***Portions of this exhibit are considered confidential by the registrant
      and have been omitted from this filing and filed separately with the
                       Securities and Exchange Commission
              pursuant to a request for confidential treatment.


                    GN RESOUND NORTH AMERICA SALES AGREEMENT


         This Agreement is made as of May 31, 2001 (the  "EFFECTIVE  DATE"),  by
and between GN ReSound North America  Corporation  (formerly known as GN ReSound
Corporation)  (the  "COMPANY")  and  the  undersigned   designated  as  Customer
("CUSTOMER") with respect to the following:

         A. The  Company  manufactures  and  distributes  a number of  different
models of hearing  instruments  which are set forth on the  current  product and
price list attached hereto as Exhibit A (the "COMPANY PRODUCTS").

         B. Customer is in the business of  distributing  and/or selling hearing
instruments.

         C. The parties  entered into a GN ReSound Sales  Agreement  dated as of
April 1, 2000 (the "ORIGINAL  AGREEMENT"),  pursuant to which Customer purchased
hearing instruments from the Company for resale.

         D. The  parties  desire  to enter  into  this  Agreement,  which  shall
supersede  the Original  Agreement to the extent  described  below,  pursuant to
which Customer may purchase hearing instruments from the Company for resale.

         Therefore, the parties agree as follows:

                                   ARTICLE 1
                               ORIGINAL AGREEMENT

         Section  1.01 . Terms And  Conditions  .  Except as set forth  below in
Section  1.02 and Section  1.03 below,  the Original  Agreement,  including  all
exhibits thereto, is hereby superseded by this Agreement, including all exhibits
and schedules hereto,  but the parties to the Original  Agreement shall continue
to be bound to their respective obligations thereunder.

         Section 1.02 . Warranties.  The  provisions of the Original  Agreement,
including  all exhibits  thereto,  relating to  warranties,  returns and repairs
shall  continue  to apply to all  Company  Products  shipped  by the  Company to
Customer  on or  before  the date  hereof.  The  provisions  of this  Agreement,
including  all exhibits  thereto,  relating to  warranties,  returns and repairs
shall apply to all Company Products shipped by the Company to Customer after the
date hereof.

         Section 1.03 . Pricing; Rebates. The price list as set forth in Exhibit
A (the "OLD PRICE LIST") to the Original  Agreement  shall  continue to apply to
all Company  Products  shipped by the Company to any of Sonus-USA,  Inc. ("SONUS
USA"),  Sonus-Canada Ltd ("SONUS CANADA"),  Sonus-Texas,  Inc. or an Acquisition
Subsidiary  (as defined in the Credit  Agreement,  as defined  below) (such four
entities,  collectively,  the "SONUS  ENTITIES") on or before May 31, 2001.


                                      -1-
<PAGE>

The rebate  provisions  as set forth in  Section 2 of Exhibit C to the  Original
Agreement shall continue to apply to all Company Products shipped by the Company
to Customer on or before May 31, 2001,  except that the "applicable  twelve (12)
month" period described  therein shall be deemed to be the months of April, 2001
and May,  2001 for  purposes of the  Original  Agreement.  The price list as set
forth in Exhibit A to this  Agreement  (the "NEW PRICE LIST") shall apply to all
Company  Products shipped by the Company to any Sonus Entity on or after June 1,
2001.  The  rebate  provisions  as set forth in  Section 4 of  Exhibit C to this
Agreement shall apply to all Company Products shipped by the Company to Customer
on or after June 1, 2001.

                                   ARTICLE 2
                                 CUSTOMER ORDERS

         Section 2.01 . Ordering. During the term of this Agreement, the Company
will sell,  and Customer will buy, those Company  Products that Customer  orders
from time to time.  Customer's  orders will be on forms provided by the Company,
and orders for custom products will include patient impressions.

         Section  2.02 .  Price  List.  The list  prices  for  Company  Products
purchased by the Sonus  Entities are set forth on the Old Price List and the New
Price List.  Also set forth on the Old Price List and the New Price List are the
discounts to which the Sonus Entities are entitled. The Sonus Entities shall pay
the discounted price for all Company Products as set forth on the Old Price List
and the New Price List, as applicable. The Company can modify the New Price List
upon at least  sixty (60) days prior  notice in  writing,  including  adding new
Company Products and removing discontinued Company Products.

         Section 2.03 . Terms And Conditions. The terms and conditions of the GN
ReSound  Policies,  attached  to this  Agreement  as Exhibit B (the "GN  ReSound
Policies"),  are incorporated into this Agreement by this reference. If there is
a conflict  between the provisions of the GN ReSound Policies and the provisions
of this Agreement, the provisions of this Agreement shall govern.

                                   ARTICLE 3
                                LIMITED WARRANTY

         Section 3.01 . Limited  Warranty.  The Company  grants a  comprehensive
warranty for each Company Product as set forth in the GN ReSound  Policies.  The
Company may modify the GN ReSound  Policies  upon at least sixty (60) days prior
notice in  writing.  THE COMPANY  MAKES NO  WARRANTIES  OF ANY KIND,  EXPRESS OR
IMPLIED,  AS TO  MERCHANTABILITY,  FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
MATTER, OTHER THAN THOSE SET FORTH IN THE GN RESOUND POLICIES.

                                      -2-
<PAGE>


                                   ARTICLE 4
                        TERM OF AGREEMENT AND TERMINATION

         Section 4.01 . Term. Except as otherwise  provided in this Agreement or
the exhibits hereto,  the initial term of this Agreement is seven (7) years from
the Effective Date, and will be automatically  renewed for additional periods of
one year unless  either party  notifies the other party in writing of its intent
not to renew  the  Agreement  at least  sixty  (60) days  before  the end of the
then-current term, provided,  however, that this Agreement may not be terminated
by Customer prior to the repayment in full of all  outstanding  Obligations  (as
defined in the Credit  Agreement)  and the  termination  of the  Commitment  (as
defined  in the  Credit  Agreement),  each in  accordance  with  the  terms  and
conditions of the Credit  Agreement dated as of the date hereof among Sonus USA,
Sonus Corp.  ("SONUS") and GN Great Nordic AS (as it may be amended from time to
time in accordance with the terms thereof, the "CREDIT AGREEMENT").

         Section 4.02 . Termination. Either party can terminate the Agreement by
giving the other party  written  notice if the other  party  breaches a material
provision of the  Agreement  and does not cure that breach  within  fifteen (15)
days after receiving written notice.

                                   ARTICLE 5
                                  MISCELLANEOUS

         Section 5.01 . Representations  And Warranties.  (a) Each of Sonus USA,
Sonus Canada and Sonus,  jointly and  severally,  represents and warrants to the
Company that on and as of the date hereof,  (i) such entity is a duly  organized
and existing  corporation,  (ii) such entity is duly  authorized  to enter into,
deliver and perform this Agreement and the transactions  contemplated hereunder,
(iii) this Agreement  constitutes a valid and binding obligation of such entity,
enforceable in accordance  with its terms,  except as the same may be limited by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
now or hereafter in effect  relating to the  enforcement  of  creditors'  rights
generally or by principles governing the availability of equitable remedies, and
(iv) the execution and delivery by such entity of, its performance under and its
consummation of the transactions contemplated by, this Agreement do not and will
not  conflict  with or violate any  provision  of such  entity's  organizational
documents,  violate any Requirement of Law (as defined in the Credit Agreement),
or require any  authority  from or approval by any  Governmental  Authority  (as
defined in the Credit Agreement).

         (b) The Company  represents  and  warrants to each of Sonus USA,  Sonus
Canada and Sonus that on and as of the date  hereof,  (i) the  Company is a duly
organized and existing corporation, (ii) the Company is duly authorized to enter
into,  deliver and perform  this  Agreement  and the  transactions  contemplated
hereunder,  (iii) this Agreement  constitutes a valid and binding  obligation of
the Company, enforceable in accordance with its terms, except as the same may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar  laws  now  or  hereafter  in  effect  relating  to the  enforcement  of
creditors'  rights  generally or by  principles  governing the  availability  of
equitable  remedies,  and (iv) the execution and delivery by the Company of, its
performance under and its consummation of the transactions contemplated by, this
Agreement  do not and will not  conflict  with or violate any  provision  of the

                                      -3-
<PAGE>

Company's organizational  documents,  violate any Requirement of Law, or require
any authority from or approval by any Governmental Authority.

