<PAGE>
 
EXHIBIT 10.57

                                                  CONTRACT NUMBER:  120900-92-01



                               PURCHASE AGREEMENT


                                    BETWEEN


                     GTE COMMUNICATION SYSTEMS CORPORATION


                                      AND


                           DIGITAL SOUND CORPORATION
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>

<S>                                                                    <C>
1.  TERM...............................................................  49
2.  PURCHASE AND DISTRIBUTION OF PRODUCT(S)............................  49
3.  PRICE..............................................................  50
4.  TERMS OF PAYMENT...................................................  50
5.  PRICE REVISIONS....................................................  50
6.  PURCHASING FORECAST................................................  50
7.  THIRD PARTY PURCHASES..............................................  51
8.  REPORTS............................................................  51
9.  BAR CODING.........................................................  51
10.  PRECEDENCE OF DOCUMENTS...........................................  51
11.  PURCHASE ORDER INFORMATION........................................  51
12.  DELIVERY..........................................................  52
13.  PACKAGING.........................................................  54
14.  BILLING...........................................................  54
15.  BILL OF SALE......................................................  54
16.  INSPECTION AND ACCEPTANCE.........................................  54
17.  PRODUCT(S) STANDARDIZATION........................................  55
18.  TECHNOLOGICAL OR SPECIFICATION CHANGE/PRODUCT(S)
DELETION/SUBSTITUTION..................................................  56
19.  UNSATISFACTORY CONDITION SITUATIONS...............................  57
20.  PRODUCT(S) CHANGES................................................  57
21.  QUALITY ASSURANCE REPORTING.......................................  59
22.  PRODUCT(S) SERVICES AND SUPPORT...................................  59
23.  TRADEMARK LICENSE.................................................  59
24.  INFRINGEMENT......................................................  59
25.  USE OF CONFIDENTIAL INFORMATION...................................  61
26.  PROPRIETARY RIGHTS................................................  61
27.  PUBLICITY.........................................................  62
28.  COMPLIANCE WITH LAWS..............................................  62
29.  FORCE MAJEURE.....................................................  63
30.  ASSIGNMENT........................................................  63
31.  TAXES.............................................................  64
32.  RECORDS...........................................................  64
33.  RIGHT OF ACCESS...................................................  64
34.  PLANT AND WORK RULES..............................................  65
35.  LIABILITY.........................................................  65
36.  TOXIC SUBSTANCES AND HAZARDOUS PRODUCT(S).........................  66
37.  CANCELLATION 0F PURCHASE ORDERS; REVOCATION OF ACKNOWLEDGEMENTS...  66
38.  TERMINATION.......................................................  67
39.  NOTICES...........................................................  68
40.  REGISTRATION......................................................  70
41.  NONWAIVER.........................................................  70
42.  SEVERABILITY......................................................  70
43.  SECTION HEADINGS..................................................  70
44.  SURVIVAL OF OBLIGATIONS...........................................  71
45.  CHOICE OF LAW.....................................................  71
46.  ENTIRE AGREEMENT..................................................  71
EXHIBIT A:  GTE AFFILIATED ENTITIES....................................  72
EXHIBIT B: SUPPLIER PRODUCT(S).........................................  72
EXHIBIT C:  SUPPLIER PRODUCT(S) PRICING................................  72
EXHIBIT D:  GTE BAR CODING.............................................  72
EXHIBIT E:  GTE SHIPPING AND CARRIER ROUTING INSTRUCTIONS..............  72
EXHIBIT F:  SUPPLIER PRODUCT(S) DELIVERY INTERVAL......................  72
EXHIBIT G:  GTE PACKAGING CONFIGURATION DEFINITIONS....................  72
EXHIBIT H:  GTE STANDARDIZA'NON POLICY.................................  72
EXHIBIT I:  GTE QUALITY ASSURANCE REPORTING............................  72
EXHIBIT J:  GTE PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS...........  72
EXHIBIT K:  SUPPLIER'S ADDITIONAL SOFTWARE LICENSING TERMS.............  72
</TABLE>
<PAGE>
 
                               PURCHASE AGREEMENT

THIS AGREEMENT is made by and between Digital Sound Corporation, a State of
California Corporation with principal offices at 6307 Carpinteria Avenue,
Carpinteria, California 93013 (hereinafter referred to as "SELLER") and GTE
Communication Systems Corporation, a Delaware Corporation, acting by and through
the GTE Supply Division with principal offices located at GTE Place, West
Airfield Drive, DFW Airport, Texas 75261 (hereinafter referred to as
"CUSTOMER"), for the benefit of itself and the GTE Affiliated Entities
(hereinafter referred to as "Affiliates") listed in Exhibit A.


WHEREAS, the parties agree and understand that CUSTOMER and/or Affiliates may
purchase products from SELLER on the same terms and conditions as CUSTOMER
hereunder.  In such event, the Affiliate shall also be a "CUSTOMER" hereunder.
It is the intent of the parties that CUSTOMER and/or Affiliates may make
purchases according to the terms and conditions hereunder.

WHEREAS, the parties hereto desire to enter into an agreement on a non-exclusive
basis to govern the purchase for use or distribution of SELLER'S product(s)
listed in Exhibit B, attached to this Agreement (hereinafter called
"PRODUCT(S)"), to CUSTOMER.

THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

                                    1.  TERM

This Agreement shall be effective on the date of signing of this Agreement, and
shall continue in effect thereafter for a period of two (2) years unless
terminated or modified by either party in accordance with the provisions of this
Agreement.  This Agreement shall be automatically terminated unless renewed by
CUSTOMER for a period not greater than one (1) year by written notice to SELLER
not less than thirty (30) days prior to the expiration date.  At the end of each
twelve month period either party shall have the option to review Agreement terms
and adjust such terms as mutually agreed upon by the parties.

                  2.  PURCHASE AND DISTRIBUTION OF PRODUCT(S)

   (a) This Agreement covers the terms and conditions for the purchase and sale
       of SELLER'S PRODUCT(S) listed in Exhibit B.


   (b) Pursuant to the terms of this Agreement, SELLER hereby agrees to sell to
       CUSTOMER, and CUSTOMER may purchase from SELLER, if it submits purchase
       orders for them, (1) the PRODUCT(S) listed in Exhibit B and (2) other
       goods for which SELLER accepts a purchase order hereunder at the 
<PAGE>
 
       price as quoted to CUSTOMER in writing with respect to each such
       transaction.

   (c) The parties agree that CUSTOMER may purchase the PRODUCT(S) for its own
       use, for resale to end users and/or for distribution to other parties.

   (d) This Agreement is non-exclusive and shall not be construed (1) to require
       CUSTOMER to purchase any specific amount of PRODUCT(S) from SELLER or (2)
       to require CUSTOMER to sell any, all or a portion of PRODUCT(S) it
       orders, or restrict the purchase, resale and/or distribution of
       PRODUCT(S) to any geographic area.

                                   3.  PRICE

   (a) The prices for all PRODUCT(S) to be paid by CUSTOMER are those prices
       specified in Exhibit B as discounted per Exhibit C. Installation charges
       listed in Exhibit B are the maximum allowable unless installation is
       beyond the committed installation date and due to fault of CUSTOMER.


   (b) SELLER represents that the prices for the purchase of any PRODUCT(S)
       hereunder are no less favorable than those offered to other purchasers in
       comparable transactions.

                              4.  TERMS OF PAYMENT

Payment shall be due thirty (30) days from the date of receipt of goods or
receipt of SELLER'S invoice, whichever occurs later.

                              5.  PRICE REVISIONS

   (a) SELLER may propose price increases annually but only after the
       anniversary date of this Agreement by giving ninety (90) days written
       notice to CUSTOMER.  SELLER shall honor all prices for PRODUCT(S) for
       which purchase orders have been issued prior to the effective date of
       such increases.

   (b) Price decreases shall be effective immediately upon announcement by
       SELLER and shall apply to all purchase orders which have not been
       delivered prior to the announcement date.

                            6.  PURCHASING FORECAST

CUSTOMER estimates that it may purchase from SELLER in the aggregate amount,
eleven million four hundred thousand dollars ($11,400,000) of SELLER'S
PRODUCT(S) during the first twelve (12) months of this Agreement.  The purchase
forecast is only a projection or estimate and is not to be construed as a
commitment to 
<PAGE>
 
purchase that or any amount. In no case shall CUSTOMER be responsible for any
billback or related nonconformance charges should CUSTOMER'S purchases fail to
meet projected levels, nor shall failure to purchase the estimated amount of
SELLER'S PRODUCT(S), or any of SELLER'S PRODUCT(S), be a breach of this
Agreement by CUSTOMER.

                           7.  THIRD PARTY PURCHASES

SELLER agrees to consider CUSTOMER's Supply Division as a possible furnisher of
goods or services which SELLER may acquire from a third party.  Accordingly
CUSTOMER shall provide SELLER with a listing of goods and services which it may
be able to provide.  SELLER shall, however be the sole authority for procurement
selections from third party suppliers.

                                  8.  REPORTS

When requested by CUSTOMER, SELLER shall, for purchase orders placed directly
with the SELLER by an Affiliate other than GTE Supply, provide CUSTOMER, at each
address as referenced in Section 39, a quarterly purchase report by ordering
location, listing PRODUCT(S) purchased under this Agreement, description, part
number, quantities shipped and associated net prices.

                                 9.  BAR CODING

SELLER agrees to comply with GTE standards in the development of a Bar Coding
Program as outlined in Exhibit D, as mutually agreed by both parties and based
on SELLER'S capability.

                          10.  PRECEDENCE OF DOCUMENTS

All purchase orders shall be subject to and governed by the provisions contained
herein.  Additional conditions appearing on the face or reverse side of any
CUSTOMER'S purchase order which do not conflict with the terms and conditions of
this Agreement shall be a part of this Agreement with respect to such purchase
order if accepted by SELLER'S order acknowledgment.  The terms and conditions of
this written Agreement shall control over any conflicting or inconsistent terms
and conditions contained in any purchase order.  Upon receipt of CUSTOMER'S
purchase order, SELLER shall acknowledge receipt, verification of information,
and required ship date.  SELLER'S acknowledgment is to be forwarded to CUSTOMER
within ten (10) days of receipt of purchase order.  Unless CUSTOMER specifically
agrees in a separate writing, no additional or different terms and conditions
appearing on the face or reverse side of any SELLER'S acknowledgment or invoice
shall become part of such purchase order.

                        11.  PURCHASE ORDER INFORMATION
<PAGE>
 
   (a) Unless otherwise mutually agreed in writing by the parties, the following
       information shall normally be contained in the purchase order:

       (1)  Description of PRODUCT(S), including any numerical alphabetical
            identification, including SELLER'S part number, referenced in the
            price list herein;

       (2)  Requested delivery date;

       (3)  Applicable price;

       (4)  Location to which the PRODUCT(S) is to be shipped;

       (5)  Location to which invoices shall be rendered for payment;

       (6)  CUSTOMER'S purchase order number;

       (7)  Configurations (if applicable);

       (8)  Delivery requirements;

       (9)  A reference to any applicable quotation given by SELLER to CUSTOMER;
            and

       (10)  Quantity to be shipped.

   (b) All purchase orders, acknowledgments and subsequent invoicing may be
       communicated between CUSTOMER and SELLER by way of postal services,
       facsimile transmission and electronic data interchange according to
       industrial standards as developed to meet both parties' needs or as
       otherwise mutually agreed to by both parties.

   (c) SELLER may enforce each purchase order only against the entity which has
       submitted the purchase order.

   (d) Unless otherwise agreed to in writing, any written purchase order placed
       by CUSTOMER for PRODUCT(S) or services specified herein shall be subject
       to the terms and conditions of this Agreement.

                                 12.  DELIVERY

   (a) Shipments of PRODUCT(S) shall be made FOB Origin freight collect or
       prepaid and added to the invoice as may be specified on individual
       purchase orders.  When CUSTOMER requests SELLER to arrange the
       transportation of the PRODUCT(S), SELLER shall ship all PRODUCT(S)
       freight collect in accordance with the GTE Shipping and Carrier Routing
       Instructions, Exhibit 
<PAGE>
 
       E, unless otherwise specified on the CUSTOMER'S purchase order. In the
       absence of shipping instructions, SELLER shall select the carrier listed
       in the GTE Shipping and Carrier Routing Instructions on behalf of
       CUSTOMER, but SELLER shall not assume any liability for shipment nor
       shall the carrier be construed as an agent of SELLER. If SELLER is
       instructed by CUSTOMER to ship prepaid & add, SELLER shall select a
       carrier based on best rate as negotiated by SELLER. In such instance,
       CUSTOMER shall only pay SELLER'S net transportation costs, inclusive of
       all applicable discounts, allowances and refunds.

   (b) Failure of SELLER to ship PRODUCT(S) in accordance with CUSTOMER'S
       freight routing instructions shall result in charge-backs to the SELLER
       for excess freight charges.

