<PAGE>

                        CONFIDENTIAL TREATMENT REQUESTED

  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS AGREEMENT
 MARKED [*].  THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN FILED SEPARATELY
                  WITH THE SECURITIES AND EXCHANGE COMMISSION.



                                                          Erlangen, June 4, 1999
                                                                    SAT, AVO, Me



                            OEM and Supply Agreement
                            ------------------------


                                    between


                            Symphonix Devices, Inc.
               2331 Zanker Road, San Jose, CA 95131.1109, U.S.A.

                    (hereinafter referred to as "PURCHASER")


                                      and


                      Siemens Audiologische Technik GmbH,
                               Erlangen, Germany

                     (hereinafter referred to as "S.A.T.")

<PAGE>

          Preamble

          S.A.T. has developed and will continue to develop COMPONENTS to be
          used in Hearing Instruments and a SOFTWARE to program these Hearing
          Instruments.

          PURCHASER is interested in buying such COMPONENTS for the use in it's
          Middle Ear Hearing Devices and in using such SOFTWARE to program these
          Middle Ear Hearing Devices.

          In consideration of the aforementioned, the parties hereto agree as
          follows:


      1.  Definition

      1.1 The term "COMPONENTS" means Integrated Circuits and Hybrids to be
          used as integrated parts for the manufacturing of Middle Ear Hearing
          Devices as specified in Exhibit 1 hereto.
                                  ---------

          S.A.T. will make available future generations of COMPONENTS to
          PURCHASER on similar terms to those provided in this agreement and
          revised editions of Exhibit 1 will be mutually agreed by the parties
                              ---------
          to formulize the availability of such future COMPONENTS.

      1.2 The term "SOFTWARE" means the fitting software CONNEXX, the term
          "DATA-BASE" means PURCHASER's specific data-base, the term "HICOSS"
          means a configuration and service software for internal use.

      1.3 The term "UPDATES" means modifications, enhancements of and additions
          to the SOFTWARE as described in Section 5 herein below.


      2.  Prices

      2.1 S.A.T. will deliver and PURCHASER will purchase from S.A.T. COMPONENTS
          for the prices laid out in Exhibit 1 hereto as mutually amended from
                                     ---------
          time to time by the parties.

      2.2 Payments are due within 30 days after receipt of COMPONENTS and will
          be made without deduction.
<PAGE>

      3.  Rights and obligations of PURCHASER

      3.1 Forecast

          PURCHASER shall provide S.A.T. with a non-binding rolling twelve-
          months forecast of COMPONENTS to be updated quarterly. The first such
          forecast shall cover the time between October 1999 and September 2000.


      4.  DATABASE to the SOFTWARE

      4.1 S.A.T. shall generate a software tool to allow PURCHASER to develop
          it's own DATABASE to the SOFTWARE.

      4.2 S.A.T. will assist PURCHASER in developing it's DATA-BASE.


      5.  Modifications, enhancements of and additions to the SOFTWARE

      5.1 Upon availability of UPDATES to the SOFTWARE at S.A.T., S.A.T. shall
          provide PURCHASER with the SOFTWARE accordingly updated.


      6.  License

          S.A.T. will deliver copies of the SOFTWARE under the conditions
          described in Section 7.

          S.A.T. hereby grants to PURCHASER - subject to receipt of the payments
          as per Sections 7.1 to 7.2 / Sections 7.3 to 7.4 herein below - the
          non-exclusive, worldwide, non-transferable, perpetual right to use the
          SOFTWARE and it's UPDATES and to grant sublicenses to its customers to
          use such SOFTWARE and it's UPDATES for the fitting of Middle Ear
          Hearing Devices.

          S.A.T. will deliver up to 10 copies of each version of the HICOSS for
          internal use at PURCHASER.
<PAGE>

      7.  Consideration

      7.1 As consideration for the License to use and sell the SOFTWARE as per
          Section 1 PURCHASER shall pay to S.A.T. a non-recurring lumpsum
          payment of

                                      [*]

          This payment includes the delivery of up to [*] copies plus [*] copies
          for internal and demonstration use by PURCHASER and PURCHASER's
          distributor's sales personal of the SOFTWARE.