         Section 5.02 . Force  Majeure.  The Company shall not be subject to any
liability  for delay or failure to perform  hereunder,  in whole or in part,  by
reason  of  contingencies   beyond  its  reasonable   control,   whether  herein
specifically enumerated or not, including,  among others, acts of God, war, acts
of war, revolution,  civil commotion, riots, acts of public enemies, blockade or
embargo, delays of carriers, car shortage,  fire, explosion,  material breakdown
of equipment,  strike,  chemical  reversal  reactions,  lockout,  labor dispute,
casualty or accident, earthquake,  epidemic, flood, cyclone, tornado, hurricane,
or other  windstorm,  delays of vendors or  suppliers,  inability  to produce or
obtain raw materials or other  contingencies  interfering  with the  production,
sale or delivery of any of the Company Products, or by reason of any law, order,
proclamation,  regulation,  ordinance,  demand, requisition,  requirement or any
other act of any  governmental  authority,  local,  state or federal,  including
court orders,  judgments or decrees,  or actions of any  governmental  authority
respecting  the  registration,  re-registration,   cancellation,  suspension  or
labeling  of, or ability to  produce,  deliver,  transport  or sell,  any of the
Company  Products;  provided,  however,  that the Company shall,  as promptly as
reasonably  possible under the  circumstances,  give written or verbal notice to
Customer whenever such a contingency appears likely to occur or has occurred and
shall use all reasonable  efforts to overcome the effects of the  contingency as
promptly as possible and shall allow the other party such access and information
as may be necessary or desirable to evaluate such contingency. The Company shall
not be required to resolve a strike,  lockout or other labor problem in a manner
which it alone does not deem proper and  advisable.  The  Company  and  Customer
shall suspend  performance  of this  Agreement for a period of time equal to the
duration  of the  event  excusing  such  performance  and the time  required  to
overcome  the  consequences  of  such  event  and  resume  performance,  and the
then-current  term of this  Agreement  shall be  automatically  extended by such
period of time,  and all terms and conditions of this  Agreement,  including the
exhibits and  schedules  attached  hereto,  shall apply  during such  extension,
mutatis mutandis.  The Company and Customer shall timely agree in good faith and
in writing on the dates upon which  performance  of this  Agreement is suspended
and resumed in accordance with this Section 5.02.

         Section 5.03 .  Definition of Customer.  The  definition of Customer is
expanded to include those Persons listed on Schedule 1 attached  hereto and such
other Sonus  related  entities or programs as may be  established  by Sonus from
time to time.  Sonus  shall  provide to the Company a list of the  entities  and
persons  included within the definition of Customer from time to time, and shall
update it  regularly  with any  changes.  The  Company  will not be  required to
process  orders from any entity or person until  Customer has advised Sonus that
such entity or person is to be included  within the definition of Customer.  For
purposes of this Agreement,

         (a) "SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership  interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person;

         (b)  "PERSON"  means  an  individual,  corporation,  limited  liability
company,  partnership,  association,  trust or  other  entity  or  organization,
including a government or political  subdivision or an agency or instrumentality
thereof; and

                                      -4-
<PAGE>


         (c)  "AFFILIATE"  means,  with respect to any Person,  any other Person
directly or indirectly  controlling,  controlled by or under common control with
such Person,  provided that no  securityholder  or any Person shall be deemed an
Affiliate of any other securityholder solely by reason of any investment in such
Person.  For purposes of this definition,  the term "control"  (including,  with
correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"),  as used with respect to any Person,  shall mean the possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management and policies of such Person,  whether through the ownership of voting
securities, by contract or otherwise.

         Section 5.04 . Governing Law. This Agreement is governed by the laws of
New York,  without regard to or application of its laws relating to conflicts of
law.

         Section  5.05 .  Attorneys'  Fees.  If  litigation  occurs  between the
parties in connection with this Agreement, the prevailing party will be entitled
to its reasonable  attorneys' fees, expert witness fees and costs of suit. Also,
Customer  will  reimburse  the  Company  for  its  costs,   including,   without
limitation,  attorneys' fees,  collection agency fees and other expenses, if the
Company  pursues the payment of a past due  invoice,  whether or not  litigation
occurs.

         Section 5.06 . Amendments; Assignment; Change of Control. Amendments to
this  Agreement are effective  only if in writing and signed by the parties.  No
amendment,  extension or release from any provision  hereof shall be effected by
mutual  agreement,  acknowledgment,  acceptance  or purchase  order,  invoice or
shipping instructions forms, or otherwise,  unless the same shall be in writing,
signed by the  party to be bound and  specifically  described  as an  amendment,
extension  or release of this  Agreement.  Neither the Company nor  Customer may
assign its rights or obligations  under this Agreement without the other party's
prior consent in writing,  which consent will not be unreasonably  withheld. Any
assignment of this  Agreement by a party without the other party's prior written
consent  shall  constitute  a  material  breach of this  Agreement.  A Change of
Control shall be deemed to be an assignment for purposes of this Agreement.  For
purposes of this Agreement, "CHANGE OF CONTROL" means (a) such time as any Third
Party (as defined  below)  acquires,  directly or  indirectly,  by virtue of the
consummation  of any  purchase,  merger  or  other  combination,  securities  or
ownership  interests  of a Person  representing  more  than 51% of the  combined
voting power of such Person's then  outstanding  voting  securities or ownership
interests  with respect to matters  submitted to a vote of the  stockholders  or
interest  holders  generally or (b) a sale or transfer by a Person,  directly or
indirectly,  of  substantially  all of its  assets  to a  Person  that is not an
Affiliate of such  transferor  prior to such sale or  transfer.  For purposes of
this Section 5.06, a "Third Party" with respect to Customer  shall not be deemed
to include any of the following:  current or future executive officers of Sonus,
Warburg  Pincus  Ventures  LP or  any  of  its  Affiliates,  Paul  Stephens,  RS
Investment  Management Co. or any of its  Affiliates,  C3 Holdings or any of its
Affiliates, or Clover Capital Partners or any of its Affiliates.  The rights and
liabilities of the parties under this Agreement bind and inure to the benefit of
the parties and their respective successors and permitted assigns.

         Section  5.07 .  Severability.  If a  court  finds  any  part  of  this
Agreement  to be  unenforceable,  that  part  will  be  enforced  to the  extent
permissible  so as to carry out the intent of the parties,  and the remainder of
the Agreement will continue in full force and effect.

                                      -5-
<PAGE>


         Section 5.08 . Notices.  All notices  under this  Agreement  will be in
writing and delivered by courier or overnight delivery service,  or by certified
mail,  sent to the addresses set forth below the signatures of the parties or to
such other address of which a party has given the other party  notice,  and will
be deemed delivered upon receipt, or three (3) days after it is sent,  whichever
occurs first.

         Section 5.09 . Relationship  of Parties.  The parties to this Agreement
are independent contractors, and nothing in this Agreement is intended to create
any relationship of partnership, joint venture, employment, franchise, or agency
between the parties.

         Section  5.10  .  Counterparts.  This  Agreement  may  be  executed  in
counterparts,  each of which will be deemed an original, but which together will
constitute one instrument.

         Section  5.11 .  Currency.  All prices and  payments  will be in United
States dollars.

         Section 5.12 . Confidentiality.

         (a)  Notwithstanding  anything in this Agreement to the contrary,  with
respect to any of Sonus's  filings with the Securities  and Exchange  Commission
(the "SEC"),  at the request of the Company,  Sonus and its Affiliates  agree to
use their best  efforts to obtain  from the SEC  confidential  treatment  of any
information  contained in this Agreement for which such treatment may reasonably
be argued to be available and for as long as is permitted under  applicable law.
Sonus and its Affiliates  agree to cooperate  fully with the Company in applying
for such  confidential  treatment,  including,  but not limited to, allowing the
Company and its counsel to review any  application  in advance of its submission
and  incorporating  such of the  Company's  and its  counsel's  comments in such
application  as  may  reasonably  be  requested.   Furthermore,  Sonus  and  its
Affiliates  agree not to  publicly  disclose  in any  manner,  oral or  written,
including, but not limited to, in any portion of its filings with the SEC, press
releases  or  other  communications,  any  information  with  respect  to  which
confidential  treatment  has been  requested,  unless  required  to so  disclose
pursuant to applicable  law. Any breach of any provision of this Section 5.12(a)
shall be considered a material breach of this Agreement.

