, and there
     are no offsets or counterclaims to the same. Grantor will strictly and
     promptly do everything required of Grantor under the terms, conditions,
     promises, and agreements contained in or relating to the Collateral. ***PAF

     Proceeds. Any and all replacement or renewal certificates, instruments, or
     other benefits or proceeds related to the Collateral that are received by
     Grantor shall be held by Grantor in trust for Lender and immediately shall
     be delivered by Grantor to Lender to be held as part of the Collateral.

LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. While this
Agreement is in effect, Lender may retain the rights to possession of the
Collateral, together with any and all evidence of the Collateral, such as
certificates or passbooks. This Agreement will remain in effect until (a) there
no longer is any Indebtedness owing to Lender: (b) all other obligations secured
by this Agreement have been fulfilled; and (c) Grantor, in writing, has
requested from Lender a release of this Agreement.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All Such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of any certificate or passbook for the
Collateral but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility (a) for the collection or protection of any income on the
Collateral, (b) for the preservation of rights against issuers of the Collateral
or against third persons; (C) for ascertaining any maturities, conversions,
exchanges, offers, tenders, or similar matters relating to the Collateral; nor
(d) for informing the Grantor about any of the above, whether or not Lender has
or is deemed to have knowledge of such matters.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

     Default on Indebtedness. Failure of Borrower to make any payment when due
     on the Indebtedness.

     Other Defaults. Failure of Grantor or Borrower to comply with or to perform
     any other term, obligation, covenant or condition contained in this
     Agreement or in any of the Related Documents or failure of Borrower to
     comply with or to perform any term, obligation, covenant or condition
     contained in any other agreement between Lender and Borrower.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Grantor or Borrower under this
     Agreement, the Note or the Related Documents is false or misleading in any
     material respect, either now or at the time made or furnished.
<PAGE>

03-24-1999                ASSIGNMENT OF DEPOSIT ACCOUNT                 Page 3
Loan No 94-310166                  (Continued)
================================================================================

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     documents to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Death or Insolvency. The death of Grantor or Borrower, the insolvency of
     Grantor or Borrower, the appointment of a receiver for any part of Grantor
     or Borrower's property, any assignment for the benefit of creditors, any
     type of creditor workout, or the commencement of any proceeding under any
     bankruptcy or insolvency laws by or against Grantor or Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or Borrower or
     by any governmental agency against the Collateral or any other collateral
     securing the Indebtedness. This includes a garnishment of any of Grantor or
     Borrower's deposit accounts with Lender. However, this Event of Default
     shall not apply if there is a good faith dispute by Grantor or Borrower as
     to the validity or reasonableness of the claim which is the basis of the
     creditor or forfeiture proceeding and if Grantor or Borrower gives Lender
     written notice of the creditor or forfeiture proceeding and deposits with
     Lender monies or a surety bond for the creditor or forfeiture proceeding,
     in an amount determined by Lender, in its sole discretion, as being an
     adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or such Guarantor dies or
     becomes incompetent.

     Right to Cure. If any default, other than a Default on Indebtedness, is
     curable and if Grantor or Borrower has not been given a prior notice of a
     breach of the same provision of this Agreement, it may be cured (and no
     Event of Default will have occurred) if Grantor or Borrower, after Lender
     sends written notice demanding cure of such default, (a) cures the default
     within fifteen (15) days; or (b), if the cure requires more than fifteen
     (15) days, immediately initiates steps which Lender deems in Lender's sole
     discretion to be sufficient to cure the default and thereafter continues
     and completes all reasonable and necessary steps sufficient to produce
     compliance as soon as reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default, or
at any time thereafter, Lender may exercise any one or more of the following
rights and remedies, in addition to any rights or remedies that may be available
at law, in equity, or otherwise:

     Accelerate Indebtedness. Lender may declare all Indebtedness of Borrower to
     Lender immediately due and payable, without notice of any kind to Grantor
     or Borrower.