      7.2 As consideration for the availability of and the right to use UPDATES
          to the SOFTWARE as per Section 7.1, PURCHASER shall pay to S.A.T. an
          amount of

                                      [*]

          for each year during the lifetime of this Agreement. Payment of the
          aforementioned yearly amount will be made on October 1. of each year,
          commencing October 1, 2000.

          This payment includes the delivery of [*]  copies plus [*]  copies for
          internal and demonstration use by PURCHASER and PURCHASER's
          distributor's sales personnel of the SOFTWARE of the UPDATES to the
          SOFTWARE.

      7.3 As soon as PURCHASER starts to sell their Middle Ear Hearing Devices
          in larger quantities PURCHASER shall pay to S.A.T. a non-recurring
          lumpsum payment of

                                      [*]

          This payment includes the delivery of a total of [*] copies plus [*]
          copies for internal and demonstration use by PURCHASER and PURCHASER's
          distributor's sales personnel of the SOFTWARE.

      7.4 As consideration for the availability of and the right to use UPDATES
          to the SOFTWARE as per Section 7.3 PURCHASER shall pay to S.A.T. an
          amount of

                                      [*]

          instead of [*] (stated in Section 7.2) for each year during the
          lifetime of this Agreement. Payment of the aforementioned yearly
          amount will be made on October 1. of each year, commencing October 1
          of the year after section 7.3 becomes valid.

          This payment includes the delivery of a total of [*]  copies plus [*]
          copies for internal and demonstration use by PURCHASER and PURCHASER's
          distributor's sales personnel of the SOFTWARE

      7.5 Further copies of SOFTWARE may be purchased for [*]  per copy.

                      CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS AGREEMENT
MARKED [*]. THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN FILED SEPARATELY
                WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

      8.  Delivery Terms

      8.1 S.A.T. shall deliver COMPONENTS "ex works" Erlangen or Singapore
          (Incoterms 1990 as amended).

      8.2 The delivery time upon receipt of a formal order from PURCHASER shall
          be not longer than 8 weeks as long as the quantities are not larger
          than given in the Forecast as described in Section 3.1.

      8.3 In case of the discontinuance of COMPONENTS S.A.T. shall inform
          PURCHASER in writing 3 months prior to the discontinuance, at the
          latest, and PURCHASER shall place a last order for COMPONENTS within
          90 days following the notice of discontinuance for the then applicable
          prices.
          PURCHASER shall have the right to ask for delivery of such last order
          in drop shipments over a period of 18 months.

      9.  Proprietary Rights, Non-Disclosure

          PURCHASER shall keep confidential all information, including the
          specification received from S.A.T. hereunder. This obligation shall be
          valid  for a period of 5 years following termination of this
          Agreement. S.A.T. shall keep confidential all information received
          from PURCHASER hereunder for a period of 5 years following the
          termination of this Agreement.

          The confidentiality obligation shall not apply, however, to any
          information which:

          (a) the receiving party can demonstrate, is already in the public
              domain or becomes available to the public through no breach by the
              receiving party of this Agreement;
          (b) was rightfully in the receiving party's possession without
              confidentiality obligation prior to receipt from the disclosing
              party as proven by its written records;
          (c) can be proven to have been rightfully received by the receiving
              party from a third party without confidentiality obligation;
          (d) is independently developed by the receiving party as proven by its
              written records.
          (e) is approved for release by written agreement of the disclosing
              party;
          (f) is required to be disclosed in order to comply with an
              administrative or judicial order or decree.

     10.  Warranty

     10.1 S.A.T. shall warrant that COMPONENTS are free of defects, i.e. that
          they demonstrate the specifications laid down in Exhibit 1 hereto.
                                                           ---------

     10.2 Depending on which occurs first, the warranty period shall run the
          lesser of either 3 (three) months as of delivery of COMPONENTS ("ex
          works" Erlangen, or Singapore
<PAGE>

          INCOTERMS 1990 as amended) or the processing of COMPONENTS in the
          production of Middle Ear Hearing Devices by PURCHASER.