         (b) Any technical,  health,  environmental  and safety,  manufacturing,
market  or  customer   information,   or  price  or  cost  related   information
communicated  to one party by the other,  under any provision of this Agreement,
whether in writing,  verbally or visually  observed  (hereinafter  "CONFIDENTIAL
INFORMATION") shall be considered  confidential at the time of communication and
shall not be disclosed  to any person or entity  other than the parties  hereto,
their Affiliates and their respective officers, directors,  employees and agents
(each,  a  "THIRD  PARTY"),  nor  used  by the  recipient  party  other  than as
contemplated by this Agreement. The recipient party shall use the same degree of
care  protecting  this  Confidential  Information  as  it  applies  to  its  own
confidential information. This Section 5.12(b) shall not apply to:

             (i)  Confidential  Information  already  in the public  domain,  or
         released to the public through no fault of the recipient;

             (ii) Confidential Information already known to the recipient except
         through  prior  disclosure  by the  other  party  hereto  or  which  is
         developed by the recipient  independently  of its  relationship  to the
         other party hereunder;

                                      -6-
<PAGE>


             (iii)  Confidential  Information  acquired by the recipient  from a
         Third Party entitled to disclose it; and

             (iv) Confidential  Information the recipient is legally required to
         disclose;  provided  that,  subject  to  applicable  law,  prior to any
         disclosure permitted by this clause (iv), the recipient gives the other
         party hereto, to the extent reasonably  practicable,  reasonable notice
         and a  reasonable  opportunity  to seek a protective  order  protecting
         against the disclosure of such Confidential Information.

         Section 5.13 . Jurisdiction.  Except as otherwise expressly provided in
this  Agreement,  the parties  hereto agree that any suit,  action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions  contemplated  hereby may be
brought in the United  States  District  Court for the Southern  District of New
York or any New York state court  sitting in the Borough of  Manhattan  and that
any cause of action arising out of this Agreement shall be deemed to have arisen
from a transaction of business in the State of New York, and each of the parties
hereby irrevocably  consents to the non-exclusive  jurisdiction of such court(s)
(and of the appropriate  appellate courts therefrom) in any such suit, action or
proceeding and irrevocably  waives,  to the fullest extent permitted by law, any
objection  that it may now or  hereafter  have to the laying of the venue of any
such suit,  action or proceeding in any such court or that any such suit, action
or  proceeding  which is  brought  in any such  court  has  been  brought  in an
inconvenient forum.

         Section  5.14 .  Waiver  of  Jury  Trial.  EACH OF THE  PARTIES  HERETO
IRREVOCABLY  WAIVES  ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL  PROCEEDING
ARISING OUT OF OR RELATED TO THIS  AGREEMENT  OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY.

         Section  5.15 . Headings  and Titles.  The  headings and titles of this
Agreement  are  inserted  for  convenience  only and  shall not be deemed a part
hereof or affect the construction or interpretation of any provision hereof.

                                   ARTICLE 6
                         ADDITIONAL TERMS AND CONDITIONS

         Section 6.01 . Additional  Terms and Conditions.  Additional  terms and
conditions,  if any, are attached hereto as Exhibit C and are, for all purposes,
incorporated herein by reference.


                                       -7-
<PAGE>


         The parties have executed this Agreement as of the Effective Date.

                            GN RESOUND NORTH AMERICA CORPORATION, a
                            California corporation
                            By: /s/ Carsten Trads
                               ----------------------------------------------
                            Name:  Carsten Trads
                                  -------------------------------------------
                            Title: President
                                  -------------------------------------------
                            Address:    220 Saginaw Drive
                                        Seaport Centre
                                        Redwood City, California 94063
                                        Attention:

                            CUSTOMER:


                             SONUS-USA, INC, a Washington corporation

                             By:  /s/ Brandon M. Dawson
                                 ------------------------------
                             Name:   Brandon M. Dawson
                                   ----------------------------
                             Title: Chairman
                                   ----------------------------
                             Address: 111 S.W. Fifth Avenue,
                                      Suite 1620
                                      Portland, Oregon  97204

                             SONUS-CANADA LTD, a British Columbia
                             corporation

                             By:  /s/ Brandon M. Dawson
                                 ------------------------------
                             Name:  Brandon M. Dawson
                                   ----------------------------
                             Title: Chairman
                                   ----------------------------
                             Address: 111 S.W. Fifth Avenue,
                                      Suite 1620
                                      Portland, Oregon 97204

For purposes of Section 5.12 of this Agreement and Section 5 of Exhibit C to
this Agreement only:

SONUS CORP., a Yukon Territory corporation

By: /s/ Brandon M. Dawson
    ------------------------------
Name:  Brandon M. Dawson
      ----------------------------
Title: Chairman
      ----------------------------
Address:  111 S.W. Fifth Avenue
          Suite 1620
          Portland, Oregon 97204

                                      -8-
<PAGE>
                                   EXHIBIT A

                           Contract Prices for Sonus
                           -------------------------
***





























         ***Confidential portions omitted
             pursuant to a request for
              confidential treatment

                                      -1-
<PAGE>
<TABLE>
<CAPTION>
                                    EXHIBIT B

                               GN ReSound Policies

<S>                                                               <C>
WARRANTIES                                                        TERMS

Standard Warranty Coverage                                        Payment

GN ReSound North America provides a two-year product              Each GN ReSound North America order is invoiced
warranty for its advanced technology digital hearing              separately.  Payments for invoiced orders are due net 30
instruments and a one-year product warranty for its analog        from the invoice date. Past due charges are subject to a
programmable hearing instruments, remote controls and             monthly service charge of 1.5% (18% per annum).  Orders
conventional instruments.  All product warranties are in          may be put on hold for accounts that are not current.  An
effect from the date of the original invoice.  For BTE            account must be in good standing to receive discount
instruments, a 90-day "stocking period" is added to the           privileges or be eligible for promotional activities.
standard warranty.  Earmolds, tubing, batteries and
accessories are not covered under our warranties.                 Accounts will receive monthly statements summarizing
                                                                  open items on account.
For warranty work, all products must be returned to an
authorized GN ReSound North America manufacturing                 VISA, MasterCard and Discover are accepted.
facility.  Proof of purchase may be required.
                                                                  Credit
Extended Warranty Coverage
                                                                  A completed, signed credit application must be submitted
An additional year of product warranty for hearing                and approved before any hearing instrument orders are
instruments may be purchased from GN ReSound at any               shipped.  Upon approval, a line of credit will be established.
time during the original warranty period.                         When purchases posted to your account have exceeded the
                                                                  assigned credit limit, all products will be shipped C.O.D.
For an advanced technology digital or analog                      until the balance is reduced below the credit limit, or the
programmable instrument, the charge for the extended              credit line is extended. Alternative payment arrangements
coverage is $75.                                                  may be available upon request.

                                                                  Return for Credit
Loss and Damage Coverage

All GN ReSound Products are covered by a one-year loss            All GN ReSound instruments, parts and accessories in good
and damage policy.  Any remote control that is stolen,            working condition may be returned for full credit within 90
lost or damaged can be replaced for a $50 per-unit fee            days of the date of the original invoice. (Please note that
during the first year of the product warranty - any CIC           payment is due 30 days from the date of the original
or advanced technology digital or analog programmable             invoice.)
instrument for a $150 per-unit fee.  If the consumer
would prefer additional loss and damage coverage, third
party insurers will cover our instruments.

An instrument may be replaced only once under this                Certain promotional activities may restrict the right of return
program -- the effective date of the product warranty on the      to "exchange only" as indicated on the invoice.  All returns
replacement unit is the date of the invoice of the original       for credit must be accompanied by a Return Authorization
unit.  The replacement must be for the same user, the same        form to ensure proper and prompt processing.
ear and with the same options package as the original
hearing instrument and it may not be returned for credit.         Products returned after 90 days will be subject to a 25%
Ownership of the stolen, lost or damaged unit reverts to GN       restocking fee.  No returns will be accepted after 180 days.
ReSound                                                           Damaged units will be subject to additional charges.

