FIRST AMENDMENT
                             TO EMPLOYMENT AGREEMENT


         This FIRST  AMENDMENT TO EMPLOYMENT  AGREEMENT  (this  "Amendment")  is
dated  as of  January  l,  1997,  and  entered  into  by  and  among  DICTAPHONE
CORPORATION,  a Delaware corporation,  whose address is 3191 Broadbridge Avenue,
Stratford,   Connecticut   06497-2559   (Dictaphone)   and   JOHN  H.   DUERDEN,
("Executive").  Capitalized terms used herein without  definition shall have the
same meanings herein as set forth in the Agreement (as hereunder defined).


                                    RECITALS:

         WHEREAS,  Executive  and  Dictaphone  desire  to amend  the  Employment
Agreement  between  Dictaphone and Executive (the  "Agreement")  dated August 9,
1995 in order to amend, modify and clarify certain provisions thereof.

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

         SECTION 1.  AMENDMENTS TO THE EMPLOYMENT AGREEMENT

                  1. The Annual Base Salary shall, effective January l, 1997, be
increased to  $995,000.00;  the term Annual Base Salary as used in the Agreement
shall refer to the Annual Base Salary as so increased.

                  2.       Section 4.02 of the Agreement is hereby amended,
effective January l, 1997, as follows:

                           A.       Section 4.02(a) and 4.02(b) are hereby
amended to read in their entirety as follows:

                          (a)      While the Executive is employed by the
Company during the Contract Term, the Company shall pay or cause to be paid an
annual cash bonus ("Annual  Bonus") in accordance with the terms hereof for each
Fiscal Year in a determined amount based (i) one-half on the extent of the
attainment of personal performance  goals for the Executive as determined by the
Board (the  "Executive Performance Objectives"), and (ii) one-half on the extent
of the attainment of budgeted performance  objectives for the Company as
determined by the Board (the "Budgeted Performance Objectives"), such amounts to
be paid on or prior to April 15th of the year following the end of such Fiscal
Year.

                           (b)      The Annual Bonus amounts shall be calculated
as follows:

                                    (i) with respect to that portion of the
Annual Bonus related to the Executive Performance Objectives, if the Executive
reaches 95% of the Executive Performance


<PAGE>


Objectives, that portion of the Annual Bonus shall equal 50% of the Base Salary,
if the  Executive  reaches  between  90%  and 95% of the  Executive  Performance
Objectives  that  portion  of the Annual  Bonus  shall  equal  42.5% of the Base
Salary,  and if the Executive  fails to reach 90% of the  Executive  Performance
Objectives that portion of the Annual Bonus shall equal 25% of the Base Salary;

                                    (ii) the same criteria and percentages shall
apply mutatis mutandis with respect to that portion of the Annual Bonus related
to Budgeted Performance Objectives for the Company as described in clause (i)
above.

                  3.       Section 4.02(b) is restated in haec verba and is
renumbered as Section 4.02(c).

                  4.       The word "recourse" in Section 4.03(a)(ii) of the
Agreement is hereby deleted and replaced with the word "non-recourse".

                  5.  With  reference  to  Section  5.02 of the  Agreement,  the
Company  shall  provide for term life  insurance in the amount of five times the
Annual Base Salary.


         SECTION 2.  ADDITIONAL STOCK

                  As  soon as  possible  following  Board  and  other  necessary
approvals  Company shall grant to Executive  new options (the "New  Options") to
purchase 325,000 shares of common stock of the Company pursuant to the Company's
Management Stock Option Plan.

                  The New Options shall vest in one-third  increments on each of
first three anniversaries of the grant thereof.  The exercise price per share of
the New Options shall be ten dollars ($10).


         SECTION 3.  MISCELLANEOUS

                  A.       REFERENCE TO AND EFFECT ON THE EMPLOYMENT AGREEMENT.

                           (i)      On and after the date hereof, each reference
in the Employment Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import  referring to the Employment  Agreement  shall mean and
be a reference to the Amended Agreement.

                           (ii)     Except as specifically amended by this
Amendment, the Employment  Agreement  shall  remain  in full  force  and  effect
and is hereby ratified and confirmed.


<PAGE>


                  B. HEADINGS.  Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.

                  C. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed and  delivered  shall be deemed an
original,  but all such  counterparts  together shall constitute but one and the
same  instrument;  signature  pages  may  be  detached  from  multiple  separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  upon  the  execution  of  a  counterpart   hereof  by  Executive  and
Dictaphone.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement  to be duly  executed  and  delivered  by  their  respective  officers
thereunto duly authorized as of the date first written above.

       Dictaphone                           DICTAPHONE CORPORATION


                                       By:  /S/ DANIEL C. HART

                                       Title:   VP & GENERAL COUNSEL

                                       Date: 2/24/97


       Executive


                                       By:  /S/ JOHN H. DUERDEN
                                            John H. Duerden

                                       Date: 2/24/97




                                                        -3-

<PAGE>