   (c) Unless instructed otherwise by CUSTOMER, SELLER shall, for purchase
       orders placed hereunder, (1) ship PRODUCT(S) in accordance with specific
       shipping instructions; (2) see that all subordinate documents bear
       CUSTOMER'S purchase order number; (3) enclose a packing list with each
       shipment and when more than one package is shipped, identify the one
       containing the packing list; (4) mark CUSTOMER'S purchase order number on
       all packages and shipping papers; (5) render invoices showing CUSTOMER'S
       purchase order number; (6) render separate invoices for each shipment or
       purchase order; (7) forward shipping notices with invoices; (8) invoice
       CUSTOMER by mailing or otherwise transmitting invoices, bills, and
       notices to the billing address on the purchase order; and (9) make
       available Bill of Lading upon request.

   (d) Standard delivery for PRODUCT(S) shall be as specified in Exhibit F and
       may be amended only by written document signed by both parties hereto.
       FOB delivery times shall be from the date of receipt of CUSTOMER'S
       purchase order.

   (e) SELLER shall ship PRODUCT(S) to CUSTOMER within the time period stated in
       Exhibit F with a minimum ninety-six percent (96%) service level.  Service
       level shall be calculated as total line items shipped complete, as
       compared to the total number of line items ordered that have been
       purchased for delivery within SELLER'S stated delivery interval.  SELLER
       shall provide CUSTOMER, on a quarterly basis at the addresses as
       referenced in Section 39, shipping reports delineating the following
       information:

       (1)  CUSTOMER'S purchase order number;

       (2)  Date CUSTOMER'S purchase order received by SELLER;

       (3)  Date purchase order shipped complete from SELLER;
<PAGE>
 
       (4)  Total number of line items scheduled for shipment in the period;

       (5)  Total number of line items shipped complete in the period;

       (6)  Percent (%) of line items shipped complete in the period;

       (7)  Total number of units scheduled for shipment in the period;

       (8)  Total number of units shipped in the period; and

       (9)  Percentage (%) of units shipped complete in the period (fill rate).

                                 13.  PACKAGING

PRODUCT(S) shall be packaged and packed at no additional charge for shipment in
suitable containers which shall provide protection against damage during the
domestic shipment, handling and storage in reasonably dry, unheated quarters.
Refer to Exhibit G for packaging configuration definitions.  Corrugated shipping
containers shall comply with requirements of Item 222 of the National Motor
Freight Code, Series NMFC 100-P.  Containers of any type that are too heavy or
too large to be palletized shall be skidded to facilitate fork truck and/or
mechanized handling.

                                  14.  BILLING

SELLER shall render invoices to CUSTOMER, for each shipment made, unless
otherwise specified, at the address listed on CUSTOMER'S purchase order.
Invoices shall include, but not be limited to (1) purchase order number; (2)
purchase order line number; (3) PRODUCT(S) identification number; (4) ship to
address; (5) quantity shipped and billed; (6) net invoice amount; (7) net unit
cost; and (8) any special instructions as requested by CUSTOMER.

                               15.  BILL OF SALE

SELLER agrees, upon request by CUSTOMER, to execute and deliver to CUSTOMER a
bill of sale evidencing conveyance of PRODUCT(S), free and clear of all liens,
security interests and encumbrances, together with such other documents as may
be necessary by CUSTOMER.

                         16.  INSPECTION AND ACCEPTANCE

   (a) All PRODUCT(S) ordered pursuant to this Agreement shall be subject to
       inspection by CUSTOMER after delivery to determine its conformity with
       CUSTOMER'S purchase order.  If the PRODUCT(S) delivered does not 
<PAGE>
 
       conform with CUSTOMER'S purchase order, CUSTOMER shall have the right to
       reject such PRODUCT(S). PRODUCT(S) which has been delivered and rejected,
       in whole or in part, shall be returned to SELLER at SELLER'S risk and
       expense. CUSTOMER shall have a period of thirty (30) days following
       arrival of PRODUCT(S) at the delivery destination specified by CUSTOMER
       within which to inspect the PRODUCT(S) for conformity with CUSTOMER'S
       purchase order and SELLER'S advertised and published specifications and
       to provide SELLER with written notice of any discrepancy or rejection. If
       CUSTOMER does not provide SELLER with such written notice of a
       discrepancy or rejection within such thirty (30) day period, the
       PRODUCT(S) shall be deemed accepted by CUSTOMER, unless otherwise agreed
       by the parties in writing. CUSTOMER shall notify SELLER and arrange for
       the return of PRODUCT(S) as required.

   (b) Inspection or failure to inspect on any occasion shall not affect
       CUSTOMER'S rights under the "WARRANTY" provisions of Exhibit J herein or
       any other rights or remedies available to CUSTOMER whether at law or in
       equity.

                        17.  PRODUCT(S) STANDARDIZATION

   (a) During the term of this Agreement, SELLER shall comply with GTE's
       PRODUCT(S) Standardization Policy as set forth in Exhibit H.


   (b) Hardware/software problems identified during CUSTOMER's Standardization
       Management testing of new hardware/software releases are to be corrected
       in accordance with the following priority schedule:



             Priority One (1) - must be corrected prior to on-line
             implementation.

             Priority Two (2) - must be corrected prior to commercial release.

             Priority Three (3) - must be corrected in the first product update.

             Priority Four (4) - possible design request or future feature
             enhancement.

             Priority Five (5) - monitor on-line performance or verify
             commercial release documentation.

   The Priority assigned to a particular hardware/software problem shall be
   determined by CUSTOMER's Standardization Management.
<PAGE>
 
   (c) CUSTOMER reserves the right to test new releases or feature enhancements
       prior to CUSTOMER's distribution.  SELLER will not distribute
       commercially available system version releases to CUSTOMER without
       written approval from CUSTOMER.  Software corrections (Patches and/or
       Point releases) will be provided at no charge for ninety (90) days from
       the date of written approval of the new release by CUSTOMER.

   (d) SELLER will work in good faith with CUSTOMER to follow guidelines to
       ensure the necessary tracking, reporting and processing of Product Design
       Requests submitted by CUSTOMER.

   (e) At the commencement of this Agreement, SELLER will provide a best efforts
       Product enhancement/availability schedule for the next two (2) years and
       update such schedule each quarter.  Software (load) enhancements must be
       made available, and the cost of each software (load) enhancement must not
       exceed ****** (***) percent of the initial software (load) expense.

  18.  TECHNOLOGICAL OR SPECIFICATION CHANGE/PRODUCT(S) DELETION/SUBSTITUTION

   (a) SELLER is required to give CUSTOMER notice one hundred twenty (120) days
       in advance of any technological or specification change,
       software/firmware revision, PRODUCT(S) deletion or manufacturer
       discontinuance that shall significantly impact PRODUCT(S) operation,
       interchangeability with existing PRODUCT(S), appearance, warranty, life
       cycle or GTE engineering/quality approvals of any PRODUCT(S).  SELLER
       shall, at the time of notification, provide CUSTOMER with (1) a
       PRODUCT(S) change number; (2) a description of such change; (3) reason
       for change; (4) a description of the impact of such change upon (i)
       reliability, (ii) PRODUCT(S) specifications, (iii) form, fit or function;
       (5) proposed price impact (if any); and (6) proposed effective date for
       such change and recommended implementation schedule therefore.
       Notwithstanding the foregoing, if SELLER makes any change with material
       impact to the PRODUCT(S) which SELLER in its reasonable discretion
       decides must be released on less than one hundred twenty (120) days
       notice (e.g., a bug fix or change for safety reasons), SELLER will give
       CUSTOMER the foregoing notification as soon as commercially practicable.

   (b) In the event that SELLER and CUSTOMER shall fail to reach agreement on
       any such change in PRODUCT(S) to be made by SELLER, then, in addition to
       all other rights and remedies at law or in equity or otherwise, CUSTOMER
       shall, at no cost or liability, have the right to terminate this
       Agreement and any and all pending purchase orders for PRODUCT(S) affected
       by such change.
<PAGE>
 
   (c) SELLER agrees if the required one hundred twenty (120) days notice is not
       provided, SELLER shall accept at CUSTOMER'S option, a PRODUCT(S) exchange
       or return for all unsold PRODUCT(S) in CUSTOMER'S inventory which were
       received or shipped prior to the date of such notice.  Such option must
       be made by CUSTOMER within one hundred twenty (120) days after SELLER'S
       notification.  Any PRODUCT(S) returned must be unused, undamaged and in
       the original carton and may, at CUSTOMER'S option, be returned for one
       hundred percent (100%) credit of the price paid or an equal dollar value
       exchange for any other PRODUCT(S) offered under this Agreement.

                    19.  UNSATISFACTORY CONDITION SITUATIONS

If at any time during normal operation the CUSTOMER encounters an unsatisfactory
condition in the PRODUCT(S), SELLER agrees to meet the following time frames for
resolving the condition:

   (a) Conditions which affect public or employee safety or the ability to track
       and collect revenue, or which cause major degradation of service, SELLER
       shall acknowledge within ****** (**) days of notification and must
       provide a permanent resolution within ****** (**) days of notification.

   (b) Conditions which affect service, but have a temporary solution to reduce
       the impact, or which have potential for major service degradation, SELLER
       shall acknowledge within ****** (**) days of notification and must
       provide a permanent resolution within ******* (**) days of notification.

   (c) Conditions which are not service or safety affecting but which have
       potential to adversely affect normal maintenance and/or administration of
       telephone service, SELLER shall acknowledge within **** (**) days and
       provide a permanent resolution within **************** (**) days of
       notification.

   (d) CUSTOMER and SELLER may agree to action dates other than those stated
       above that shall correct unsatisfactory conditions due to upgrades,
       technological changes, etc.  If an exception to the above corrective
       action time frames occurs, the SELLER is bound by the newly agreed upon
       date.

                            20.  PRODUCT(S) CHANGES

   (a) After PRODUCT(S) has shipped to CUSTOMER, if SELLER issues changes
       affecting such PRODUCT(S) and a change is identified as necessary for the
       PRODUCT(S) to continue to meet SELLER'S published specifications, design
       criteria or is an identified correction of deficiency as a result of an
       Unsatisfactory Condition Report (refer to Section 19), SELLER shall
       provide prompt notification of required changes to GTE Standardization
       Management.  SELLER shall, at its expense, furnish and install the parts
<PAGE>
 
       necessary to implement any such changes made within a ten (10) year
       period from the date of shipment of PRODUCT(S) by SELLER to CUSTOMER.
       Upgrades and enhancements are not covered in this subsection or in the
       other subsections of this Product Changes provision.

   (b) If CUSTOMER and SELLER ascertain that PRODUCT(S) or part thereof subject
       to such change is readily returnable, CUSTOMER shall remove and shall
       return such PRODUCT(S) or part to SELLER'S facility and SELLER, at its
       expense, shall implement such changes at its facility and return such
       changed PRODUCT(S) or part to CUSTOMER'S designated location.  If removed
       PRODUCT(S) returned to SELLER for modification creates an out-of-service
       condition, SELLER shall make suitable arrangements to provide replacement
       PRODUCT(S) such that no out-of-service condition shall occur.

   (c) Any PRODUCT(S) maintained in CUSTOMER'S inventory subject to such change
       shall be returned to SELLER'S facility to implement changes and return to
       CUSTOMER'S stocking location at SELLER'S expense.  If such changes create
       an adverse impact on the PRODUCT(S) warranty or CUSTOMER'S ability to
       sell the PRODUCT(S) as new, then SELLER shall accept at CUSTOMER'S
       option, a PRODUCT(S) exchange or return for all unchanged PRODUCT(S) in
       CUSTOMER'S inventory.

   (d) All change notifications provided by SELLER to CUSTOMER shall contain the
       following information:

       (1)  description of change;

       (2)  reason for change;

       (3)  impact on customer service (i.e., outages, system downtime);

       (4)  price impact, if known;

       (5)  effective date of changes; and

       (6)  implementation schedule of change.

   (e) CUSTOMER may request SELLER to make changes to SELLER'S PRODUCT(S).  Upon
       receipt of a written document describing in detail the changes requested
       by CUSTOMER, SELLER shall respond in writing to CUSTOMER within thirty
       (30) days.  If SELLER agrees to undertake such modifications for
       CUSTOMER, the response shall quote a proposed implementation schedule and
       a cost for such changes to PRODUCT(S).
<PAGE>
 
                        21.  QUALITY ASSURANCE REPORTING

   (a) Unless specified otherwise, quality and reliability reporting
       requirements shall be as defined in GTE Standardization Management's
       Quality and Reliability Document, known as the TO-15 Process, as set
       forth in Exhibit I.  SELLER shall submit Form TQ-15 and related documents
       to CUSTOMER for performance verification, as required, on a quarterly
       basis.  Verification may include on-site audits of documentation, process
       reviews and product quality discussions.

   (b) CUSTOMER has the right to rate SELLER'S performance in accordance with
       CUSTOMER'S internal rating algorithm.  Upon request, CUSTOMER agrees to
       provide rating information to SELLER without charge.