Should a claim need to be filed, a complete written and
notarized statement from the user is required.

Service Warranties

Please refer to the Service section for specific warranty
information on repairs and remakes.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<S>                                                               <C>
Services                                                          Remake

Shipping                                                          During the intial warranty period, GN ReSound will remake
                                                                  custom shells (and place the original faceplate and
GN ReSound North America provides Airborne Next                   components into the new shell) as often as necessary at no
Afternoon Service free of charge for all new orders, repairs      charge.  A remake performed under warranty maintains the
and remakes.  (Next Afternoon Service means next                  original purchase warranty effective date.  Note: a remake
business afternoon delivery for packages under 15 pounds,         requires a new impression
and two-day delivery for packages over 15 pounds.)
Preprinted Airborne forms for Next Afternoon Service are          To remake an out-of-warranty advanced technology
available from Customer Service.  Please enter name and           hearing instrument less than 60 months old, the charge is
address information only -- do not make any changes to the        $150 per instrument.  This charge includes a 12-month
form.  You will be billed for any additional charges incurred.    warranty in effect from the date of the remake invoice.

Insurance is the sole responsibility of the sender.  If           To remake an out-of-warranty conventional hearing
additional insurance is purchased by the sender from              instrument less than 60 months old, the charge is $100 per
Airborne, the sender will be billed for such costs.               instrument.  This charge includes a 6-month warranty in
                                                                  effect from the date of the remake invoices.
Warranty Repair
                                                                  To remake any out-of-warranty hearing instrument 60
Should repair of a GN ReSound product be necessary, we            months or older, the charge is $250 per instrument. This
will make every effort to provide this service in a timely and    charge includes a 6-month warranty in effect from the date
efficient manner.  To facilitate this service, please return the  of the remake invoice.
product with a completed Repair/Remake form to
Customer Service in appropriate packaging.  A produce             Recasing to a New Color
repair under warranty maintains the original purchase
warranty effective date.                                          BTE instruments with color options may be recased with a
                                                                  different color at no charge during the first 90 days.  After
Out-of-Warranty Repair                                            90 days from the date of the original invoice, the recasing
                                                                  charge is $35 per instrument for the BT4 and BT2-ES
GN ReSound hearing instruments (excluding shell                   models, and $55 per instrument for the BTP model.  A
remakes) and remote controls that are no longer covered           recasing performed under warranty maintains the original
under the original purchase warranty may be repaired "out         purchase warranty effective date.
of warranty."
                                                                  Remote Control Replacement
To repair an out-of-warranty advance technology device
less than 60 months old, the charge is $105 per hearing           In an effort to minimize patient inconvenience during trial
instrument and $90 per remote control.  This charge               periods, GN ReSound will ship replacement remote
includes a supplemental 12-month warranty in effect from          controls in exchange for malfunctioning units.  To receive
the date of the repair invoice.                                   credit, the units must be received within 90 days from the
                                                                  date of the original invoice.  Note:  We recommend that
To repiar an out-of-warranty conventional device less than        dispensers stock extra remote controls for "loaner" use.
60 months old, the standard charge is $65 per hearing
instrument.  This charge includes a supplemental 6-month
warranty in effect from the date of the repair invoice.

For a device 60 months or older, GN ReSound will repair or
replace it at our discretion (based upon parts availability)
for a charge of $150.  This charge includes a supplemental
6-month warranty in effect fromt he date of the repair
invoice.

GN ReSound cannot guarantee repair or replacement of
devices which have been discontinued from our product
line for more than five years.
</TABLE>

<PAGE>


Policies Summary
Warranties

STANDARD WARRANTY COVERAGE

Advanced technology digital programmable instruments                   Two-year
Analog programmable instruments                                        One-year
Remote controls                                                        One-year
BTE instruments: add 90-day "stocking period")

EXTENDED WARRANTY COVERAGE

Advanced technology digital programmable instruments                        $ 75
Analog programmable instruments                                               75

LOSS AND DAMAGE COVERAGE (DEDUCTIBLES)

Advanced technology digital programmable instruments                       $ 150
Analog programmable instruments                                              150
CICs (all circuits)                                                          150
Remote controls                                                               50

Terms

PAYMENT

Invoice due date (each order invoices
  separately)                                                             Net 30
Past due charges                                                      1.5%/month
Credit cards accepted                                 VISA, MasterCard, Discover

CREDIT

Initial orders                       Accepted after credit application completed
Credit limit exceeded                                All products shipped C.O.D.

RETURN FOR CREDIT

First 90 days                                                        Full credit
90-180 days                                                   25% restocking fee
After 180 days                                                        No returns
(Damaged units subject to additional charges)

Services

SHIPPING

New orders, repairs and remakes              Airborne Next Afternoon (no charge)
(Insurance is sole responsibility
 of the sender)

OUT-OF-WARRANTY REPAIR

Advanced technology instruments <60 months old (+12-month warranty)        $ 105
Conventional instruments <60 months old (+6-month warranty)                   65
Remote controls <60 months old (+12-month warranty)                           90
Any device 60 months or older (+6-month warranty)                            150

REMAKE

Initial warranty period                                                No charge
Advanced technology instruments <60 months old (+12-month warranty)          150
Conventional instruments <60 months old (+6-month warranty)                  100
Any device 60 months or older (+6-month warranty)                            250

RECASING TO A NEW COLOR (if available)

First 90 days                                                          No charge
BT4 and BT2 ES models after 90 days                                          $35
BTP models after 90 days                                                      55

REMOTE CONTROL REPLACEMENT

Malfunction during first 90 days                                       No charge


<PAGE>
                                    EXHIBIT C

                         ADDITIONAL TERMS AND CONDITIONS


         (Unless otherwise  defined herein,  capitalized terms used herein shall
have the meanings ascribed to them in the Agreement.)


         1. No Modification of Price List.  Notwithstanding any provision to the
contrary  in the  Agreement,  the  Company  shall not be  entitled to adjust the
prices on the New Price List until June 1, 2004,  after  which the  Company  may
increase  prices with  respect to any Company  Product for the  remainder of the
term of this  Agreement not more than *** each year. In the event that the CANTA
Series Company Products are not available to Customer by June 1, 2001, the price
set forth on the New Price List with respect to such Company  Products  shall be
effective as of the date that such Company  Products are  available to Customer.
The Company represents and warrants that the "list price" set forth on Exhibit A
will be the Company's  published list price for the Company  Products  listed on
Exhibit A as of June 1, 2001. ***

         2. Sales  Requirements.  (a) The "SALES NUMBER" for any period shall be
the number of Company  Products  purchased  from the Company and its  Affiliates
during such period by all Persons  included  within the definition of "Customer"
under this  Agreement.  The "DIGITAL  SALES  NUMBER" for any period shall be the
number of digital Company Products purchased from the Company and its Affiliates
during such period by all Persons  included  within the definition of "Customer"
under this Agreement.  The "CUSTOMER  CLINIC NUMBER" for any period shall be the
number of hearing instruments (produced by any manufacturer,  including, but not
limited to, the Company  and its  Affiliates)  sold during such period by retail
hearing  centers  that are  controlled  by Sonus  or its  Subsidiaries.  The "D2
NUMBER" for any period  shall be the number of OEM  Viennatone  digital  Company
Products (private label brands, including, but not limited to, D2 and ListenEar)
("D2 PRODUCTS") purchased from the Company and its Affiliates during such period
by  all  Persons  included  within  the  definition  of  "Customer"  under  this
Agreement.  Each Sales Number, Digital Sales Number,  Customer Clinic Number and
D2 Number shall be determined on a "NET BASIS",  i.e.  reduced by any orders for
hearing  instruments placed during such period that are canceled and any hearing
instruments  sold in such  period  that are  returned  for any  reason.  For the
avoidance of doubt,  for any given period,  the Sales Number,  the Digital Sales
Number  and the  Customer  Clinic  Number  shall  each  include  the  number  of
Viennatone  products  sold on a Net Basis  during  such  period  but shall  each
exclude the number of Avance units and V-Series units sold on a Net Basis during
such  period.  In the  event  Sonus  or any of its  Subsidiaries  or  Affiliates
consummates a transaction involving expansion or acquisition of assets, business
or third parties  subsequent to the  execution of the  Agreement,  references to
"Customer"  in the  Agreement  and this  Exhibit  C shall  give  effect  to such
expansion or acquisition.  In the event that Company  Products are not available
for sale or permitted to be sold in a jurisdiction (an "EXCLUDED  JURISDICTION")
under the  applicable  laws of such  jurisdiction  after any date (the "EXCLUDED
DATE")  following the date hereof,  the Customer Clinic Number for any period or

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -1-
<PAGE>

portion  thereof after the Excluded Date shall not include the number of hearing
instruments sold on a Net Basis in the Excluded Jurisdiction by Customer.