     10.3 Defects in COMPONENTS notified during the warranty period, shall be
          rectified by S.A.T. upon request by PURCHASER without delay and free
          of charge by sending non-defective COMPONENTS to PURCHASER.

     10.4 Further claims on the part of PURCHASER against S.A.T. due to
          defective COMPONENTS shall be excluded, other than in cases of cogent
          liability due to intent, gross negligence or the absence of warranted
          characteristics. No change in the burden of proof to the detriment of
          PURCHASER shall attach to this provision.


     11.  Third-party intellectual property rights

     11.1 If a third party enforces claims on account of infringement of
          intellectual property rights or copyright (hereinafter referred to as
          IPR) by COMPONENTS against  PURCHASER or his customers, and if the
          supply and/or use of COMPONENTS is adversely affected or forbidden as
          a result, S.A.T. shall at its discretion and at its expense either
          modify or replace COMPONENTS in such a manner that they do not
          infringe the property rights yet still to a substantial extent comply
          with the agreed specifications, or indemnify PURCHASER from royalties
          claimed by third parties for supply and/or use of COMPONENTS. If this
          is not possible for S.A.T. under reasonable conditions, S.A.T. shall
          take back COMPONENTS against reimbursement of the purchase price paid.
          S.A.T. shall be entitled to demand appropriate remuneration from
          PURCHASER for the use of COMPONENTS returned. The above does not apply
          to infringements derived specifically from the incorporation of
          COMPONENTS in the Middle Ear Devices.

     11.2 Preconditions for liability on the part of S.A. T. under the terms of
          11.1 shall be that PURCHASER shall notify S.A. T. of any third-party
          claims on account of infringement of IPR in writing and without delay,
          that the alleged infringement shall be not admitted, and that
          PURCHASER shall conduct no dispute, including any out-of-court
          settlement, other than in agreement with the S.A. T..

     11.3 Insofar as PURCHASER is responsible himself for infringement of IPR,
          claims against S.A.T. under the terms of 11.1 shall be excluded. The
          same shall apply insofar as the infringement of IPR is based on
          particular specifications by PURCHASER, or is caused by use not
          foreseen by S.A.T., or is caused by COMPONENTS having been modified by
          PURCHASER, or is caused by COMPONENTS having been used by a customer
          according to PURCHASER 's instructions, or is caused by COMPONENTS
          having been used with products not provided by S.A.T., unless
          COMPONENTS were obtained expressly for this purpose.
<PAGE>

     11.4 Further claims on the part of PURCHASER on account of infringement of
          third-party IPR shall be excluded. The right of PURCHASER to cancel
          the order concerned and the provisions of Sections 12.3 through 12.4
          shall apply.

     12.  Delay, other liabilities

     12.1 If S.A.T. is in delay with delivery of COMPONENTS and if PURCHASER
          can prove that it has suffered damage in consequence thereof,
          PURCHASER shall be entitled to claim liquidated damages. Such
          liquidated damages shall amount to 0.5 % for each full week of delay
          of the purchase price of COMPONENTS supplied late, up to a maximum
          total of 5 % of this purchase price.

     12.2 Claims for damages on the part of PURCHASER going beyond the scope
          described in Section 12.1 shall be excluded in all cases of delayed
          delivery, even following expiry of a period of grace allowed to S.A.T.
          with the threat of rejection, other than in cases of cogent liability
          due to intent or gross negligence. The rights of PURCHASER to cancel
          the order concerned in whole or in part and the provisions of Sections
          12.3 and 12.4 shall remain unaffected.

     12.3 S.A.T. shall be liable without limit for any personal injury for
          which it is responsible and shall pay the costs of replacement in any
          case of property damage for which it is responsible up to an amount of
          DM 1,000,000 per event, yet up to a maximum total of DM 3,000,000. To
          the extent, PURCHASER is held responsible for such liability by third
          parties, S.A.T. shall indemnify and hold harmless PURCHASER from such
          third parties' claims.