   (c) SELLER agrees to have a field reliability and delivery performance
       tracking system in place as mutually agreed between CUSTOMER and SELLER
       and shall continue the tracking system for as long as this Agreement is
       in effect.  The tracking system shall provide timely internal data
       collection enabling SELLER to arrive at solutions to delivery, quality
       and reliability problems related to assembly, subassembly or other
       repairable module deficiencies as measured against CUSTOMER'S
       requirements.

                      22.  PRODUCT(S) SERVICES AND SUPPORT

During the term of this Agreement, SELLER shall provide PRODUCT(S) services and
support as set forth in Exhibit J.

                             23.  TRADEMARK LICENSE

SELLER hereby grants to CUSTOMER the non-exclusive right to use SELLER'S trade
name and trademark.  The SELLER'S trade name and trademark are registered in the
United States.  SELLER reserves the right to prior review and approval of
CUSTOMER'S use of the SELLER'S trade name, trademark, and all relevant
advertising material and SELLER agrees not to unreasonably withhold or delay
such approval.  In the event of termination of this Agreement, SELLER has the
right to withdraw this consent with respect to uses by CUSTOMER following
termination.

                               24.  INFRINGEMENT

   (a) SELLER shall defend at its own expense all third party claims,
       proceedings and/or suits alleging infringement or misappropriation of any
       patent, trademark, copyright, trade secret or violation of any other
       intellectual property or proprietary rights by reason of the use or sale
       of any PRODUCT(S) furnished to CUSTOMER under this Agreement, or the use
       of any licensed PRODUCT(S) within the scope of the licenses granted under
       this Agreement, and shall defend, indemnify, protect and save 
<PAGE>
 
       CUSTOMER harmless from all claims, actions, suits, costs, expenses,
       damages, including reasonable attorney's fees and payments, as a result
       of such claim of infringement or misappropriation; and if the use or
       resale shall be enjoined, SELLER shall, at its option, replace the
       enjoined PRODUCT(S), licensed PRODUCT(S) or service with a suitable
       substitute free of the infringement or misappropriation; or shall procure
       for CUSTOMER'S benefit a license or other right to use or resell the
       same, or shall remove the enjoined PRODUCT(S) and refund to CUSTOMER the
       amount paid to SELLER therefor, plus CUSTOMER'S direct, incidental and/or
       consequential damages for such infringing or misappropriated PRODUCT(S).
       CUSTOMER agrees that any such recovery of consequential damages shall
       have an upper limit of two hundred fifty thousand dollars ($250,000) per
       claim or occurrence. SELLER shall have total control over the defense,
       negotiation and settlement of each case, provided, however, that CUSTOMER
       shall be permitted to participate in such defenses, negotiation, or
       settlement by counsel of its own choosing and expense.

   (b) CUSTOMER shall give SELLER prompt notice of any claims of such
       infringement or misappropriation and of all suits and, except as
       otherwise indicated herein, full opportunity and authority to assume the
       sole defense thereof, where SELLER is obligated to indemnify CUSTOMER
       hereunder, including appeals, and to settle such suits, and shall furnish
       upon SELLER'S request and at SELLER'S expense all disclosable information
       and reasonable assistance available to CUSTOMER.  This Section 24 states
       SELLER's entire liability and obligations with respect to claims of
       infringement of proprietary rights of any kind and is CUSTOMER's sole and
       exclusive remedy for any breach of Exhibit J Section 1 (a)(i) with
       respect to infringement of proprietary rights.

   (c) No undertaking of SELLER in this Section shall apply to any infringement
       misappropriation or any claim of infringement or misappropriation which
       arises solely from SELLER's adherence to CUSTOMER's written instructions
       or directions or which arise solely from the use of PRODUCT(S) with
       equipment, devices, or software not supplied by SELLER other than (1)
       commercial merchandise which is available on the open market with which
       PRODUCT(S) is designed to operate or (2) items of SELLER origin, design
       or selection.  Each party shall defend or settle, at its own expense, any
       action or suit against the other for which ft is responsible.


                      25.  USE OF CONFIDENTIAL INFORMATION

   (a) Any specifications, drawings, sketches, models, samples, tools, computer
       programs, technical information, or confidential business information or
       data, written, oral or otherwise (hereinafter called "Information")
       furnished by the parties to one another hereunder shall remain the
       property of the supplier of 
<PAGE>
 
       such Information. All copies of such Information in written, graphic or
       other tangible form shall be returned to the supplier upon request except
       for a single archival copy.

   (b) If clearly marked as confidential, and unless such Information was
       previously known to the recipient to be free from any obligation to keep
       it confidential or until It has been or is subsequently made public by
       the supplier or a third party, without breach of any obligation of
       confidentiality, it shall be treated as confidential by the recipient,
       and shall be used by the recipient only in connection with fulfilling the
       obligations of the recipient which arise pursuant to this Agreement,
       unless the prior written consent of the supplying party is obtained.
       Orally disclosed confidential Information shall be reduced to writing
       within twenty (20) days of disclosure and marked as confidential.  Such
       Information shall only be distributed to those employees who have a need
       to know.

   (c) Each party shall treat the other's Information in accordance with a
       standard of care reasonably calculated to prevent inadvertent or
       accidental disclosure.  Nothing herein shall be construed as waiving the
       right of any party to require the other party to execute a written
       nondisclosure agreement, containing reasonable additional terms and
       conditions, prior to the supplying of particular confidential Information
       from time to time.  Such additional terms and conditions shall not be
       inconsistent, with the terms and conditions of this Agreement.

                            26.  PROPRIETARY RIGHTS

   (a) Nothing herein shall be construed as affecting SELLER's (and its
       licensor') ownership, and CUSTOMER acknowledges and agrees that SELLER
       (and its licensor') retains all ownership of any and all patent rights,
       patent applications, rights to apply for patents, copyrights, trademarks,
       trade secrets and all other proprietary rights in and to the PRODUCT(S),
       including without limitation, the software portions of the PRODUCT(S) in
       all formats and mediums including ROMS, EPROMS and all other firmware
       devices.

   (b) CUSTOMER will take all steps reasonably necessary and advisable to
       preserve and protect SELLER's confidential information and proprietary
       rights in connection with any proposal, bid or contract between CUSTOMER
       and any part of any foreign, federal, state or local government,
       including without limitation the use of appropriate confidentiality
       legends and restricted rights notices in the name of SELLER on any
       written material submitted by CUSTOMER in connection with any such
       proposal, bid or contract.

   (c) SELLER hereby licenses the "Software," as defined in Exhibit K to
       CUSTOMER for use with the hardware portions of the PRODUCT(S) 
<PAGE>
 
       pursuant to the terms and conditions of this Agreement, including the
       Additional Software Terms attached as Exhibit K.

                                 27.  PUBLICITY

The parties agree to submit to one another for written approval all advertising,
sales promotion, press releases and other publicity matters relating to the
PRODUCT(S) furnished or the services performed by them pursuant to this
Agreement whereby their respective names or marks are mentioned or language from
which the connection of said names or marks therewith may be inferred or
implied, and the parties further agree not to publish or use such advertising,
sales promotions, press releases, or publicity matters without such prior
written approval.  Such approval shall not be unreasonably withheld or delayed
by either party.

                           28.  COMPLIANCE WITH LAWS

   (a) The parties hereto shall comply with the provisions of all applicable
       federal, state, county and local laws, ordinances, regulations and codes
       (including procurement of required permits or certificates) in their
       respective performance hereunder including, but not limited to the
       standards promulgated by the Occupational Safety and Health Act,
       Executive Order 11246, as amended, relative to Equal Employment
       Opportunity, Section 503 of the Rehabilitation Act of 1973 and Section
       402 of the Vietnam Veterans Readjustment Assistance Act of 1974 and all
       applicable laws, orders and regulations concerning immigrants and non-
       discrimination in the employment of minorities, females, veterans and the
       handicapped.  Irrespective of whether a specification is furnished, if
       PRODUCT(S) or containers furnished are required to be constructed,
       packaged, labeled or registered in a prescribed manner, the SELLER shall
       comply with federal law and, in addition, with applicable state or local
       law.  Each party agrees to indemnify the other, and defend the other
       party against, any claims, loss or damage sustained because of its
       noncompliance hereunder.

   (b) Without prejudice to the generality of the foregoing, CUSTOMER agrees to
       comply strictly and fully with all export controls imposed on the
       PRODUCT(S) by any country or organization of nations within whose
       jurisdiction CUSTOMER operates or does business.  CUSTOMER agrees not to
       export or permit exportation of any part of the PRODUCT(S) or any related
       technical data or any direct product of any related technical data,
       outside of the United States without first (a) obtaining any required
       written permission to do so from the United States Office of Export
       Administration and other appropriate governmental agencies of the United
       States; or, (b) complying fully and strictly with all requirements of any
       general license exempting the exportation from the requirement for that
       permission.  These restrictions also apply to re-exportation from the
       United States of imported items.
<PAGE>
 
                               29.  FORCE MAJEURE

   (a) Neither SELLER nor CUSTOMER shall be responsible for any delay or failure
       in performance of any part of this Agreement to the extent that such
       delay or failure is caused by fire, flood, explosion, war, strike,
       embargo, government requirement, civil or military authority, acts of
       God, inability to obtain raw materials or supplies of PRODUCT(S), acts or
       omissions of carriers and other similar causes beyond its control
       (hereinafter called "Condition(s)").  If any such Condition(s) occurs,
       the party delayed or unable to perform shall promptly give notice to the
       other party and, if such Condition(s) remains at the end of thirty (30)
       days thereafter, the party affected by the other's delay or inability to
       perform may elect to (1) terminate such purchase order or part thereof,
       or (2) suspend such purchase order for the duration of the Condition(s),
       and at the option of the suspending party, buy elsewhere comparable
       material to be bought or sold under such purchase order, and apply to any
       commitment the value of such purchase, and resume performance of such
       purchase order once the Condition(s) ceases, with an option in the
       affected party to extend the period of this Agreement up to the length of
       time the Condition(s) endured.

   (b) Unless written notice is given within thirty (30) days after the affected
       party is notified of the Condition(s), (a)(2) above shall be deemed
       selected.

                                30.  ASSIGNMENT

   (a) Except as otherwise provided herein, the rights and obligations of the
       parties hereunder shall neither be assigned nor delegated without the
       prior written consent of the other party, which shall not be unreasonably
       withheld, provided that any party may assign or delegate their respective
       rights and obligations hereunder, in whole or in part, to any parent or
       subsidiary or affiliate of CUSTOMER or SELLER in existence at the time of
       execution of this Agreement, upon prior written notice to the other.
       Such assignment shall not diminish any rights or duties that SELLER or
       CUSTOMER may have had prior to the effective date of assignment.

   (b) The limitation on assignment does not apply to an assignment confined
       solely to monies due or to become due under this Agreement, provided
       CUSTOMER or SELLER is given thirty (30) days prior written notice of such
       assignment.  Assignment of monies shall be void to the extent that it
       attempts to impose upon CUSTOMER or SELLER obligations to the assignee
       additional to the payment of such monies, or to preclude CUSTOMER or
       SELLER from dealing solely and directly with the other in all matters
       pertaining hereto, including negotiation of amendments or settlement of
       amounts due.  In the event CUSTOMER or SELLER makes such an assignment it
       is and shall remain responsible for payment hereunder.
<PAGE>
 
                                   31.  TAXES

CUSTOMER shall be liable for and shall reimburse SELLER for payments of Federal
Manufacturers' and Retailers' Excise Taxes, state and local sales taxes and use
taxes, as applicable, with respect to transactions under this Agreement.  Taxes
payable by CUSTOMER shall be separately stated in SELLER'S invoices and shall
not be included in SELLER'S prices.  CUSTOMER shall not be liable for any tax
for which a valid exemption certificate acceptable to the applicable, state
taxing authorities is furnished by CUSTOMER to SELLER.

                                  32.  RECORDS

SELLER shall maintain complete and accurate records of all amounts billable to
and payments made by CUSTOMER hereunder in accordance with generally accepted
accounting practices.  SELLER shall retain such records for a period of three
(3) years from the date of final shipment for PRODUCT(S) or services covered by
this Agreement.  SELLER agrees to provide supporting documentation concerning
any disputed amount of invoice to CUSTOMER within thirty (30) days after
CUSTOMER provides written notification of the dispute to SELLER.  SELLER shall
retain such records for three (3) years from date of invoice.

                              33.  RIGHT OF ACCESS

SELLER and CUSTOMER shall permit reasonable access during normal working hours
to its facilities in connection with work hereunder.  No charge shall be made
for such visits.  It is agreed that reasonable prior notification shall be given
when access is required.  CUSTOMER may inspect any material that CUSTOMER has
ordered.

                           34.  PLANT AND WORK RULES

The respective agents and employees of the parties shall, while on premises of
the other, comply with all plant rules, regulations and reasonable company
standards for security, including (where required by Government Regulations)
submission of satisfactory clearance from U.S. Department of Defense and other
federal authorities concerned.