         (b)  Each  calendar  year  following  the  Effective  Date  shall  be a
"CUSTOMER SALES Period",  except that the initial  "CUSTOMER SALES PERIOD" shall
begin on June 1, 2001 and end on December 31,  2001.  With respect to the period
from  October 1, 2001 through  December  31, 2001 ("2001 Q4") and each  Customer
Sales Period  thereafter,  (i) the "TARGET NUMBER" for each such period shall be
***, and (ii) the "DIGITAL TARGET NUMBER" for each such period shall be ***.

         (c) No later than 90 days after the end of each Customer  Sales Period,
Sonus USA shall  deliver to the Company a  statement  (each,  a "CUSTOMER  SALES
STATEMENT") in a form mutually  agreed upon by Sonus USA and the Company setting
forth, without limitation, the Customer Clinic Number for such period. Sonus USA
and the Company shall also agree in good faith as to the Sales  Number,  Digital
Sales  Number and D2 Number for such  Customer  Sales  Period,  and such numbers
shall  be added to the  Customer  Sales  Statement.  In the  event of a  dispute
regarding the information set forth on a Customer Sales  Statement,  the Company
and Sonus USA shall make a good faith effort to resolve any discrepancies and to
make a final  determination of the information  required to be set forth on such
Customer Sales Statement (a "FINAL DETERMINATION").

         (d) The  excess  of the  Sales  Number  during  2001 Q4 or  during  any
subsequent  Customer  Sales  Period  thereafter  over the Target  Number (or, if
applicable,  the Revised Target Number (as defined below)) for such period shall
be the "EXCESS  NUMBER" for the following  Customer Sales Period.  The excess of
the Digital  Sales  Number  during 2001 Q4 or during any  Customer  Sales Period
thereafter  over the  Digital  Target  Number (or,  if  applicable,  the Revised
Digital Target Number) for such period shall be the "DIGITAL  EXCESS NUMBER" for
the following Customer Sales Period.

         (e) In the  event  that the Final  Determination  of a  Customer  Sales
Statement  indicates that the Sales Number during 2001 Q4 or during any Customer
Sales Period thereafter was fewer than the Target Number (or, if applicable, the
Revised Target Number) for such period, then the following shall apply:

             (i) If the Sales  Number for such  period is less than *** for such
         period:

                           (x) Sonus USA shall pay to the Company in immediately
                           available funds by the 100th day following such Final
                           Determination  (the  "PAYMENT  DATE") an amount  (the
                           "CASH  PAYMENT")  equal to ***  provided  that if the
                           Cash Payment is not paid by the Payment Date, then it
                           shall bear  interest for each day from and  including
                           the Payment Date to and  including  the date on which
                           the Cash Payment,  plus all such accrued  interest is
                           paid  in  full,  at a rate  per  annum  equal  to six
                           percent (6%);  provided further that the Cash Payment
                           shall be reduced  by *** (and such  number of Company
                           Products so purchased shall not, for the avoidance of
                           doubt,  be included in the  calculation  of the Sales
                           Number,  Digital  Sales  Number or D2 Number

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -2-
<PAGE>

                           for the  Customer  Sales  Period  during  which  such
                           purchases are made); and

                           (y) *** for such period (the "FULL DIFFERENCE") shall
                           be  added  to the  Target  Number  for the  following
                           Customer Sales Period as computed in accordance  with
                           subsection (b) of this Section 2 (the sum of the Full
                           Difference  and the Target Number for such  following
                           Customer Sales Period, a "REVISED TARGET NUMBER").

             (ii) If the Sales  Number for such period is greater  than or equal
         to *** for such period, *** (the "PARTIAL  DIFFERENCE") *** as computed
         in  accordance  with  subsection  (b) of this Section 2 (the sum of the
         Partial  Difference and the Target Number for such  following  Customer
         Sales Period, also a "REVISED TARGET NUMBER").

             (iii) In the event a One Quarter  Termination (as defined below) is
         in effect at the time such Customer Sales  Statement is delivered,  any
         Full Difference or Partial Difference  resulting from such period shall
         be added to the  Termination  Target  Number of the  first  Termination
         Quarter (each as defined below).

             (iv) In the event a One Year  Termination  (as defined below) is in
         effect at the time such Customer Sales Statement is delivered, any Full
         Difference or Partial  Difference  resulting  from such period shall be
         added to the Termination Target Number of the then-current  Termination
         Quarter.

In the event that the Sales Number during the last Customer  Sales Period of the
then-current  term of this  Agreement  is fewer than the Target  Number  (or, if
applicable,  the Revised  Target  Number) for such  Customer  Sales Period (such
difference,  the  "SHORTFALL  NUMBER"),  then Sonus USA shall  either (i) pay in
immediately  available funds to the Company within 10 business days of the Final
Determination  of the Customer  Sales  Statement  relating to such period *** or
(ii) purchase from the Company and its  Affiliates  during the 90 days following
such Final  Determination  ***.  The first  proviso of clause  (e)(i)(x) of this
Section 2 shall apply, mutatis mutandis, to any payments due under the preceding
sentence.  Notwithstanding  the  foregoing,  in the event of a  Termination  (as
defined  below),  the provisions of Section 3 of this Exhibit C shall  supersede
the foregoing two sentences.

         (f) In the  event  that the Final  Determination  of a  Customer  Sales
Statement  indicates  that the Digital Sales Number during 2001 Q4 or during any
Customer  Sales Period  thereafter was fewer than the Digital Target Number (or,
if applicable,  the Revised  Digital  Target  Number) for such period,  then the
following shall apply:

             (i) If the  Digital  Sales  Number for such period is less than ***
         for such period:

                           (x) Sonus USA shall pay to the Company in immediately
                           available  funds by the 100th  business day following
                           such Final Determination (the "DIGITAL PAYMENT DATE")
                           an amount (the "DIGITAL CASH  PAYMENT")  equal to ***
                           provided that if the Digital Cash Payment is not

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -3-
<PAGE>

                           paid by the Digital  Payment Date, then it shall bear
                           interest for each day from and  including the Digital
                           Payment Date to and  including  the date on which the
                           Digital Cash Payment,  plus all such accrued interest
                           is paid in  full,  at a rate per  annum  equal to six
                           percent (6%);  provided further that the Digital Cash
                           Payment  shall be reduced by *** (and such  number of
                           digital Company  Products so purchased shall not, for
                           the   avoidance   of  doubt,   be   included  in  the
                           calculation of the Sales Number, Digital Sales Number
                           or D2 Number for the  Customer  Sales  Period  during
                           which such purchases are made); and

                           (y)  ***  for  such   period   (the   "DIGITAL   FULL
                           DIFFERENCE")  shall be added  to the  Digital  Target
                           Number for the  following  Customer  Sales  Period as
                           computed in accordance  with  subsection  (b) of this
                           Section 2 (the sum of the Digital Full Difference and
                           the Digital Target Number for such following Customer
                           Sales Period, a "REVISED DIGITAL TARGET NUMBER").

             (ii) If the Digital Sales Number for such period is greater than or
         equal to *** for such period, as computed in accordance with subsection
         (b) of this Section 2 (the sum of the Digital  Partial  Difference  and
         the Digital  Target Number for such  following  Customer  Sales Period,
         also a "REVISED DIGITAL TARGET NUMBER").

             (iii) In the event a One  Quarter  Termination  is in effect at the
         time such  Customer  Sales  Statement  is  delivered,  any Digital Full
         Difference or Digital  Partial  Difference  resulting  from such period
         shall be added to the  Termination  Digital  Target Number of the first
         Termination Quarter (each as defined below).