     12.4 All other warranty claims and claims for compensation on the part of
          PURCHASER other than those expressly specified in this Agreement,
          regardless of legal grounds, in particular claims on account of
          production stoppage, loss of profits, loss of information and data or
          on indirect or consequential damages shall be excluded, other than in
          cases of cogent liability, e.g. under the terms of the product
          liability law or in cases of intent, gross negligence, absence of
          warranted characteristics or infringement of major contractual
          obligations. Compensation for infringement of major contractual
          obligations shall however be limited to damage of a contractually
          typical, predictable nature, other than in cases of intent or gross
          negligence.

     12.5 A change in the burden of proof to the detriment of PURCHASER shall
          not attach to the above provisions in Sections 12.2 through 12.4.

     13.  Arbitration

     13.1 All disputes arising out of or in connection with the present
          Agreement, including any question regarding its existence, validity or
          termination, shall be finally settled under the Rules of Arbitration
          of the International Chamber of Commerce, Paris by three arbitrators
          in accordance with the said Rules.
<PAGE>

     13.2 Each party shall nominate one arbitrator for confirmation by the
          competent authority under the applicable Rules (Appointing Authority).
          Both arbitrators shall agree on the third arbitrator within 30 days.
          Should the two arbitrators fail, within the above time-limit, to reach
          agreement on the third arbitrator, he shall be appointed by the
          Appointing Authority. If there are two or more defendants, any
          nomination of an arbitrator by or on behalf of such defendants must be
          by joint agreement between them. If such defendants fail, within the
          time-limit fixed by the Appointing Authority, to agree on such joint
          nomination, the proceedings against each of them must be separated.

     13.3 The seat of arbitration shall be Munich, Germany. The procedural law
          of this place shall apply where the Rules are silent.

     13.4 The language to be used in the arbitration proceeding shall be
          English.

     14.  Substantive Law

          All disputes shall be settled in accordance with the provisions of
          this Agreement and all other agreements regarding its performance,
          otherwise in accordance with the substantive law applicable in Germany
          without reference to other laws. The application of the United Nations
          Convention on Contracts for the International Sale of Goods of April
          11, 1980 shall be excluded.

     15.  Term and Termination

     15.1 This Agreement shall enter into force upon signature by both
          parties.

     15.2 This Agreement may be terminated by either party upon the end of each
          fiscal year (i.e. years ended September 30) - however on September 30,
          2004, at the earliest, provided that at least 3 months' prior written
          notice is given to the other party. Such termination shall be subject
          to the provisions in Section 8.3.

     15.3 This Agreement may be terminated by either party upon 30 days' prior
          written notice if the other party has materially breached this
          Agreement and has not cured such breach within such notice period.

     15.4 As the SOFTWARE is making use of the HI-PRO system this Exhibit
          becomes only valid under the assumption that PURCHASER has entered
          into a HI-PRO Agreement with Madsen Electronics.

     16.  Miscellaneous

     16.1 Supplemental agreements and amendments to this Agreement must be
          made in writing.
<PAGE>

     16.2 Neither party may assign its rights or obligations under this
          Agreement without the prior written consent of the other party, except
          to a successor of all or substantially all of its business and / or
          properties.

     16.3 If not otherwise expressly agreed to herein, the General Terms and
          Conditions for Delivery of S.A.T. shall apply.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
     by their duly authorized representatives as set forth below.



     Symphonix Devices, Inc.         Siemens Audiologische Technik GmbH

     Date: ______________________    Date:_____________________________



     ____________________________    __________________________________
<PAGE>

                                                           Erlangen, June 4,
          1999
                                                           SAT, AVO, Me


      Exhibit 1 to OEM and Supply Agreement between Symphonix Devices Inc. and
      Siemens Audiologische Technik GmbH dated June 4, 1999
      --------------------------------------------------------------------------

      List and Prices of COMPONENTS

              COMPONENT                                     Price US $
                                                            ----------



              [*]                                                [*]



      Symphonix Devices, Inc.         Siemens Audiologische Technik GmbH

      Date: ______________________    Date:_____________________________



      ____________________________    __________________________________

__
                      CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS AGREEMENT
MARKED [*]. THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN FILED SEPARATELY
                WITH THE SECURITIES AND EXCHANGE COMMISSION.