                                 35.  LIABILITY

   (a) Notwithstanding anything to be contrary herein, SELLER shall indemnify
       and save harmless CUSTOMER from any loss or damages (including reasonable
       attorney's fees) incurred by CUSTOMER because of claims, suits, or
       demands of any kind including personal injury or property damage to the
       extent such loss or damage is caused by or results from defective
       PRODUCT(S) manufactured by SELLER or the negligent acts or omissions of
       SELLER or its employees or agents provided (1) CUSTOMER promptly 
<PAGE>
 
       notifies SELLER in writing of any suits, claims, or demands against
       CUSTOMER for which SELLER is responsible under this indemnity; (2)
       CUSTOMER gives SELLER full opportunity and authority to assume the sole
       defense of and settlement of such suits; and (3) CUSTOMER furnishes to
       SELLER upon request all information and reasonable assistance available
       to CUSTOMER for defense against any such suit, claim, or demand.

   (b) All work performed under this Agreement by any party shall be performed
       as an independent contractor and not as an agent of any other party.
       Persons furnished by the respective parties shall be solely the employees
       or agents of such parties, respectively, and shall be under the sole and
       exclusive direction and control of such parties.  They shall not be
       considered employees of the other party for any purpose.  Each party
       shall be responsible for compliance with all laws, rules and regulations
       involving their respective employees or agents, including (but not
       limited to) employment of labor, hours of labor, health and safety,
       working conditions and payment of wages.  Each party shall also be
       responsible, respectively, for payment of taxes, including federal,
       state, and municipal taxes, chargeable or assessed with respect to its
       employees or agents, such as social security, unemployment, worker's
       compensation, disability insurance and federal and state income tax
       withholding.

   (c) SELLER agrees to maintain during the term hereof all insurance and/or
       bonds required by law or this Agreement, including, but not limited to
       (1) Worker's Compensation and related insurance as prescribed by the law
       of the state in which SELLER'S services are performed; (2) employer's
       liability insurance with limits of at least $500,000 for each occurrence,
       and (3) comprehensive general liability insurance including PRODUCT(S)
       liability, and, if the use of motor vehicles is required, comprehensive
       motor vehicle liability insurance, each with limits of at least
       $2,000,000 for combined single limit for bodily injury, including death
       and/or property damage.  SELLER shall, if requested by CUSTOMER, prior to
       rendering such services, furnish certificates or adequate proof of the
       foregoing insurance.  Notwithstanding the above, SELLER and CUSTOMER
       shall each have the option, where permitted by law, to self-insure any or
       all of the foregoing risks.

   (d) The parties expressly agree and understand that Seller's liability shall
       in no event exceed ************* dollars ($*********) for any one
       occurrence, whether the claim arises under this Agreement, in contract,
       tort or otherwise.

                 36.  TOXIC SUBSTANCES AND HAZARDOUS PRODUCT(S)

   (a) SELLER warrants to CUSTOMER that each PRODUCT(S) furnished by SELLER
       hereunder or in performance of purchase orders placed hereunder is safe
       for normal use, is nontoxic, presents no abnormal hazards to persons or
       the environment, and may be disposed of as normal refuse.
<PAGE>
 
   (b) All system cards shall be clearly labeled with the letters "ESD" (Electro
       Static Discharge) for proper printed wire card handling.

      37.  CANCELLATION 0F PURCHASE ORDERS; REVOCATION OF ACKNOWLEDGEMENTS

   (a) In the event that SELLER shall be in material breach or default of any of
       the terms, conditions or covenants of this Agreement, including, but not
       limited to, SELLER'S failure to tender delivery of the PRODUCT(S) on or
       before the delivery date stated on SELLER'S acknowledgement, then, in
       addition to all other rights and remedies of law or equity or otherwise,
       CUSTOMER shall have the right to immediately cancel all applicable
       purchase orders without any obligation or liability to SELLER for said
       cancellation.

   (b) In the event that CUSTOMER shall be in material breach or default of any
       of the terms, conditions or covenants of this Agreement, including, but
       not limited to, timely payment for PRODUCT(S) purchased and such breach
       shall continue for a period of thirty (30) days after CUSTOMER'S receipt
       of SELLER'S written notice thereof, then, in addition to all other rights
       and remedies of law or equity or otherwise, SELLER shall have the right
       to suspend delivery of PRODUCT(S) on outstanding purchase orders or
       revoke existing acceptances.  Default by an Affiliate shall not affect
       any other Affiliate party to this Agreement.

   (c) SELLER will defer or cancel shipment of items subject to purchase orders
       upon CUSTOMER's written request, if that request is received by SELLER a
       reasonable time prior to the scheduled shipment date.  All deferments and
       cancellations will be subject to certain charges as a percentage of the
       discounted prices of the items to be deferred or canceled.  That
       percentage will depend upon the number of days prior to the scheduled
       shipment date that SELLER receives a written request for deferment, or
       cancellation as follows:

<TABLE>
<CAPTION>
 
 
                                Percentage    Percentage
Days                             Deferment   Cancellation
Notice                            Charge        Charge
<S>                             <C>          <C>
 
Beyond **% of                      **%            **%
Delivery Lead Time
Interval

**% or less of                     **%            **%
Delivery Lead Time
Interval
</TABLE> 
<PAGE>
 
       If equipment canceled is sold by SELLER within ****** (**) days of
       requested delivery date, then no cancellation charges will apply.  If
       equipment canceled is sold by SELLER but not within ****** (**) days of
       requested delivery date, then a ** percent (*%) charge will apply.

       CUSTOMER will have no right to defer shipment of any item developed,
       made or modified to CUSTOMER's special order.  Any request for deferment
       of any item for more than ***** (**) days, and the third (3rd) request
       for any deferment of shipment of any item, will be treated as a
       cancellation of the deferred shipment and a new order.

                                38.  TERMINATION

   (a) CUSTOMER may terminate this Agreement without cause, effective
       immediately, upon written notice to the other party.

   (b) Upon termination of this Agreement, without cause pursuant to this
       Section, CUSTOMER shall not be liable to SELLER, either for compensation
       or for damages of any kind or character whatsoever, whether on account of
       the loss by SELLER of present or prospective profits on sales or
       anticipated sales, or expenditures, investments or commitments made in
       connection therewith or in connection with the establishment, development
       or maintenance of SELLER'S business, or on account of any other cause or
       thing whatsoever, provided that termination shall not prejudice or
       otherwise affect the rights or liabilities of SELLER with respect to
       PRODUCT(S) theretofore ordered hereunder, or any indebtedness then owing
       by either party to the other.

   (c) Either party may terminate this Agreement, effective immediately, without
       liability for said termination, upon written notice to the other party,
       if any of the following events occur:

       (1)  The other files a voluntary petition in bankruptcy;

       (2)  The other is adjudged bankrupt;

       (3)  A court assumes jurisdiction of the assets of the other under a
            federal reorganization act;

       (4)  A trustee or receiver is appointed by a court for all or a
            substantial portion of the assets of the other;

       (5)  The other becomes insolvent of suspends its business;
<PAGE>
 
       (6)  The other makes an assignment of its assets for the benefit of its
            creditors except as required in the ordinary course of business; or

       (7)  The identity of the other's business is materially changed by sale
            of its business, transfer of control of its outstanding stock,
            merger or otherwise.

   (d) Either party may immediately terminate this Agreement for a material
       breach or default of any of the terms, conditions or covenants of this
       Agreement by the other, provided that such termination may be made only
       following the expiration of a thirty (30) day period during which the
       other party has failed to cure such breach after having been given
       written notice of such breach.  This paragraph shall not apply to
       CUSTOMER'S cancellations or SELLER'S revocations under Section 37.

                                  39.  NOTICES

Any notice or demand given under the terms of this Agreement or pursuant to
statute shall be in writing and shall be given or made by telegram, telecopy or
similar communication or by certified or registered mail return receipt
requested, proper postage paid and addressed to the respective parties as
follows:

                                  To CUSTOMER:

GTE Supply
700 Hidden Ridge
Irving, Texas 75038
Attention:  Director - Central Procurement (HQW02B28)

and

GTE Service Corporation
700 Hidden Ridge
Irving, Texas 75038
Attention:  Director - CPS Standardization (HQW01N60)

and

GTE Supply
GTE Place, West Airfield Drive
DFW Airport, Texas 75261
Attention:  Director - Materials Management/Purchasing (D03B58)

and
<PAGE>
 
GTE Service Corporation
700 Hidden Ridge
Irving, Texas 75038
Attention:  Director - Consumer Network Services (HQE02B60)
<PAGE>
 
                                   To SELLER:

Digital Sound Corporation
6307 Carpinteria Avenue
Carpinteria, California 93013
Attention: Vice President, Sales

Such notice or demand shall be deemed to have been given or made when received
or seventy-two (72) hours after being sent whichever occurs first, or upon
electronic confirmation of receipt, if sent by telegraph or telecopy.  The above
may be changed at any time by giving thirty (30) days prior written notice as
above provided.

                               40.  REGISTRATION

PRODUCT(S) furnished hereunder shall comply, to the extent applicable, with the
requirements of the Federal Communications Commission's Rules and Regulations,
as may be amended, including those sections concerning the labeling of such
PRODUCT(S) and the suppression of radiation to specified levels.  If the
PRODUCT(S) generates interference harmful to radio communications, and such
PRODUCT(S) was installed in accordance with such Rules and Regulations, then
SELLER shall provide to CUSTOMER methods for suppressing the interference.  If
the interference cannot be reasonably suppressed, SELLER shall, at CUSTOMER'S
option, accept return of the PRODUCT(S), refund to CUSTOMER the price paid for
the PRODUCT(S) and bear all expenses for removal and shipment of such
PRODUCT(S).  Nothing herein shall be deemed to diminish or otherwise limit
SELLER'S obligations under respective "WARRANTY" provisions herein.

                                 41.  NONWAIVER

Either party's failure to enforce any of the provisions of this Agreement and/or
any purchase order or to exercise any option hereunder shall in no way be
construed as a waiver of such provisions, rights, or options or in any way be
deemed to affect the validity of this Agreement or any purchase order.

                               42.  SEVERABILITY

If any of the provisions of this Agreement shall be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate or render unenforceable
the entire Agreement, but rather the entire Agreement shall be construed as if
not containing the particular invalid or unenforceable provision or provisions,
and the rights and obligations of SELLER and CUSTOMER shall be construed and
enforced accordingly.

                             43.  SECTION HEADINGS

The headings of the sections herein are inserted for convenience only and are
not intended to affect the meaning or interpretation of this Agreement.
<PAGE>
 
                          44.  SURVIVAL OF OBLIGATIONS

The respective obligations of SELLER and CUSTOMER under this Agreement which by
their nature would continue beyond the termination, cancellation or expiration
hereof, shall survive termination, cancellation or expiration hereof.

                               45.  CHOICE OF LAW

The construction, interpretation and performance of this Agreement shall be
governed by and construed in accordance with the domestic laws of the state of
Texas.

                             46.  ENTIRE AGREEMENT

This Agreement and the exhibits hereto constitute the entire agreement between
SELLER and CUSTOMER.  No modifications shall be made to this Agreement unless in
writing and signed by appropriate representatives of the parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement through
their authorized corporate representatives.

DIGITAL SOUND CORPORATION            GTE COMMUNICATION SYSTEMS
                                     CORPORATION


  /s/  Harry Bruner                    /s/  C. W. Barlow
-------------------                  -------------------
Harry Bruner                         C. W. Barlow
Vice President, Sales                President

Dated:  December 21, 1992            Dated:  January 13, 1993

                                     Approved as to form and legality

                                       /s/ Connie E. Nicholos
                                     -------------------------  
                                     Attorney, GTE Telephone Operations

                                     Dated:  December 15, 1992 
<PAGE>
 
EXHIBIT A: Revised List of GTE Affiliated Entities that are entitled to purchase
                         under the Purchase Agreement.

              EXHIBIT B: DGSD Domestic Version Price/Product List

                EXHIBIT C: DGSD Product Pricing Discount for GTE

                           EXHIBIT D: GTE Bar Coding

           EXHIBIT E:  GTE Shipping and Carrier Routing Instructions

                  EXHIBIT F: DGSD Product(S) Delivery Interval

               EXHIBIT G: GTE Packaging Configuration Definitions

                     EXHIBIT H: GTE Standardization Policy

                   EXHIBIT I: GTE Quality Assurance Reporting

          EXHIBIT J: GTE Product(S) Services And Support Requirements

Exhibit J ATTACHMENT A: DGSD Product(S) Warranty

Exhibit J ATTACHMENT B: DGSD Product Repair Rates

Exhibit J ATTACHMENT C: DGSD Repair Parts Pricing

Exhibit J ATTACHMENT D: DGSD Working Hour Schedule & Contact Information &
Escalation Matrix

Exhibit J ATTACHMENT E: DGSD Training Rates

Exhibit J ATTACHMENT F: GTE Training Standards

             EXHIBIT K:  DGSD'S Additional Software Licensing Terms
<PAGE>
 
                                AMENDMENT NO. 1
                                       TO
                      PURCHASE AGREEMENT NO. 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION

This Amendment No. 1 to the Purchase Agreement - No. 120900-92-01 (the
"Agreement"), by and between GTE Communication Systems Corporation ("CUSTOMER")
for the benefit of itself and the GTE Affiliated Entities (as defined in the
Agreement) and Digital Sound Corporation ("SELLER"), shall be effective as of
September 30, 1993.