             (iv) In the event a One Year  Termination  is in effect at the time
         such Customer Sales Statement is delivered, any Digital Full Difference
         or Digital Partial Difference resulting from such period shall be added
         to  the   Termination   Digital  Target  Number  of  the   then-current
         Termination Quarter.

In the event that the Digital Sales Number during the last Customer Sales Period
of the  then-current  term of this  Agreement  is fewer than the Digital  Target
Number (or, if applicable,  the Revised Digital Target Number) for such Customer
Sales Period (such difference,  the "DIGITAL SHORTFALL NUMBER"),  then Sonus USA
shall either (i) pay in  immediately  available  funds to the Company  within 10
business  days  of the  Final  Determination  of the  Customer  Sales  Statement
relating to such period *** or (ii) purchase from the Company and its Affiliates
during the 90 days following such Final  Determination ***. The first proviso of
clause  (e)(i)(x)  of this  Section  2 shall  apply,  mutatis  mutandis,  to any
payments due under the preceding sentence. Notwithstanding the foregoing, in the
event of a Termination (as defined  below),  the provisions of Section 3 of this
Exhibit C shall supersede the foregoing two sentences.

         (g) In the event that the Customer Sales Statement relating to the last
Customer  Sales Period  indicates  that there is no Shortfall  Number or Digital
Shortfall Number, Customer shall have no further obligations to purchase Company
Products from the Company and its Affiliates except as otherwise  provided under
this Agreement.

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -4-
<PAGE>

         (h)  Except  in  the  event  of a  Termination,  upon  satisfaction  of
Customer's  obligations  described  in  this  Section  2  and  of  the  parties'
obligations described in Section 4 of this Exhibit C, the term of this Agreement
shall expire.  3. Early  Termination.  (a) In the event that Sonus USA repays in
full  the  outstanding  Obligations  and  the  Commitment  terminates,  each  in
accordance with the terms and conditions of the Credit  Agreement,  Customer may
terminate this Agreement if it agrees to either:

             (i) (x)  purchase  from the Company and its  Affiliates  during the
         first  Termination  Quarter  (as  defined  below) a number  of  Company
         Products equal to the Termination  Target Number (as defined below) for
         such  Termination  Quarter,  of which a number equal to the Termination
         Digital  Target  Number (as  defined  below)  must be  digital  Company
         Products,  and (y)  transfer  to the Company in  immediately  available
         funds by the last  business day of the first  Termination  Quarter (the
         "TERMINATION   PAYMENT  DATE")  an  amount  equal  to  $2,000,000  (the
         "TERMINATION PAYMENT"), or

             (ii)  purchase  from the  Company  and its  Affiliates  during each
         Termination   Quarter  a  number  of  Company  Products  equal  to  the
         Termination  Target  Number for such  Termination  Quarter,  of which a
         number equal to the  Termination  Digital Target Number must be digital
         Company Products.

A "ONE QUARTER  TERMINATION"  means a termination  pursuant to (i) above, a "ONE
YEAR   TERMINATION"   means  a  termination   pursuant  to  (ii)  above,  and  a
"TERMINATION"  means either a One Quarter Termination or a One Year Termination.
Customer may effect a  Termination  at any time after  repaying the  outstanding
Obligations  but must  provide  written  notice to the  Company of its desire to
effect a Termination (the "TERMINATION NOTICE").

         (b)  For purposes of this Agreement:

             (i) The Customer Sales Period during which the  Termination  Notice
         is received by the Company (the "FINAL CUSTOMER SALES PERIOD") shall be
         deemed  to end on the  last  day of the  month  of  such  receipt  (the
         "RECEIPT  MONTH"),  if the Termination  Notice is received by the first
         business  day of the  Receipt  Month,  or on the last day of the  month
         following the Receipt Month, if the Termination  Notice is not received
         by the first  business  day of the Receipt  Month.  The 3-month  period
         starting on the first day of the month immediately  following the Final
         Customer  Sales Period,  as well as each of the three  3-month  periods
         thereafter,  shall be a  "TERMINATION  QUARTER".  For  example,  if the
         Company receives the Termination  Notice on May 15, 2004, (v) the Final
         Customer  Sales  Period  shall  end on June  30,  2004,  (w) the  first
         Termination  Quarter  shall be from July 1, 2004 through  September 30,
         2004, (x) the second Termination  Quarter shall be from October 1, 2004
         through December 31, 2004, (y) the third  Termination  Quarter shall be
         from  January  1,  2005  through  March  31,  2005  and (z) the  fourth
         Termination Quarter shall be from April 1, 2005 through June 30, 2005.

             (ii) The "TERMINATION TARGET NUMBER" for the first,  second,  third
         and fourth  Termination  Quarters  shall be ***,  respectively,  of the
         Customer Clinic Number for such

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                       -5-
<PAGE>

         Termination  Quarter.  The "TERMINATION DIGITAL TARGET NUMBER" for each
         Termination  Quarter shall be *** of the Termination  Target Number for
         such Termination Quarter. ***.

         (c) No  later  than 90 days  after  the  end of the  first  Termination
Quarter, in the event of a One Quarter Termination,  or 90 days after the end of
the fourth Termination  Quarter,  in the event of a One Year Termination,  Sonus
USA shall deliver to the Company a statement  (the  "TERMINATION  CUSTOMER SALES
STATEMENT") in a form mutually  agreed upon by Sonus USA and the Company setting
forth,  without  limitation,  the Customer  Clinic  Number for each  Termination
Quarter.  Sonus USA and the  Company  shall  also  agree in good faith as to the
Sales Number,  Digital Sales Number and D2 Number for each Termination  Quarter.
In the event of a dispute regarding the information set forth on the Termination
Customer  Sales  Statement,  the  Company  and Sonus USA shall make a good faith
effort to resolve any  discrepancies  and to make a final  determination  of the
information  required  to  be  set  forth  on  the  Termination  Customer  Sales
Statement.

         (d)  In  the  event  that  the  Termination  Customer  Sales  Statement
indicates  that the Sales Number during any  Termination  Quarter was fewer than
the Termination  Target Number for such period (the sum of any such differences,
the "TERMINATION SHORTFALL NUMBER"),  then Sonus USA shall pay to the Company in
immediately  available funds by the 100th day following the Final  Determination
of the Termination Customer Sales Statement (the "TERMINATION PAYMENT DATE")  an
amount (the "TERMINATION  CASH PAYMENT") *** (the "TERMINATION  PENALTY PRICE");
provided  that if the  Termination  Cash Payment is not paid by the  Termination
Payment  Date,  then it shall bear  interest for each day from and including the
Termination Payment Date to and including the date on which the Termination Cash
Payment,  plus all such  accrued  interest is paid in full,  at a rate per annum
equal to six percent (6%);  provided  further that the Termination  Cash Payment
shall be reduced by ***.

         (e)  In  the  event  that  the  Termination  Customer  Sales  Statement
indicates that the Digital Sales Number during any Termination Quarter was fewer
than the Termination  Digital Target Number for such period (the sum of any such
differences,  the "DIGITAL TERMINATION SHORTFALL NUMBER"),  then Sonus USA shall
pay to the Company in immediately available funds by the 100th day following the
Final  Determination  of the Termination  Customer Sales Statement (the "DIGITAL
TERMINATION  PAYMENT DATE") an amount (the "DIGITAL  TERMINATION  CASH PAYMENT")
***;  provided that if the Digital  Termination  Cash Payment is not paid by the
Digital  Termination Payment Date, then it shall bear interest for each day from
and including the Digital  Termination Payment Date to and including the date on
which the Digital  Termination  Cash Payment,  plus all such accrued interest is
paid in full,  at a rate per annum equal to six percent (6%);  provided  further
that the Digital Termination Cash Payment shall be reduced by ***.

         (f)  In  the  event  that  the  Termination  Customer  Sales  Statement
indicates that there is no Termination  Shortfall Number or Termination  Digital
Shortfall Number, Customer shall have no further obligations to purchase Company
Products from the Company and its Affiliates except as otherwise  provided under
this Agreement.