     Application of Account Proceeds. Lender may obtain all funds in the Account
     from the issuer of the Account and apply them to the Indebtedness in the
     same manner as if the Account had been issued by Lender. If the Account is
     subject to an early withdrawal penalty, that penalty shall be deducted from
     the Account before its application to the Indebtedness, whether the Account
     is with Lender or some other institution. Any excess funds remaining after
     application of the Account proceeds to the Indebtedness will be paid to
     Grantor or Borrower as the interests of Grantor or Borrower may appear.
     Borrower agrees, to the extent permitted by law, to pay any deficiency
     after application of the proceeds of the Account to the Indebtedness.
     Lender also shall have all the rights of a secured party under the
     California Uniform Commercial Code, even if the Account is not otherwise
     subject to such Code concerning security interests, and the parties to this
     Agreement agree that the provisions of the Code giving rights to a secured
     party shall nonetheless be a part of this Agreement.

     Collect the Collateral. Lender may collect any of the Collateral and, at
     Lender's option and to the extent permitted by applicable law, may retain
     possession of the Collateral while suing on the Indebtedness.

     Sell the Collateral. Lender may sell the Collateral, at Lender's
     discretion, as a unit or in parcels, at one or more public or private
     sales. Unless the Collateral is perishable or threatens to decline speedily
     in value, Lender shall give or mail to Grantor or Borrower, or any of them,
     notice at least ten (10) days in advance of the time and place of public
     sate, or of the dale after which private sale may be made. Grantor and
     Borrower agree that any requirement of reasonable notice is satisfied if
     Lender mails notice by ordinary mail addressed to Grantor or Borrower, or
     any of them, at the last address Grantor or Borrower has given Lender in
     writing. If public sale is held, there shall be sufficient compliance with
     all requirements of notice to the public by a single publication in any
     newspaper of general circulation in the county where the Collateral is
     located, setting forth the time and place of sale and a brief description
     of the property to be sold. Lender may be a purchaser at any public sale.

     Register Securities. Lender may register any securities included in the
     Collateral in Lender's name and exercise any rights normally incident to
     the ownership of securities.

     Sell Securities. Lender may sell any securities included in the Collateral
     in a manner consistent with applicable federal and state securities laws,
     notwithstanding any other provision of this or any other agreement. If,
     because of restrictions under such laws, Lender is or believes it is unable
     to sell the securities in an open market transaction, Grantor and Borrower
     agree that (a) Lender shall have no obligation to delay sale until the
     securities can be registered, (b) Lender may make a private sale to a
     single person or restricted group of persons, even though such sale may
     result in a price that is less favorable than might be obtained in an open
     market transaction, and (c) such a sale shall be considered commercially
     reasonable. If any securities held as Collateral are "restricted
     securities" as defined in the Rules of the Securities and Exchange
     Commission (such as Regulation D or Rule 144) or state securities
     departments under state "Blue Sky" laws, or if Grantor or Borrower, or any
     of them (if more than one), is an affiliate of the issuer of the
     securities, Grantor and Borrower agree that Grantor or Borrower will
     neither sell nor dispose of any securities of such issuer without obtaining
     Lender's prior written consent.

     Transfer Title. Lender may effect transfer of title upon sale of all or
     part of the Collateral. For this purpose, Grantor irrevocably appoints
     Lender as its attorney-in-fact to execute endorsements, assignments and
     instruments in the name of Grantor and each of them (if more than one) as
     shall be necessary or reasonable.

     Application of Proceeds. Lender may apply any cash which is part of the
     Collateral, or which is received from the collection or sale of the
     Collateral, to (a) reimbursement of any expenses, including any costs of
     any securities registration, commissions incurred in connection with a
     sale, attorney fees as provided below and court costs, whether or not there
     is a lawsuit and including any fees on appeal, incurred by Lender in
     connection with the collection and sale of such Collateral, and (b) to the
     payment of the Indebtedness of Borrower to Lender, with any excess funds to
     be paid to Grantor as the interests of Grantor may appear.

     Other Rights and Remedies. Lender shall have and may exercise any or all of
     the rights and remedies of a secured creditor under the provisions of the
     California Uniform Commercial Code, at law, in equity, or otherwise.

     Deficiency Judgment. If permitted by applicable law, Lender may obtain a
     judgment for any deficiency remaining in the Indebtedness due to Lender
     after application of all amounts received from the exercise of the rights
     provided in this section.

     Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
     by this Agreement or by any other writing, shall be cumulative and may be
     exercised singularly or concurrently. Election by Lender to pursue any
     remedy shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform an obligation of Grantor or
     Borrower under this Agreement, after Grantor or Borrower's failure to
     perform, shall not affect Lender's right to declare a default and to
     exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
<PAGE>

03-24-1999                ASSIGNMENT OF DEPOSIT ACCOUNT                 Page 4
Loan No 94-310166                  (Continued)
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     party or parties sought to be charged or bound by the alteration or
     amendment.

     Applicable Law. This Agreement has been delivered to Lender and accepted by
     Lender in the State of California. If there is a lawsuit, Grantor and
     Borrower agree upon Lender's request to submit to the jurisdiction of the
     courts of CONTRA COSTA County, State of California. Subject to the
     provisions on arbitration, this Agreement shall be governed by and
     construed in accordance with the laws of the State of California.

     Attorneys' Fees; Expenses. Grantor and Borrower agree to pay upon demand
     all of Lender's costs and expenses, including attorneys' fees and Lender's
     legal expenses, incurred in connection with the enforcement of this
     Agreement. Lender may pay someone else to help enforce this Agreement, and
     Grantor and Borrower shall pay the costs and expenses of such enforcement.
     Costs and expenses include Lender's attorneys' fees and legal expenses
     whether or not there is a lawsuit, including attorneys' fees and legal
     expenses for bankruptcy proceedings (and including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Grantor and Borrower also shall pay all
     court costs and such additional fees as may be directed by the court.

     Notices. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the United
     States mail, first class, postage prepaid, addressed to the party to whom
     the notice is to be given at the address shown above. Any party may change
     its address for notices under this Agreement by giving formal written
     notice to the other parties, specifying that the purpose of the notice is
     to change the party's address. To the extent permitted by applicable law,
     if there is more than one Grantor or Borrower, notice to any Grantor or
     Borrower will constitute notice to all Grantor and Borrowers. For notice
     purposes, Grantor and Borrower will keep Lender informed at all times of
     Grantor and Borrower's current address(es).

     Power of Attorney. Grantor hereby appoints Lender as its true and lawful
     attorney-in-fact, irrevocably, with full power of substitution to do the
     following: (a) to demand, collect, receive, receipt for, sue and recover
     all sums of money or other property which may now or hereafter become due,
     owing or payable from the Collateral; (b) to execute, sign and endorse any
     and all claims, instruments, receipts, checks, drafts or warrants issued in
     payment for the Collateral; (C) to settle or compromise any and all claims
     arising under the Collateral, and, in the place and stead of Grantor, to
     execute and deliver its release and settlement for the claim; and (d) to
     file any claim or claims or to take any action or institute or take part in
     any proceedings, either in its own name or in the name of Grantor, or
     otherwise, which in the discretion of Lender may seem to be necessary or
     advisable. This power is given as security for the Indebtedness, and the
     authority hereby conferred is and shall be irrevocable and shall remain in
     full force and effect until renounced by Lender.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be invalid or unenforceable as to any person or
     circumstance, such finding shall not render that provision invalid or
     unenforceable as to any other persons or circumstances. If feasible, any
     such offending provision shall be deemed to be modified to be within the
     limits of enforceability or validity; however, if the offending provision
     cannot be so modified, it shall be stricken and all other provisions of
     this Agreement in all other respects shall remain valid and enforceable.

     Successor Interests. Subject to the limitations set forth above on transfer
     of the Collateral, this Agreement shall be binding upon and inure to the
     benefit of the parties, their successors and assigns.

     Waiver. Lender shall not be deemed to have waived any rights under this
     Agreement unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement. No prior waiver by Lender, nor any
     course of dealing between Lender and Grantor, shall constitute a waiver of
     any of Lender's rights or of any of Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

BORROWER AND GRANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
ASSIGNMENT OF DEPOSIT ACCOUNT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
MARCH 24, 1999.

BORROWER:

/s/ Tim C. Johnson
----------------------------------------------------
TIM C. JOHNSON

GRANTOR:
NATUS MEDICAL, INC.

By: /s/ Bill Lawrenson
   -------------------------------------------------
   BILL LAWRENSON, CHIEF FINANCIAL OFFICER

================================================================================

     (E)  UNDER NO CIRCUMSTANCE SHALL GRANTOR BE REQUIRED TO PROVIDE
          ADDITIONAL COLLATERAL BEYOND THE ABOVE ACCOUNT PLUS ACCRUED
          INTEREST

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