WHEREAS CUSTOMER and SELLER desire to amend Exhibit A to the Agreement, GTE
Affiliated Entities; and

WHEREAS CUSTOMER and SELLER desire to amend Exhibit J, Section 6, Product(s)
Maintenance; and

WHEREAS CUSTOMER and SELLER desire to amend Exhibit J, Attachment E,
Comprehensive Hardware and Software Maintenance For Non-Warranty Products; and

WHEREAS CUSTOMER and SELLER desire to amend Agreement to include Section 47,
DISPUTE RESOLUTION.

NOW, THEREFORE, the parties agree that the Agreement is hereby amended as
follows:

   1.  Exhibit A to the Agreement, GTE Affiliated Entities, is hereby deleted in
       its entirety and replaced with a new Exhibit A, GTE Affiliated Entities,
       attached hereto.

   2.  In Exhibit J, Section 6 to the Agreement, Product(s) Maintenance, the
       words "shall be in accordance with the terms and conditions as set forth
       in Attachment E" shall be replaced with "pursuant to issuance of
       CUSTOMER'S purchase order shall be in accordance with the terms and
       conditions as set forth in Attachment E for services provided for 1993.
       Services provided by SELLER to CUSTOMER beginning January 1, 1994,
       pursuant to issuance of CUSTOMER'S purchase order, shall be mutually
       agreed upon by year end 1993."

   3.  Exhibit J, Attachment E to the Agreement, Comprehensive Hardware and
       Software Maintenance For Non-Warranty Products is hereby deleted and
<PAGE>
 
       replaced in its entirety with a new Attachment E, Comprehensive Hardware
       and Software Maintenance For Non-Warranty Products, attached-hereto.

   4.  The Agreement shall be amended to include Section 47, Dispute Resolution,
       as follows:

       47.  DISPUTE RESOLUTION

       (a)  The parties desire to resolve disputes arising out of this Agreement
            without litigation.  Accordingly, except for action seeking a
            temporary restraining order or injunction related to the purposes of
            this Agreement, or suit to compel compliance with this dispute
            resolution process, the parties agree to use the following
            alternative dispute resolution procedure as their sole remedy with
            respect to any controversy or claim arising out of or relating to
            this Agreement or its breach.

       (b)  At the written request of a party, each party shall appoint a
            knowledgeable, responsible representative to meet and negotiate in
            good faith to resolve any dispute arising under this Agreement.  The
            parties intend that these negotiations be conducted by non-lawyer,
            business representatives.  The discussions shall be left to the
            discretion of the representatives.  Upon agreement, the
            representatives may utilize other alternative dispute resolution
            procedures such as mediation to assist in the negotiations.
            Discussions and correspondence among the representatives for
            purposes of these negotiations shall be treated as confidential
            information developed for purposes of settlement, exempt from
            discovery and production, which shall not be admissible in the
            arbitration described below or in any lawsuit without the
            concurrence of all parties.  Documents identified in or provided
            with such communications, which are not prepared for purposes of the
            negotiations, are not so exempted and may, if otherwise admissible,
            be admitted in evidence in the arbitration or lawsuit.

       (c)  If the negotiations do not resolve the dispute within sixty (60)
            days of the initial written request, the dispute shall be submitted
            to binding arbitration by a single arbitrator pursuant to the
            Commercial Arbitration Rules of the American Arbitration
            Association.  A party may demand such arbitration in accordance with
            the procedures set out in those rules.  Discovery shall be
            controlled by the arbitrator and shall be permitted to the extent
            set out in this Section.  Each party may submit in writing to a
            party, and that party shall so respond, to a maximum of any
            combination of thirty-five (35) (none of which 
<PAGE>
 
            may have subparts) of the following: interrogatories, demands to
            produce documents and requests for admission. Each party is also
            entitled to take the oral deposition of one (1) individual of
            another party. Additional discovery may be permitted upon mutual
            agreement of the parties. The arbitration hearing shall be commenced
            within sixty (60) days of the demand for arbitration and the
            arbitration shall be held in Dallas, Texas. The arbitrator shall
            control the scheduling so as to process the matter expeditiously.
            The parties may submit written briefs. The arbitrator shall rule on
            the dispute by issuing a written opinion within thirty (30) days
            after the close of hearings. The times specified in this Section may
            be extended upon mutual agreement of the parties or by the
            arbitrator upon a showing of good cause. Judgement, upon the award
            rendered by the arbitrator may be entered in any court having
            jurisdiction.

       (d)  Each party shall bear its own cost of these procedures.  A party
            seeking discovery shall reimburse the responding party the cost of
            production of documents (to include search time and reproduction
            time costs).  The parties shall equally share the fees of the
            arbitration and the arbitrator.

   5.  All other terms and conditions of the Agreement shall remain in full
       force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to the
Agreement to be executed by their duly authorized representatives.


DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


/s/ E. Hovanek                    /s/ Larry K. Henry
----------------                  --------------------
E. Hovanek                        Larry K. Henry
Vice President, Finance           Vice President - General Manager

Dated:  October 27, 1993          Dated:  October 8, 1993
                                  APPROVED AS TO FORM AND LEGALITY
                                  /s/  (illegible)
                                  ------------------
                                  Attorney GTE Telephone Operations 10/6/93
<PAGE>
 
                         ATTACHMENTS TO AMENDMENT NO. 1

EXHIBIT A: Revised List of GTE Affiliated Entities that are entitled to purchase
                         under the Purchase Agreement.

Exhibit J ATTACHMENT E: Terms for Comprehensive Hardware And Software
Maintenance For Non-Warranty Products
<PAGE>
 
January 7, 1993


GTE Communication Systems Corporation
GTE Supply Division
GTE Place
West Airfield Drive
DFW Airport, TX 75261


RE:  Amendment 2 [Software Escrow Deposit] to Purchase Agreement


Gentlemen:

GTE Communication Systems Corporation ("GTE") and Digital Sound Corporation
("DGSD") are parties to Purchase Agreement No. 120900-92-01 executed on January
13, 1993 ("the Agreement").  The parties wish to amend the subject Agreement to
provide for a software escrow deposit for the benefit of GTE.  In furtherance of
this premise, GTE agrees to execute the Licensee of Record Acceptance document
attached hereto and incorporated herein by this reference.  Upon execution by
GTE, GTE will become a Licensee of Record on DGSD's Escrow No. 490-9 at Brambles
NSD, Inc. located in San Jose, CA 95131.

This document and its attachments shall become Amendment 2 to the Agreement.  In
all other respects the Agreement is ratified and confirmed and shall continue in
full force and effect according to its terms and conditions.

Very truly yours,



                              AGREED AND ACCEPTED
/s/  Keith Beckwith           for GTE COMMUNICATION SYSTEMS
---------------------                                        
Keith Beckwith
Director, VIS Sales

                              by: /s/ Michelle Monger
                                 -----------------------
                                  Michelle Monger


                              Approved as to Form
                               /s/ Joe A. Garza
                              ------------------
                              Law Dept. 2/1/94
<PAGE>
 
ATTACHMENTS TO AMENDMENT NO. 2

Licensee Of Record Acceptance Relating To Software Deposit Agreement

Software Deposit Agreement Between Digital Sound Corporation And National Safe
Depository

National Safe Depository Inventory List InfoMail And Univox Source Q3 1993
<PAGE>
 
                                AMENDMENT NO. 3
                                       TO
                      PURCHASE AGREEMENT NO. 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION

This Amendment No. 3 to the Purchase Agreement No. 120900-92-01 (the
"Agreement"), by and between GTE Communication Systems Corporation ("CUSTOMER")
for the benefit of itself and the GTE Affiliated Entities (as defined in the
Agreement) and Digital Sound Corporation ("SELLER"), shall be effective as of
January 1, 1994.

WHEREAS CUSTOMER and SELLER desire to amend Exhibit J, Attachment E, to include
Attachment E-1 to the Agreement, Comprehensive Hardware and Software Maintenance
for Non-Warranty PRODUCT(S).

NOW, THEREFORE, the parties agree that the Agreement is hereby amended as
follows:

   1.  Exhibit J, Attachment E, to the Agreement, is hereby amended to include
       Attachment E-1 that is attached hereto and incorporated herein by this
       reference.

   2.  All other terms and conditions of the Agreement shall remain in full
       force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to the
Agreement to be executed by their duly authorized representatives.


DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


/s/ Jim Eby                       /s/ Larry K. Henry
-------------------------         -------------------------------
Jim Eby                           Larry K. Henry
Vice President, Chief Quality     Vice President - General Manager
 and Operations Officer
Dated:  March 31, 1994            Dated:  April 8, 1994
                                  APPROVED AS TO FORM
                                  /s/ Joe A. Garza
                                  ----------------
                                  Law Dept. 3/25/94
<PAGE>
 
ATTACHMENT TO AMENDMENT NO. 3

Exhibit J ATTACHMENT E-1: Comprehensive Hardware And Software Maintenance For
Non-Warranty Products
<PAGE>
 
                                AMENDMENT NO. 4
                                       TO
                      PURCHASE AGREEMENT NO. 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION

This Amendment No. 4 to Purchase Agreement No. 120900-92-01 (the "Agreement"),
by and between GTE Communication Systems Corporation ("CUSTOMER") for the
benefit of itself and the GTE Affiliated Entities (as defined in the Agreement)
and Digital Sound Corporation ("SELLER"), shall be effective as of June 15,
1994.

WHEREAS CUSTOMER and SELLER desire to set out certain terms and conditions
applicable to purchases by CUSTOMER of SELLER'S PRODUCT(S) for VoiceServer
Systems with fax capability during 1994 and 1995.

NOW, THEREFORE, the parties agree that the Agreement is hereby amended as
follows:

   1.  EXHIBIT B is hereby amended to include EXHIBIT B-1 ("VOICESERVER SYSTEMS
       WITH FAX CAPABILITIES PRODUCTS & PRICING") which is attached hereto and
       incorporated herein by this reference.

   2.  The following paragraph (d) is hereby added to Section 21, QUALITY
       ASSURANCE REPORTING as follows:

       (d)  SELLER agrees to utilize its Quality First TQM Program to provide
            for continuous improvement in quality levels of PRODUCT(S).  The
            parties agree to jointly develop a process for the ongoing
            monitoring of PRODUCT reliability, system availability, and progress
            reporting.

   3.  In Section 35, LIABILITY, paragraph (c) is hereby deleted in its entirety
       and replaced with the following:

       (c)  SELLER agrees to maintain during the term hereof all insurance
            and/or bonds required by law or this Agreement, including, but not
            limited to (i) Workers' Compensation and related insurance as
            prescribed by the law of the state in which SELLER'S services are
            performed; (ii) employer's liability insurance with limits of at
            least five hundred thousand dollars ($500,000) for each occurrence,
            and (iii) comprehensive general liability insurance including
            products liability, and, if the use of motor vehicles is required,
            comprehensive motor vehicle 
<PAGE>
 
            liability insurance, each with limits of at least two million
            dollars ($2,000,000) for combined single limit for bodily injury,
            including death, and/or property damage. SELLER shall cause CUSTOMER
            to be included as an Additional Insured under said policies (as "GTE
            Corporation and its affiliates and subsidiaries") and CUSTOMER'S
            coverage under such policies shall be primary. SELLER shall, prior
            to rendering such services, furnish certificates or evidence of the
            foregoing insurance indicating the amount and nature of such
            coverage, the expiration date of each policy, and stating that no
            material change which affects CUSTOMER'S coverage and rights to
            collect under any such policy or cancellation of any such policy
            shall be effective unless thirty (30) days' prior written notice is
            given to CUSTOMER. Notwithstanding the above, SELLER and CUSTOMER
            shall each have the option, when permitted by law, to self-insure
            any or all of the foregoing risks. CUSTOMER shall provide SELLER
            with written notification prior to the filing of any claim against
            any such policy.

   4.  The following paragraph (o) is hereby added to Section 11, TRAINING of
       EXHIBIT J, GTE PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS:

       (o)  For each VoiceServer System with fax capabilities purchased by
            CUSTOMER in 1994 and 1995, SELLER shall provide, at no cost to
            CUSTOMER, ****** training slots in a Fax Administration training
            class.  CUSTOMER employees attending these training sessions must
            have previously completed either SELLER'S InfoMail Software
            Administration training class or SELLER'S Installation and
            Maintenance training classes, costs of which shall be in accordance
            with paragraph (f) above.  If, at the request of CUSTOMER, such Fax
            Administration training class(es) are conducted at a location other
            than SELLER'S principal place of business, CUSTOMER shall be
            responsible for payment to SELLER for instructor's reasonable travel
            and living expenses.  In no event shall CUSTOMER be responsible for
            such expenses which exceed what CUSTOMER would reasonably reimburse
            its own employees for such travel and living taken at the request
            and behalf of CUSTOMER.