         (g) In the  event  of a One  Quarter  Termination,  if the  Termination
Payment is not paid by the  Termination  Payment Date, the  Termination  Payment
shall  bear  interest  on  $2,000,000,  for

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -6-
<PAGE>

each day from and  including the  Termination  Payment Date to and including the
date on which the Termination Payment plus all accrued interest is paid in full,
at a rate per annum equal to six percent (6%).

         (h) Upon  satisfaction  of  Customer's  obligations  described  in this
Section 3 and of the parties' obligations described in Section 4 of this Exhibit
C, the term of this Agreement shall expire.

         4. Sales Rebates. (a) For Company Products listed on the New Price List
that are billed to  Customer  after the  Effective  Date,  including  during any
period during which a Termination is in effect, Sonus USA shall be entitled to a
rebate as follows:

         Sonus USA shall  receive a rebate of *** purchased by Customer from the
Company.  Of such rebate, *** (the "REPAYMENT  REBATE") shall be payable *** (as
described below) *** subject to the following:  (i) during the first three years
following the date hereof,  the Repayment  Rebate will first be applied by Sonus
USA toward Current  Interest as defined and described in Section  2.05(a) of the
Credit Agreement,  and Sonus USA shall be entitled to keep any remaining portion
of such rebate (subject to Section 4(b) of this Exhibit C); and (ii) during each
year after the first two years following the date hereof,  the Repayment  Rebate
will first be applied by Sonus USA to repay any Current  Interest  and then will
be applied by Sonus USA to repay any amounts described in Section 2.05(a)(ii) of
the Credit  Agreement,  and Sonus USA shall be  entitled  to keep any  remaining
portion  of such  rebate  (subject  to  Section  4(b) of this  Exhibit  C).  The
remaining *** of such *** rebate (such ***, the "WORKING  CAPITAL REBATE") shall
be payable *** (as described below). In addition to the *** rebate above,  Sonus
USA shall receive a rebate (the "SONUS SOLUTION  REBATE",  and together with the
Repayment Rebate and the Working Capital Rebate, the "REBATES") of *** purchased
from the  Company by  Customer,  which  rebate  will be used for the  purpose of
national  advertising.  It is the  understanding  of  the  parties  hereto  that
Customer may make any  additional  requests  that the Company  provide funds for
marketing  programs,  but the  Company is under no  obligation  to grant or even
consider such requests.

         (b) Notwithstanding  the foregoing,  in the event that any Sonus Entity
has not remitted to the Company any amount (an  "INVOICED  AMOUNT") for which it
has been invoiced by 90 days after the date of such invoice,  after  application
by Sonus USA of the  Repayment  Rebate in  accordance  with Section 4(a) of this
Exhibit C, the  Company  shall be allowed to apply the  Rebates,  including  any
portion of the  Repayment  Rebate not so  applied by Sonus USA,  or any  portion
thereof toward such Invoiced Amount.

         (c) The Sonus  Entities and the Company  understand and agree that each
Person  other  than  the  Sonus  Entities  included  within  the  definition  of
"Customer"  (each, a "SONUS  Affiliate")  shall order Company Products  directly
from the Company,  which shall  deliver and bill such Sonus  Affiliate  for such
Company Products. ***

         (d) All  rebates  described  above  shall  be paid to  Sonus  USA  ***.
Determination of rebate level shall be based on the total number of units billed
to Customer during the applicable  period on a Net Basis.  The Company shall pay
to Sonus USA each Repayment  Rebate earned by Customer  during each *** of Sonus
USA  beginning  after the date hereof by 12:00 noon,  New York City time, of the
10th  business day ***,  provided  that in the event that Sonus USA has


***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -7-
<PAGE>

provided  notice to GN ReSound  AS of a  material  adverse  change  pursuant  to
Section 5.01(k) of the Credit  Agreement,  the Company shall be allowed to apply
the full amount of each Repayment  Rebate owed by the Company to pay any Current
Interest owed by Sonus USA to the Company or any of its Affiliates.  The Company
shall pay to Sonus USA each Working  Capital  Rebate and Sonus  Solution  Rebate
earned by Customer  *** by the 10th  business day of ***. By each date that each
Customer  Sales  Statement  or,  if  applicable,   Termination   Customer  Sales
Statement,  is due, the Company shall calculate and deliver to Sonus USA a final
reconciliation  for units  qualifying for a rebate *** owed Sonus USA during the
relevant period. If such reconciliation indicates that the Company has underpaid
the  rebates  ***,  the  Company  shall pay any and all amounts due to Sonus USA
within  30 days  of the  Company's  delivery  of  such  reconciliation.  If such
reconciliation  indicates  that the Company has overpaid the rebates ***, and if
Sonus USA has a credit balance in its account,  the Company shall be entitled to
reduce such credit  balance by the  overpaid  amount.  Alternatively,  Sonus USA
shall refund such  overpayment  to the Company  within 30 days of the  Company's
invoice to Sonus USA for such amount.

         (e) All  determinations  of net orders  shall be based on the books and
records of the  Company  and such  determinations  made in good  faith  shall be
deemed conclusive.  If Sonus USA disputes such determination and such dispute is
with  respect to an amount in excess of 5% of the total  number  reported by the
Company for the  applicable  period,  Sonus USA shall notify the Company and the
parties shall made a good faith effort to resolve any discrepancies.

         5.  Right of First  Offer.  (a) For the period  commencing  on the date
hereof and ending on the second  anniversary  hereof,  Sonus will not consent to
any Change of Control Transaction unless Sonus shall have first made an offer to
sell itself to the Company,  and the Company  shall have had an  opportunity  to
purchase Sonus, each as set forth below in this Section 5.

         (b) A copy of Sonus's offer (the "SONUS  NOTICE") shall be given to the
Company and shall consist of an invitation to the Company and its  Affiliates to
make an offer to purchase Sonus upon the terms and conditions set forth therein.
The offer  contained  in the Sonus  Notice  shall be  confidential  unless Sonus
specifies  to the  contrary  in  the  Sonus  Notice.  Subject  to the  foregoing
sentence,  no public  disclosure  shall be made by Sonus,  the Company or any of
their respective Affiliates of the delivery of the Sonus Notice or the terms and
conditions  contained  therein,  except as may be required  under any applicable
state,  federal or foreign  law,  in which case the  disclosing  party  shall as
promptly  as  practicable  give  notice to the other  parties in advance of such
disclosure.

         (c) The Company or any of its Affiliates shall have the right to make a
confidential  offer to acquire Sonus upon the terms and  conditions set forth in
the Sonus Notice at a purchase  price per share (the "BUYER OFFER  PRICE") to be
proposed in the Buyer Notice and Proposed  Purchase  Agreement  (each as defined
below).

         (d) Within thirty (30) days after the receipt of the Sonus Notice,  the
Company or any of its Affiliates may, at its option,  offer to purchase all, but
not fewer than all, of the  outstanding  voting  securities  of Sonus  (assuming
conversion or exercise of all  securities  and options that are  convertible  or
exercisable into voting  securities) (such offering party or parties,  "BUYER").

***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment
                                      -8-
<PAGE>

Buyer shall  exercise such option by giving notice  thereof to Sonus within such
30-day period.  Such notice (the "BUYER NOTICE") shall set forth the Buyer Offer
Price and an  estimated  date for the closing of the  purchase  of Sonus,  which
shall not be more than ninety  (90) days after the date that a merger  agreement
between  Sonus and Buyer is entered  into  (which  date may be  extended  for an
additional  sixty (60) days if  necessary  to obtain any  required  shareholder,
regulatory,  Securities and Exchange Commission, or other approvals).  The Buyer
Notice shall be  accompanied by a merger  agreement  executed on behalf of Buyer
containing  customary  terms  and  provisions  for the  acquisition  of a public
company (the "PROPOSED PURCHASE AGREEMENT").  Without limiting the generality of
the foregoing,  the Proposed Purchase Agreement shall contain no indemnification
provisions  and no  provisions  that  survive  the  closing of the  transactions
contemplated by the Proposed Purchase Agreement.

         (e) The  Proposed  Purchase  Agreement  shall set forth the Buyer Offer
Price and the form of the  consideration  of which the Buyer  Offer  Price shall
consist.  The Buyer  Offer Price may be paid in any  combination  of cash and/or
marketable  securities.  If any  portion of the Buyer  Offer  Price  consists of
marketable  securities,  the  value of such  portion  shall be based on the Fair
Market Price (as defined below) of such securities.