   5.  The following subparagraph (1) is hereby added to paragraph (a) of
       Section 1, WARRANTY of EXHIBIT J, GTE PRODUCT(S) SERVICES AND SUPPORT
       REQUIREMENTS:
<PAGE>
 
       (1)  Notwithstanding the provisions of Paragraph (a) above, the warranty
            period for all VoiceServer Systems with fax capability purchased
            hereunder in 1994 shall be the longer of one (1) year from the date
            the PRODUCT(S) are placed in service, such date not to be later than
            ninety (90) days after delivery to CUSTOMER, or through December 31,
            1995, whichever date occurs later.  All other terms and conditions
            of this Section 1, WARRANTY shall apply to all VoiceServer Systems
            with fax capabilities for the duration of this warranty period.  The
            warranty period for VoiceServer Systems with fax capabilities
            purchased by CUSTOMER in 1995 shall be as described in Paragraph (a)
            above.

   6.  All other terms and conditions of the Agreement shall remain in full
       force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to the
Agreement to be executed by their duly authorized representatives.



DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


/s/ Keith M. Beckwith             /s/ Larry K. Henry
--------------------------        -------------------------------
Keith M. Beckwith                 Larry K. Henry
Vice President, Sales             Vice President - General Manager

Dated:  October 21, 1994          Dated:  October 10, 1994

                                  APPROVED AS TO FORM
                                  /s/ Joe A. Garza
                                  ------------------
                                  Law Dept. 10/04/94
<PAGE>
 
ATTACHMENT TO AMENDMENT NO. 4

EXHIBIT B-1
Product Description & Pricing Information for VoiceServer Systems With Fax
Capabilities
<PAGE>
 
                                AMENDMENT NO. 5
                                       TO
                      PURCHASE AGREEMENT NO. 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION

This Amendment No. 5 to Purchase Agreement No. 120900-92-01 (the "Agreement"),
by and between GTE Communication Systems Corporation ("CUSTOMER") for the
benefit of itself and the GTE Affiliated Entities (as defined in the Agreement)
and Digital Sound Corporation ("SELLER"), shall be effective as of December 31,
1994.

WHEREAS, the Agreement bears a termination date of January 12, 1995; and

WHEREAS CUSTOMER and SELLER desire to extend the term of the Agreement.

NOW, THEREFORE, the parties agree that the Agreement is further amended as
follows:

   1.  Section 1, TERM is hereby amended to extend the term of the Agreement
       until February 28, 1995.

   2.  All other terms and conditions of the Agreement shall remain in full
       force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 5 to the
Agreement to be executed by their duly authorized representatives.


DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


/s/ Mark C. Ozur                  /s/ signed on behalf of M. R. Redmond
------------------                ---------------------------------------
Mark C. Ozur                      M. R. Redmond
President and CEO                 Director - Contract Management

Dated:  December 31, 1994         Dated:  12/27/94
                                  APPROVED AS TO FORM
                                  /s/ Joe A. Garza
                                  ------------------
                                  Law Dept. 12/19/94
<PAGE>
 
                                AMENDMENT NO. 6
                                      TO
                         CONTRACT NUMBER 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION


This Amendment No. 6 to Contract Number 120900-92-01 (the "Agreement"), by and
between GTE Communication Systems Corporation ("CUSTOMER") for the benefit of
itself and the GTE Affiliated Entities (as defined in the Agreement) and Digital
Sound Corporation ("SELLER"), shall be effective as of January 1, 1995.

WHEREAS, the Agreement bears a termination date of January 12, 1995; and

WHEREAS, Amendment No. 5 to the Agreement extended the termination date to
February 28, 1995; and

WHEREAS CUSTOMER and SELLER desire to extend the term of the Agreement; and

WHEREAS CUSTOMER and SELLER desire to amend Exhibit A, GTE Affiliated Entities,
Exhibit B, Supplier Product(s), Exhibit C, Supplier Product(s) Pricing, Exhibit
E, GTE Shipping and Carrier Routing Instructions, EXHIBIT H, GTE Standardization
Policy, and certain attachments to EXHIBIT J, GTE Product(s) Services and
Support Requirements; and

WHEREAS CUSTOMER and SELLER desire to make other modifications to the terms and
conditions of the Agreement.

NOW, THEREFORE, the parties agree that the Agreement is hereby amended as
follows:


   1.  In Section 1, TERM, the first sentence is hereby deleted in its entirety
       and replaced with the following:


       This Agreement shall be effective on the date of signing of this
       Agreement, and shall continue in effect through December 31, 1996 unless
       terminated or modified by either party in accordance with the provisions
       of this Agreement.

   2.  In Section 13, PACKAGING, the third sentence is hereby deleted in its
       entirety and replaced with the following:
<PAGE>
 
       Corrugated shipping containers shall comply with the requirements of Item
       222 of the National Motor Freight Code, Series NMFC 100-S, which may be
       amended from time to time.

   3.  Section 18, TECHNOLOGICAL OR SPECIFICATION CHANGE/PRODUCT(S)
       DELETION/SUBSTITUTION, of the Agreement is hereby deleted in its
       entirety.

   4.  Section 19, UNSATISFACTORY CONDITION SITUATIONS, of the Agreement is
       hereby deleted in its entirety.

   5.  Section 20, PRODUCT(S) CHANGES, of the Agreement is hereby deleted in its
       entirety.

   6.  Section 21, QUALITY ASSURANCE REPORTING, of the Agreement is hereby
       deleted in its entirety.

   7.  The following paragraph (c) is hereby added to Section 30, ASSIGNMENT:


       (c)  If CUSTOMER sells, exchanges or otherwise disposes of all or a
            portion of the assets of, or CUSTOMER's interest in, any business
            unit in which PRODUCT are used, then CUSTOMER shall have the right,
            upon written notice to SELLER, to assign to such third party all
            licenses and rights granted under this Agreement with respect to
            such PRODUCT; provided that the third party agrees to be bound by
            all obligations of CUSTOMER to SELLER that pertain to the PRODUCT.



   8.  In Section 39, NOTICES, the address for the Director-Materials
       Management/Purchasing is hereby amended as follows:


           GTE Supply
           5615 High Point Drive
           PO Box 169001
           Irving, Texas 75016-9001
           Attention:  Director - Materials Management/Purchasing (HQA02JO2)

   9.  EXHIBIT A to the Agreement, "GTE AFFILIATED ENTITIES" is hereby amended
       to substitute the GTE Affiliated Entities listed on the attached Exhibit
       A(1).

   10. EXHIBIT B to the Agreement, "SUPPLIER PRODUCT(S)", and EXHIBIT B-1 to the
       Agreement, "VOICESERVER SYSTEMS WITH FAX CAPABILITIES PRODUCT(S) &
       PRICING" as amended in Amendment No. 
<PAGE>
 
       4 to the Agreement, is hereby amended to substitute the Supplier
       Product(s) listed on the attached Exhibit B(1).

   11. EXHIBIT C to the Agreement, "SUPPLIER PRODUCT(S) PRICING" is hereby
       amended to substitute the Supplier Product(s) Pricing listed on the
       attached Exhibit C(1).

   12. EXHIBIT E to the Agreement, "GTE SHIPPING AND CARRIER ROUTING
       INSTRUCTIONS" is hereby amended to substitute the GTE Shipping and
       Carrier Routing Instruction (May 1994) listed on the attached Exhibit
       E(1).

   13. EXHIBIT G to the Agreement, "GTE PACKAGING CONFIGURATION DEFINITIONS" is
       hereby amended to substitute the GTE Packaging Configuration Definitions
       listed on the attached Exhibit G(1).

   14. EXHIBIT H to the Agreement, "GTE STANDARDIZATION POLICY" is hereby
       amended to substitute the Standardization Policies, Procedures and Terms
       listed on the attached Exhibit H(1).

   15. Section 6, PRODUCT(S) MAINTENANCE of Exhibit J, GTE PRODUCT(S) SERVICES
       AND SUPPORT REQUIREMENTS, as amended in Amendment No. 1 to the Agreement,
       is deleted in its entirety and replaced with the following:

       Hardware and software maintenance for each year of this Agreement
       pursuant to issuance of CUSTOMER's purchase orders shall be in accordance
       with the terms and conditions set forth in Attachment E, which may be
       changed each year as mutually agreed to by the parties.

   16. ATTACHMENT C, "SUPPLIER REPAIR PARTS PRICING" of EXHIBIT J, GTE
       PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS, is hereby amended to
       substitute the Supplier Repair Parts Pricing listed in the attached
       Attachment C(1).

   17. ATTACHMENT D, "SELLER WORKING HOUR SCHEDULE AND CONTACT INFORMATION" of
       EXHIBIT J, GTE PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS, is hereby
       amended to substitute the Seller Working Hour Schedule and Contact
       Information & Escalation Matrix listed in the attached Attachment D(1).

   18. ATTACHMENT E(1), "COMPREHENSIVE HARDWARE AND SOFTWARE MAINTENANCE FOR
       NON-WARRANTY PRODUCTS" of EXHIBIT J, GTE PRODUCT(S) SERVICES AND SUPPORT
       REQUIREMENTS, is hereby amended to substitute the Hardware and Software
       Maintenance listed in the attached Attachment E(1).
<PAGE>
 
   19. ATTACHMENT G, "SELLER TRAINING RATES" of EXHIBIT J, GTE PRODUCT(S)
       SERVICES AND SUPPORT REQUIREMENTS, is hereby amended to substitute the
       Supplier Training Rates listed in the attached Attachment G(1).

   20. All other terms and conditions of the Agreement shall remain in full
       force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to the
Agreement to be executed by their duly authorized representatives.


DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


 /s/ Keith M. Beckwith             /s/ Larry K. Henry
-----------------------           --------------------
Keith M. Beckwith                 Larry K. Henry
Vice President, Sales             Vice President-General Manager
Dated:  March 9, 1995             Dated:  March 6, 1995

                                  APPROVED AS TO FORM
                                   /s/ Joe A. Garza
                                  ------------------
                                  Law Dept. 03/01/95
<PAGE>
 
Attachments To Amendment No. 6


Exhibit A(1): Revised List Of GTE Affiliated Entities That Are Entitled To
Purchase Under The Purchase Agreement.

Exhibit B(1): DGSD Domestic Version Price/Product List

Exhibit C(1): DGSD Product Pricing Discount For GTE

Exhibit E(1): GTE Packaging, Shipping And Carrier Routing Instruction

Exhibit E(1) Attachment A: Detail Of 42 X 42 Inch Pallet To Be Used In Shipping

Exhibit E(1) Attachment B: GTE Area Routing Instructions And Carrier Contacts

Exhibit E(1) Attachment C: Carrier Routing Instruction For GTE Supply/GTE
Telephone Operations

Exhibit G(1): GTE Packaging Configuration Definitions

Exhibit H(1): GTE Standardization Policies, Procedures And Terms

Exhibit J Attachment C(1): DGSD Repair And Exchange Pricing For GTE

Exhibit J Attachment D(1): DGSD Contact Information And Escalation Matrix In The
Event Of Product Degradation

Exhibit J Attachment E(1): Hardware And Software Maintenance Terms

Exhibit J Attachment G(1): DGSD Training Rates For GTE And Process Description
For Training Courses Available
<PAGE>
 
                               AMENDMENT NUMBER 7
                                       TO
                 PRODUCT PURCHASE AGREEMENT NUMBER 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION


                                  1.  PARTIES

This Amendment Number 7 to Product Purchase Agreement Number 120900-92-01
(Agreement) between Digital Sound Corporation, a California corporation, with
offices at 6307 Carpinteria Avenue, Carpinteria, California 93013 (SELLER) and
GTE Communication Systems Corporation, a Delaware corporation, acting through
its GTE Supply Division on behalf of itself and its Affiliates, with offices at
700 Hidden Ridge, Irving, Texas 75038 (CUSTOMER).


                               2.  EFFECTIVE DATE

This Amendment Number 7 shall be effective January 1, 1996.

                              3.  CHANGES TO TERMS

   (a) Exhibit A(1), GTE AFFILIATED ENTITIES, as amended in Amendment Number 6
       dated January 1, 1995, is deleted in its entirety and replaced with a new
       Exhibit A(2), GTE AFFILIATED ENTITIES, included as Attachment I to this
       Amendment.

   (b) Exhibit B(1), SUPPLIER PRODUCT(S), as amended in Amendment Number 6, is
       deleted in its entirety and replaced with a new Exhibit B(2), SUPPLIER
       PRODUCT(S), included as Attachment II to this Amendment.

   (c) The first sentence of subsection 3(b) of Exhibit J, GTE PRODUCT(S)
       SERVICES AND SUPPORT REQUIREMENTS, is deleted in its entirety and
       replaced with the following:

       "SELLER agrees to sell to CUSTOMER the replacement parts or proprietary
       components for said repairs at prices as set forth in the column
       identified as "LIST PRICE" of Attachment C(2), SUPPLIER REPAIR PARTS
       PRICING."

   (d) Subsection 5(a) of Exhibit J, GTE PRODUCT(S) SERVICES AND SUPPORT
       REQUIREMENTS, is deleted in its entirety and replaced with the following:

       "(a) SELLER agrees, in the event of a failure that causes a customer
            service impairment caused by PRODUCT(S) 
<PAGE>
 
            furnished under this Agreement, to ship replacement parts at the
            most expedient means available within twenty four (24) hours of
            verbal notification by CUSTOMER. There shall be no charge for the
            expedited service.

            (1) If the defective part is under warranty, there shall be no
                charge for the replacement part, providing, however, that
                CUSTOMER returns such defective part within sixty (60) days
                after SELLER's shipment of the replacement part.  If SELLER has
                not received such defective part within such sixty (60) day
                period, SELLER may invoice CUSTOMER for such replacement part at
                the price as set forth in the column identified as "LIST PRICE"
                of Attachment C(2), SUPPLIER REPAIR PARTS PRICING."

            (2) If the defective part is not under warranty, SELLER shall
                invoice CUSTOMER for such replacement part at the price as set
                forth in the column identified as "30 DAYS R/E PRICE" of
                Attachment C(2) of this Exhibit J.  If CUSTOMER does not return
                such defective part to SELLER within sixty (60) days after
                SELLER's shipment of the replacement part, SELLER may invoice
                CUSTOMER for the difference between the "30 DAYS R/E PRICE" and
                the "LIST PRICE" for such replacement part as set forth in
                Attachment C(2)."

   (e) Attachment C(1), SUPPLIER REPAIR PARTS PRICING, of Exhibit J, GTE
       PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS, as amended in Amendment
       Number 6, is deleted in its entirety and replaced with a new Attachment
       C(2), SUPPLIER REPAIR PARTS PRICING, included as Attachment III to this
       Amendment.

   (f) Attachment E(1), HARDWARE AND SOFTWARE MAINTENANCE, of Exhibit J, GTE
       PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS, as amended in Amendment
       Number 6, is deleted in its entirety and replaced with a new Attachment
       E(2), HARDWARE AND SOFTWARE MAINTENANCE, included as Attachment IV to
       this Amendment.

                              4.  ALL OTHER TERMS

All other terms and conditions of the Agreement shall remain in full force and
effect.

Each party represents that it has executed this Agreement through its authorized
corporate representative:
<PAGE>
 
DIGITAL SOUND CORPORATION         GTE COMMUNICATION SYSTEMS
                                  CORPORATION


 /s/ Keith M. Beckwith              /s/ Gary D. Klingsporn
-----------------------            ------------------------
Keith M. Beckwith                  Gary D. Klingsporn
Vice President, Sales              Contract Manager

Dated:  January 18, 1996           Dated:  January 16, 1996

                                   APPROVED AS TO FORM
                                    /s/ Joe A. Garza
                                   ------------------
                                   Law Dept.  01/15/96
<PAGE>
 
ATTACHMENTS to AMENDMENT NO. 7

EXHIBIT A(2): Revised List of GTE Affiliated Entities that are entitled to
purchase under the Purchase Agreement.

EXHIBIT B(2): DGSD Domestic Version Price/Product List

Exhibit J ATTACHMENT C(2): DGSD'S Repair And Exchange Pricing For GTE

Exhibit J ATTACHMENT E(2): Terms for Comprehensive Hardware And Software
Maintenance For Non-Warranty Products
<PAGE>
 
                               AMENDMENT NUMBER 8
                                       TO
                 PRODUCT PURCHASE AGREEMENT NUMBER 120900-92-01
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION

                                  1.  PARTIES

This Amendment Number 8 to Product Purchase Agreement Number 120900-92-01
(Agreement) between Digital Sound Corporation, a California corporation, with
offices at 6307 Carpinteria Avenue, Carpinteria, California 93013 (SELLER) and
GTE Communication Systems Corporation, a Delaware corporation, acting through
its GTE Supply Division on behalf of itself and its Affiliates, with offices at
700 Hidden Ridge, Irving, Texas 75038 (CUSTOMER).

                               2.  EFFECTIVE DATE

This Amendment Number 8 shall be effective January 1, 1997.

                              3.  CHANGES TO TERMS

   (a) Section 1, TERM, is amended as follows

       The words . . . "continue in effect through December 31, 1996" . . .
       shall be deleted and replaced with . . . "shall continue in effect until
       December 31, 1998".

   (b) Subsection 24(b), of Section 24, INFRINGEMENT is deleted in its entirety
       and replaced with the following:

       24.  INFRINGEMENT

            (b) Except for the negligence provisions, the procedures set forth
                in subsection (b) of Section 35, INDEMNIFICATION AND INSURANCE
                shall apply in the case of any claims of infringement,
                misappropriation or violation of intellectual property rights
                for which indemnification will be sought.

   (c) Section 35, LIABILITY and Amendment No. 4 item number 3 are deleted in
       its entirety and replaced with the following:

       35.  INDEMNIFICATION AND INSURANCE

            (a) SELLER shall indemnify, defend, and hold harmless CUSTOMER and
                its affiliates, officers, agents, and employees, from all
                claims, suits, actions, demands, damages, liabilities, expenses
                (including fees and disbursements of counsel), judgements,
                settlements and penalties of every kind based on (i) 
<PAGE>
 
                personal injury, death, or property damage to the extent any of
                the foregoing is proximately caused by either any defective
                PRODUCT provided by SELLER, its officers, employees,
                subcontractors or agents, or by the negligent or willful acts or
                omissions of SELLER, its officers, employees, subcontractors or
                agents, or (ii) strict liability in tort or product liability of
                any other kind in connection with any PRODUCT provided by
                SELLER, its officers, employees, subcontractors or agents or the
                use, resale or distribution of any such PRODUCT by CUSTOMER. The
                foregoing indemnity, to the extent permitted by law, shall apply
                in the case of all claims that arise from the negligence,
                misconduct or other fault of CUSTOMER, provided, however, that
                if a claim is the result of the joint negligence, joint
                misconduct, or joint fault of SELLER and CUSTOMER, the amount of
                the claim for which CUSTOMER is entitled to indemnification
                shall be limited to that portion of such claim that is
                attributable to the negligence, misconduct or other fault of
                SELLER. The obligations of this provision are in addition to
                SELLER obligation to provide insurance and shall not be limited
                by any limitation on the amount or type of damages, compensation
                or benefits payable by SELLER under the Worker's Compensation
                Acts, Longshoremen and Harborworker's Act, Disability Benefits
                Act or any other employee benefit act.

            (b) CUSTOMER shall promptly notify SELLER in writing of any suits,
                claims or demands covered by this indemnity.  Promptly after
                receipt of such notice, SELLER shall assume the defense of such
                claim with counsel reasonably satisfactory to CUSTOMER.  If
                SELLER fails, within a reasonable time after receipt of such
                notice, to assume the defense with counsel reasonably
                satisfactory to CUSTOMER, or if, in the reasonable judgement of
                CUSTOMER, a direct or indirect conflict of interest exists
                between the parties with respect to the claim, then CUSTOMER
                shall have the right to undertake the defense, compromise and
                settlement of such claim for the account and at the expense of
                SELLER.  Notwithstanding the above, if CUSTOMER in its sole
                discretion so elects, CUSTOMER may also participate in the
                defense of such actions by employing counsel at its own expense,
                without waiving SELLER's obligations to indemnify or defend.
                SELLER shall not settle or compromise any claim or consent to
                the entry of any judgement without the prior written consent of
                CUSTOMER and without an unconditional release of all liability
                by each claimant or plaintiff to CUSTOMER.  Such consent shall
                be timely given and shall not be reasonably withheld.

            (c) SELLER agrees to maintain during the term all insurance or bonds
                required by law or this Agreement, including, but not limited to
                (i) Workers Compensation and related insurance as 
<PAGE>
 
                prescribed by the law of the state in which SELLER's services
                are performed or PRODUCT are delivered; (ii) employer's
                liability insurance with limits of at least five hundred
                thousand dollars ($500,000) for each occurrence, and (iii)
                comprehensive general liability insurance including Services
                liability, and, if the use of motor vehicles is required,
                comprehensive motor vehicle liability insurance, each with
                limits of at least two million dollars ($2,000,000) for combined
                single limit for bodily injury, including death, and/or property
                damage. SELLER shall cause CUSTOMER to be included as an
                additional insured under said policies (as "GTE Corporation and
                its affiliates and subsidiaries") and CUSTOMER's coverage under
                such policies shall be primary. SELLER shall waive its rights of
                subrogation against CUSTOMER for Workers' Compensation claims.
                SELLER shall, prior to rendering such SERVICES, furnish
                certificates or evidence of the foregoing insurance indicating
                the amount and nature of such coverage, the expiration date of
                each policy, and stating that no material change or cancellation
                of any such policy shall be effective unless thirty (30) days'
                prior written notice is given to CUSTOMER.

            (d) All work performed under this Agreement by any party shall be
                performed as an independent contractor and not as an agent of
                any other party.  Persons furnished by the respective parties
                shall be solely the employees or agents of such parties,
                respectively, and shall be under the sole and exclusive
                direction and control of such parties.  They shall not be
                considered employees of the other party for any purpose.  Each
                party shall be responsible for compliance with all laws, rules
                and regulations involving their respective employees or agents,
                including (but not limited to) employment of labor, hours of
                labor, health and safety, working conditions and payment of
                wages.  Each party shall also be responsible, respectively, for
                payment of taxes, including federal, state, and municipal taxes,
                chargeable or assessed with respect to its employees or agents,
                such as social security, unemployment, worker's compensation,
                disability insurance and federal and state income tax
                withholding.

            (e) The parties expressly agree and understand that SELLER's
                liability shall in no event exceed ********** dollars
                ($*********) for any one (1) occurrence, whether the claim
                arises under this Agreement, in contract, tort or otherwise.
                Such limitation does not apply to loss or claims arising from
                death, personal injury or damage to real or tangible personal
                property or to claims of infringement.

   (d) The Agreement is hereby amended to include Section 48, CENTURY
       COMPLIANCE.  "SELLER agrees to the terms and conditions as listed in
       Exhibit L, CENTURY COMPLIANCE".
<PAGE>
 
   (e) Exhibit A(2), GTE AFFILIATED ENTITIES, as amended in Amendment Number 7
       dated January 1, 1996, is deleted in its entirety and replaced with a new
       Exhibit A(3), GTE AFFILIATED ENTITIES, included as Attachment I to this
       Amendment.

   (f) Exhibit B(3), SUPPLIER PRODUCT(S), as amended in Amendment Number 7, is
       deleted in its entirety and replaced with a new Exhibit B(3), SUPPLIER
       PRODUCT(S), included as Attachment 11 to this Amendment.

   (g) This Agreement is hereby amended to add Exhibit L, CENTURY COMPLIANCE,
       included as Attachment III to this Amendment.

   (h) Attachment E(2), HARDWARE AND SOFTWARE MAINTENANCE (1996), of Exhibit J,
       GTE PRODUCT(S) SERVICES AND SUPPORT REQUIREMENTS, as amended in Amendment
       Number 7 dated January 1, 1996, is deleted in its entirety and replaced
       with a new Attachment E(3), HARDWARE AND SOFTWARE MAINTENANCE (1997),
       included as Attachment IV to this Amendment:

                              4.  ALL OTHER TERMS

All other terms and conditions of the Agreement shall remain in full force and
effect.

Each party represents that it has executed this Agreement through its authorized
corporate representative:


DIGITAL SOUND CORPORATION          GTE COMMUNICATION SYSTEMS
                                   CORPORATION


 /s/ B. Robert Suh                  /s/ Richard E. Potter
-------------------                -----------------------
B. Robert Suh                      Richard E. Potter
Vice President and CFO             Manager-Contract/Management

Dated:  February 18, 1997          Dated:  February 12, 1997


                                   APPROVED AS TO FORM AND LEGALITY

                                    /s/ J. R. Seastrom
                                   --------------------
                                   Attorney, GTE Telephone Operations
                                   Date: 2/11/97
<PAGE>
 
ATTACHMENTS TO AMENDMENT NO. 8

EXHIBIT A(3): Revised List of GTE Affiliated Entities that are entitled to
purchase under the Purchase Agreement.

EXHIBIT B(2): DGSD Domestic Version Price/Product List

EXHIBIT L: Details Of Century Compliance Obligation For Procured Systems

Exhibit J ATTACHMENT E(2): Terms for Comprehensive Hardware And Software
Maintenance For Non-Warranty Products
<PAGE>
 
EXHIBIT 10.57


                               AMENDMENT NUMBER 9
                                       TO
PRODUCT PURCHASE AGREEMENT NUMBER 120900-92-01
----------------------------------------------
                                    BETWEEN
                     GTE COMMUNICATION SYSTEMS CORPORATION
                                      AND
                           DIGITAL SOUND CORPORATION
                                        


                                  1.  PARTIES

   This Amendment Number 9 to Product Purchase Agreement Number 12090092-01
(Agreement) is made between Digital Sound Corporation, a California corporation,
with offices at 6307 Carpinteria Avenue, Carpinteria, California 93013
(SELLER) and GTE Communication Systems Corporation, a Delaware corporation,
acting through Its GTE Supply Division with offices at 700 Hidden Ridge,
Irving, Texas 75038 (CUSTOMER).