         (f) Within thirty (30) days of receiving  the Buyer  Notice,  Sonus may
either accept or reject Buyer's offer to purchase Sonus at the Buyer Offer Price
("BUYER'S OFFER").  Sonus shall have no obligation  whatsoever to accept Buyer's
Offer or to negotiate with Buyer, and may reject Buyer's Offer for any reason or
no reason.

         (g) If Sonus rejects  Buyer's Offer,  Sonus may enter into an agreement
with a Third  Party or any of its  Affiliates  that  provides  for a  Change  of
Control Transaction (a "MERGER AGREEMENT").

         (h) If Sonus  enters  into a Merger  Agreement  but  fails to close the
related Change of Control  Transaction  within 180 days  following  rejection of
Buyer's  Offer,  Sonus shall again comply with the  procedures set forth in this
Section 5 with respect to any Change of Control Transaction.

         (i) For purposes  hereof,  the following terms shall have the following
meanings:

             (i) "CHANGE OF CONTROL  TRANSACTION" shall mean (A) the acquisition
         by  any  Third  Party,  directly  or  indirectly,   by  virtue  of  the
         consummation of any purchase, merger or other business combination,  of
         all outstanding  voting  securities of Sonus  (assuming  conversion and
         exercise of all securities and options  convertible or exercisable into
         voting  securities) with respect to matters  submitted to a vote of the
         stockholders  generally or (B) the sale or transfer by Sonus,  directly
         or indirectly,  of substantially  all of its assets to a Person that is
         not an Affiliate of Sonus prior to such sale or transfer;

             (ii) The "FAIR MARKET PRICE" for any security shall be deemed to be
         the average of the daily  closing  prices for the ten (10)  consecutive
         business days prior to the Valuation  Date.  The closing price for each
         day shall be the average of the reported closing bid and ask prices, in
         either case on the principal national  securities

                                      -9-
<PAGE>

             exchange on which the security is listed or admitted to trading, or
             if not listed or  admitted  to trading on any  national  securities
             exchange,  the  average  of the  highest  reported  bid and  lowest
             reported  asked prices as furnished by the National  Association of
             Securities  Dealers,  Inc.'s Automated Quotation System ("NASDAQ"),
             or the nearest  comparable system, or, in the absence or either, as
             determined by the majority of the board of directors of Sonus; and

         (iii)  "VALUATION   DATE"  shall  mean  the  date  which  is  ten  (10)
             consecutive  business  days  prior to the date on which  the  Buyer
             Notice is given to Sonus.

         6. Distribution of D2. The Company grants Sonus USA the exclusive right
to  distribute D2 Products  within North America  during the entire term of this
Agreement, provided that (a) the reconciliation of the Customer Sales Period for
the initial  Customer Sales Period  indicates that the D2 Number for such period
is at least the product of *** times a fraction,  the  numerator of which is the
number of days during such period  during which the CIC, ITE and BTE D2 Products
are  available  from the Company and the  denominator  of which is 365,  (b) the
reconciliation  of the Customer  Sales  Statement for any other  Customer  Sales
Period other than the Final Customer  Sales Period  indicates that the D2 Number
for such  period  is at least  ***,  or (c) in the event of a  Termination,  the
reconciliation  of the Customer  Sales  Statement for the Final  Customer  Sales
Period  indicates  that the D2 Number for such period is at least the product of
*** times a  fraction,  the  numerator  of which is the  number of months in the
Final  Customer  Sales Period and the  denominator  of which is 12. In the event
that any such  reconciliation  indicates the relevant  requirement  has not been
met,  Customer shall have 30 days from the date of such  reconciliation  to meet
such  requirement  by the  purchase of  additional  D2 Products or else it shall
forfeit the exclusive  distribution right granted under this Section 6 effective
immediately.

         7. Sonus Network. Sonus USA shall use reasonable efforts to support the
purchase of Company Products by members of The Sonus Network, provided, however,
that the form of such support  shall be within the sole  discretion of Sonus USA
and that such support shall not be to the detriment of Sonus USA's relationships
with other hearing instrument manufacturers.

         8. Private Label Program.  Unless otherwise agreed between the parties,
or unless  otherwise  requested when ordering,  Company  Products shipped by the
Company to fill Customer's orders, shall reflect the names, trademarks,  service
marks, logos and/or trade names (collectively,  the "MARKS") of Customer and not
of the Company ("SONUS SOLUTION PRODUCTS").  The parties shall mutually agree on
the  specific  Marks to be used in this regard and the  respective  placement of
those Marks on the products and in the associated  printed  materials.  Customer
grants to the Company a non-exclusive  limited license to the Marks for the term
of the Agreement and any  extensions  thereof solely for the purpose of affixing
them to the Company  Products so ordered by Customer.  Customer will defend,  at
its  expense,  any action  brought  against the Company to the extent that it is
based on a claim that  Customer  does not have the right to use the Marks in any
manner whatsoever,  and Customer will pay any settlements and any costs, damages
and attorneys' fees finally awarded against the Company in such action which are
attributable to such claim;  provided, the foregoing obligation shall be subject
to the  Company  notifying  Customer  promptly  in writing of the claim,  giving
Customer  the  exclusive  control of the defense  and  settlement  thereof,  and
providing reasonable assistance in connection therewith.


***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment
                                      -10-
<PAGE>


         After the  parties  have  agreed on the  placement  of the Marks on the
Company Products and in the associated printed materials,  Customer may not make
changes thereto  without the prior consent of the Company,  which consent may be
conditioned upon Customer  reimbursing the Company for any costs associated with
such change.

         9. Warranty  Period.  Notwithstanding  any  provision  contained in the
Agreement  or in Exhibit B, the  warranty  period  for Sonus  Solution  Products
(digital  and  analog)  sold to  Customer  by the  Company  commencing  with the
Effective  Date  shall  be *** from the  date of the  original  invoice  and the
warranty  period  shall be *** from the date of the  original  invoice for units
that are not Sonus Solution Products.

         10. U.S.  and Canada  Sales Only.  This  Agreement  shall only apply to
sales of units to end users in the United  States and  Canada.  The  parties may
expend the  application  of the  Agreement  in the future to include  additional
countries  but without such written  agreement no units may be sold for delivery
to end users in countries other than the United States and Canada.

         11.  Canadian  Pricing   Adjustments.   Canadian  prices  are  intended
approximately  to reflect the current  exchange rate between the U.S. Dollar and
the Canadian  Dollar.  For ease of  administration,  the Canadian  price list is
subject to adjustment at the end of each calendar quarter to reflect adjustments
in such exchange rate, however, the Canadian price list will be adjusted only if
such  adjustment  results  in an  adjustment  either  up or down of at least ten
percent  (10%).  Payment for units  purchased for Canada from the Canadian price
list shall be made in Canadian dollars.

         12.  Internet  Ordering and  Centralized  Invoicing  and  Payment.  The
parties  agree to cooperate in  developing  and  implementing  a system  whereby
Customer may order units through the Internet. Until such system is implemented,
the Company will invoice each ordering entity  separately in a manner acceptable
to Customer.  It is  anticipated  that such  invoices will reflect less than the
full discount from the list price.  When the ordering  entity remits its payment
to the  Company,  the  Company  will in turn  promptly  remit  to  Customer  the
difference  between the  discount  reflected  on the invoice and the discount to
which Customer is entitled.  After the Internet  ordering system is implemented,
invoicing and payment will be centralized through a single office of Customer.


***  Confidential  portions  omitted  pursuant  to a  request  for  confidential
treatment

                                      -11-
<PAGE>

                                   SCHEDULE 1

                               "CUSTOMER" ENTITIES

         SONUS CORP.

         SONUS-USA, INC.

         SONUS-CANADA LTD.

         SONUS-TEXAS, INC.

         ANY ACQUISITION SUBSIDIARY (AS DEFINED IN THE CREDIT AGREEMENT)

         ANY AFFILIATE (AS DEFINED IN THE AGREEMENT) OF SONUS CORP.

         HEAR PO CORP.

         MEMBERS OF THE SONUS NETWORK

         MEMBERS OF THE SONUS PHYSICIAN NETWORK

         SONUS.COM



                                      -1-