                              2.  EFFECTIVE DATE

   This Amendment Number 9 shall be effective October 1, 1997.


                                  3.  PURPOSE

   The principal purpose of this Amendment is to provide for the commercial
   availability to CUSTOMER of SELLER's Open Enhanced Application Platform,
   System Software, and OnPoint Messaging, in accordance with the milestones,
   specifications and other requirements set out in Attachment A to this
   Amendment.  The Amendment also provides for continued purchase of SELLER's
   products, extension of the term of the Agreement, and other matters as set
   out below.

                            4.  PURCHASE COMMITMENT

   (a) SELLER agrees to make commercially available to CUSTOMER SELLER's Open
       Enhanced Application Platform, System Software, and OnPoint Messaging, in
       accordance with the milestones, specifications and other requirements set
       out in Attachment A to this Amendment.  CUSTOMER agrees to purchase from
       SELLER in the aggregate amount of fifty million dollars ($50,000,000.00)
       of SELLER's PRODUCT(S) and/or related services during the period from
       October 1, 1997 through the remaining term of this Agreement (the
       "Purchase Commitment").

   (b) If SELLER does not accomplish the development substantially in accordance
       with the milestones set out in Attachment A, and does not meet the
       milestones on time, with the commercial availability to CUSTOMER of the
       platform, software and OnPoint Messaging that meets CUSTOMER's acceptance
       and standardization criteria, by the final milestone date set out in
       Attachment A, CUSTOMER may 
<PAGE>
 
       exercise the option not to be bound by the Purchase Commitment. If SELLER
       does not meet an interim milestone, no later than five (5) business days
       after the failed milestone date, CUSTOMER shall give SELLER written
       notice setting out the nature of the failure, or the milestone shall be
       deemed to have been met. SELLER shall have ten business (10) days from
       receipt of the notice to cure the failure. If the failure is not cured
       within this time, CUSTOMER may terminate the Purchase Commitment by
       giving SELLER written notice. If the failure is cured within this time,
       CUSTOMER shall give SELLER written notice confirming the cure. Unless
       otherwise agreed in writing, the days consumed to cure a failure shall
       not result in changes to subsequent milestone dates, which shall remain
       in effect as stated in Attachment A.

   (c) SELLER's timely performance of the final milestone for commercial
       availability of the Open Enhanced Application Platform, System Software,
       and OnPoint Messaging, as set out in Attachment A, is a condition
       precedent to Customers Purchase Commitment, unless waived in writing by
       CUSTOMER.  If SELLER does not meet this final milestone, CUSTOMER may
       terminate the Purchase Commitment, including the minimum purchase
       commitment in Section 4(d) of this Amendment (if any), by giving SELLER
       written notice within thirty (30) days of the date for performance of the
       final milestone.

   (d) If SELLER meets all of the milestones in Attachment A specified to be
       completed by the end of 1998, CUSTOMER agrees to purchase a minimum of
       Fifteen Million Dollars ($15,000,000) in SELLER's products and/or related
       services from SELLER during the period beginning October 1, 1997, through
       and including December 31, 1998, and said purchase shall be applied
       towards the Fifty Million Dollar ($50,000,000) aggregate Purchase
       Commitment.

   (e) The milestones can only be changed by mutual written agreement between
       SELLER and CUSTOMER.  CUSTOMER may request modifications to deliverables
       set out in Attachment A. Such request must be made in writing.  Upon
       receipt of such request, SELLER shall notify CUSTOMER in writing prior to
       starting work on the requested modification that SELLER is capable of
       performing the modification and that additional time may be required to
       complete said modification.  If the parties mutually agree in writing to
       the delay the date(s) set out in Attachment A for SELLER's delivery of
       the deliverable to make CUSTOMER's requested modification, then SELLER
       shall be excused for the time period set out in the mutual agreement and
       CUSTOMER will otherwise honor its Purchase Commitment.

   (f) SELLER agrees that, except for the specific functions assigned to
       CUSTOMER in Attachment A, SELLER is not relying on participation by
       CUSTOMER in order for SELLER to meet the milestones set out in Attachment
       A. Nevertheless, if SELLER's performance of the requirements set out in
       Attachment A is dependent upon CUSTOMER or a CUSTOMER contractor or
       supplier, and if CUSTOMER or CUSTOMER's contractor or supplier fails to
       perform and such failure proximately causes SELLER to fail to timely
       deliver, then SELLER shall be excused for the time period of the delay
       and CUSTOMER will otherwise honor its purchase obligations.  
<PAGE>
 
       SELLER commits that it has sufficient control over all of SELLER's
       subcontractors to meet the milestones, and agrees that a failure of a
       subcontractor of SELLER to perform shall not excuse SELLER from meeting
       the milestones.

   (g) If CUSTOMER terminates the Purchase Commitment, SELLER nevertheless
       agrees to use Its best efforts to support all of the platform acquired
       and implemented by CUSTOMER.  Termination of the Purchase Commitment does
       not alter CUSTOMER's rights to purchase the platform and related products
       under this Agreement.

                            5.  RELATED AGREEMENTS

SELLER and CUSTOMER, acting through GTE Service Corporation, are
contemporaneously entering into the following related agreements: (a) Software
Professional Services Agreement; (b) Joint Software Development Agreement; (c)
Letter of Agreement Concerning Accelerated Development of Software; and (d)
Master Source Code and Technology Escrow Agreement (the 'Related Agreements").
The Master Source Code and Technology Escrow Agreement is made part of this
Agreement and is attached as Attachment E to this Amendment.  In case of
conflict between terms of any of these Related Agreements and this Amendment or
this Agreement, the terms of the Related Agreements shall govern.

                             6.  CHANGES TO TERMS

   (a) Section 1, TERM, is amended as follows:

       The words: 'shall continue in effect until December 31, 1998" shall be
       deleted and replaced with the words: "shall continue in effect until
       March 31, 2001."

   (b) Section 6, PURCHASING FORECAST, is deleted in its entirety and replaced
       with a new Section 6, PURCHASING FORECAST, as follows:

       "Customer estimates that ft may purchase from Seller, in the aggregate
       amount, the purchase forecast quantities set out in Attachment B.
       Attachment B may be amended from time to time by the mutual agreement of
       the parties.  The purchase forecast is only an estimate or projection and
       is not be to construed as a commitment to purchase that or any amount.
       In no case shall Customer be responsible for any bill back or related
       nonconformance charges should Customer's purchase fail to meet the
       projected levels in Attachment B, nor shall failure to purchase the
       estimated amount of Seller's Products in Attachment B, or any of Seller's
       Products be a breach of this Agreement by customer."

   (c) Section 25, USE OF CONFIDENTIAL INFORMATION, is amended by adding the
       following subsection (d):

       "(d) Attachment A and A-1 through A-7 are designated as confidential
            business information of the party supplying the material, and are to
            be treated as Information under the Agreement.  The parties shall
            not use this Information, or any portion thereof or any derivations
            therefrom, for any purpose not related to this Agreement, nor
            disclose this 
<PAGE>
 
            Information or portions thereof or derivations therefrom to third
            parties."

   (d) Section 38 (a) is deleted in its entirety.

   (e) Section 38 (b) is amended as follows:

       In the first line after the beginning words, 'Upon termination of this
       Agreement insert the words "pursuant to Section 38(e) or termination of
       the Purchase Commitment pursuant to the provisions of Amendment 9," and
       delete the words "without cause pursuant to this Section."

   (f) Section 38(c)(7) is deleted in its entirety.

   (g) A new Section 38 (e) is added to the Agreement as follows:

       "In addition to any other rights afforded to CUSTOMER under this
       Agreement, if SELLER or any of its subsidiaries shall sell, transfer,
       assign or otherwise dispose of all or substantially all of the assets of
       SELLER, if SELLER agrees to do any of the foregoing, or if a Change of
       Control of SELLER shall occur, then CUSTOMER may terminate, at CUSTOMER'S
       sole option, Customer's Purchase Commitment, by giving SELLER thirty
       (30)days written notice, which shall be provided within thirty (30) days
       of receipt by CUSTOMER of written notice from SELLER of an applicable
       event triggering the application of this provision."

       "A 'Change in Control' shall mean the direct or indirect acquisition of
       the beneficial ownership of twenty percent (20%) or more of the
       outstanding voting securities of SELLER, whether in a single transaction
       or a series of transactions, by any person, group, corporation, or other
       entity who is engaged, directly or through any of its affiliates, in any
       business engaged in by GTE Corporation or any of its Affiliates (a
       'Communications Company"), or the announcement by any person, group,
       corporation, other entity or Communications Company of its intent to
       acquire twenty percent (20%) or more of the outstanding voting securities
       of SELLER."

   (h) Section 44, SURVIVAL OF OBLIGATIONS, is amended as follows:

       After the words: "beyond the termination, cancellation or expiration
       hereof insert the words: 'including but not limited to, any obligation to
       defend and indemnify, any warranty obligation, any obligation to escrow
       software code and technology pursuant to any software and technology
       agreement, any confidentiality or non-disclosure obligations and any
       obligations under the dispute resolution clause of this Agreement."

   (i) Exhibit A(3), GTE AFFILIATED ENTITIES, as amended in Amendment Number 8,
       dated January 1, 1997, is deleted in its entirety and replaced with a new
       Exhibit A(4), GTE AFFILIATED ENTITIES, included as Attachment C to this
       Amendment.

       A new Exhibit B, Attachment A, PULSEPOINT PRODUCTS, is added and included
       as Attachment D to this Amendment.
<PAGE>
 
   (k) Exhibit C(l), SUPPLIER PRODUCT(S) PRICING, is deleted in its entirety and
       replaced with the following:


                                  EXHIBIT C(2)
                          SUPPLIER PRODUCT(S) PRICING

       CUSTOMER shall receive a **** percent (**%) discount from the list prices
       as set forth in Exhibit B, with the exception that no discount shall
       apply to those items identified as "non-discountable'.  Such discount
       shall apply to all system components, including hardware and software,
       except as otherwise provided for in this Exhibit C(2).

       CUSTOMER shall receive a ****** percent (**%) discount from the list
       prices as set forth in Exhibit B for hard disk drives, whether purchased
       individually or as a part of a configured "3110" system.

       CUSTOMER shall receive a **** percent (**%) discount from the list prices
       as set forth in Exhibit B, Attachment A, PULSEPOINT PRODUCTS, with the
       exception that no discounts shall apply to those items identified as
       "nondiscountable."

   (l) Attachment E(3), HARDWARE AND SOFTWARE MAINTENANCE (1997), Section C,
       APPLICABILITY, is hereby amended to add the following:

       "The hardware and software maintenance services described in this
       Attachment shall also apply to CUSTOMER's entire installed base of
       PulsePoint PRODUCT(S) as of October 1, 1997.


                              7.  ALL OTHER TERMS

   All other terms and conditions of the Agreement shall remain in full force
and effect.

Each party represents that it has executed this Agreement through its authorized
corporate representative:



DIGITAL SOUND CORPORATION        GTE COMMUNICATIONS SYSTEMS
                                 CORPORATION



  /s/  Keith M. Beckwith          /s/  Larry K. Henry
------------------------         ---------------------
Keith M. Beckwith                Larry K. Henry
Vice President Sales,            Vice President - General Manager
Americas and Europe

Date:  November 17, 1997         Date:  November 17, 1997


                                 APPROVED AS TO FORM AND LEGALITY

                                  /s/ (signature illegible)
                                 ---------------------------
                                 Attorney GTE Telephone Operations
                                 11/14/97
<PAGE>
 
ATTACHMENTS TO AMENDMENT NO. 9

Attachment A: Software Applications &  Features Specifications and Related
Milestone Dates

Attachment A lists milestones and other requirements that apply to the
development and commercial availability to GTE of DGSD's Open Enhanced
Application Platform, System Software, and OnPoint Messaging.  The requirements
stated in this Attachment incorporate the specifications and other standards and
references set out in Attachments A-1 through A-7, which are part of this
Attachment A.  The milestones set forth in this Attachment A must be completed
for the Purchase Commitment to remain in effect as set forth in Paragraph 4 of
Amendment No. 9.

Attachment A-1: Technical Specifications and Description of GTE networking plans

Attachment A-2: Architectural Specifications for GTE's Centralized Voicemail

Attachment A-3: Architectural Specifications for Digital Sound Corporation's
Messaging Platform

Attachment A-4: Definitions and Requirements for Messaging Standards

Attachment A-5: Technical Summary of Digital Sound Corporation's Proprietary
Rapid Application Creation Environment

Attachment A-6: Product Requirements' Specification for Voice Messaging
Application

Attachment A-7: GTE Sample/Mock Marketing Literature: Voice Mail User Guide

Attachment B: Digital Sound Corporation Product Milestone Chart and Correlated
Non-binding GTE Forecast

Attachment C: Revised List of GTE Affiliated Entities that are entitled to
purchase under the Purchase Agreement.

Attachment D: Digital Sound Corporation PulsePoint Product Description and Price
List

Attachment E: Master Source Code and Technology Escrow Agreement (to be attached
at a later date).