Exhibit 4.8


                             DICTAPHONE CORPORATION
                       LIMITED WAIVER AND FIRST AMENDMENT
                               TO CREDIT AGREEMENT

         This  LIMITED  WAIVER AND FIRST  AMENDMENT  TO CREDIT  AGREEMENT  (this
"AMENDMENT")  is dated as of December  31,  1998 and  entered  into by and among
DICTAPHONE  CORPORATION  (successor to Dictaphone  Acquisition Inc.), a Delaware
corporation ("COMPANY"),  and the financial institutions listed on the signature
pages hereof  ("LENDERS"),  and is made with  reference  to that certain  Credit
Agreement dated as of November 14, 1997 (the "CREDIT  AGREEMENT"),  by and among
Company,  Lenders, Morgan Stanley Senior Funding, Inc., as syndication agent for
lenders,  and Bankers Trust Company, as administrative  agent for Lenders and as
collateral agent for Lenders.  Capitalized terms used herein without  definition
shall have the same meanings herein as set forth in the Credit Agreement.

                                 R E C I T A L S
                                 - - - - - - - -

         WHEREAS, Company has informed Lenders that it will not be in compliance
with the  covenants set forth in  subsection  7.6 of the Credit  Agreement as of
December 31, 1998 and for the four-Fiscal Quarter period ending on such date;

         WHEREAS,  Company has requested  Lenders to waive Company's  compliance
with subsection 7.6 of the Credit  Agreement as of December 31, 1998 and for the
four-Fiscal Quarter period ending on such date;

         WHEREAS, Stonington Fund has agreed to provide Company with $20,000,000
in new cash equity  contributions,  the proceeds of which Company desires to use
for working capital and general corporate purposes; and

         WHEREAS,  Company also desires (i) to consummate  the  Melbourne  Asset
Sale,  (ii) to retain a portion of the proceeds  thereof for working capital and
general  corporate  purposes,  and (iii) to use the  remainder  of the  proceeds
thereof (a) to prepay certain scheduled principal installments in respect of the
Loans and the Existing  Tranche B Term Loans and (b) to reduce the  Subordinated
Indebtedness  evidenced by the  Subordinated  Notes by making certain  scheduled
interest payments and repurchasing certain Subordinated Notes.

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

SECTION 1. WAIVER

         Subject to the terms and conditions set forth herein and in reliance on
the representations  and warranties of Company herein contained,  Lenders hereby
waive  compliance by Company with the provisions of subsection 7.6 of the Credit
Agreement as of December 31, 1998 and for the four-Fiscal  Quarter period ending
on such date.


<PAGE>

SECTION 2. LIMITATION OF WAIVER

         Without limiting the generality of the provisions of subsection 10.6 of
the Credit  Agreement,  the waiver set forth above shall be limited precisely as
written and shall relate solely to Company's  non-compliance with the provisions
of  subsection  7.6 of the  Credit  Agreement  in the  manner  and to the extent
described above, and nothing in this Amendment shall be deemed to:

         (i)  constitute a  waiver of compliance  by Company with respect to (a)
    subsection 7.6 of the Credit Agreement in any other instance for any  period
    commencing  after  December 31, 1998  or (b)  any other  term, provision  or
    condition of the  Credit Agreement,  the  other Loan Documents  or any other
    instrument  or agreement referred to therein (whether in connection with the
    above waiver or otherwise); or

         (ii) prejudice  any  right or  remedy that  Agent or any Lender may now
     have or may have in the  future under  or in  connection  with  the  Credit
     Agreement,  the  other Loan Documents, any  other instrument  or  agreement
     referred to therein or under applicable law.

         Except  as  expressly  set forth  herein,  the  terms,  provisions  and
conditions of the Credit  Agreement and the other Loan Documents shall remain in
full  force and  effect  and in all  other  respects  are  hereby  ratified  and
confirmed.

SECTION 3. AMENDMENTS TO THE CREDIT AGREEMENT

    3.1  AMENDMENTS TO SUBSECTION 1.1:  CERTAIN DEFINED TERMS.
         ----------------------------------------------------

         A.   AMENDMENTS TO EXISTING DEFINITIONS.  Certain definitions contained
         in  subsection  1.1  of  the  Credit  Agreement  are hereby  amended as
         follows:

              (i)  The definition of "CONSOLIDATED NET WORTH" is hereby  amended
                   by   adding  the  phrase  "or  the   Melbourne  Asset   Sale"
                   immediately after the phrase "Specified Asset Sale/Financing"
                   contained therein.

              (ii) The definition of "SPECIFIED ASSET SALE/FINANCING" is  hereby
                   amended  by  deleting  it  in  its entirety and  substituting
                   therefor the following:

                       "SPECIFIED ASSET SALE/FINANCING" means each of the
                       Headquarters Asset Sale, the Headquarters Financing
                       and/or the Swiss Asset Sale.

          B.   ADDITION OF NEW DEFINITIONS. Subsection 1.1 of the Credit 
          Agreement is hereby  amended by adding thereto the following  
          definitions which shall be inserted in proper alphabetical order:

                   "JANUARY 1999 EQUITY" means not less than $20,000,000 in  new
                   cash payment in  kind preferred  equity contributions made to
                   Company by the Stonington Fund on or before January 28, 1999.


                                       2
<PAGE>

                   "FIRST AMENDMENT" means that certain Limited Waiver and First
                   Amendment to Credit Agreement dated as of  December  31, 1998
                   by and among Company and Lenders.

                   "FIRST AMENDMENT EFFECTIVE DATE"  has the meaning assigned to
                   that term in the First Amendment.

                   "FIFTH  AMENDMENT TO  EXISTING  CREDIT  AGREEMENT" means that
                   certain   Limited  Waiver  and  Fifth  Amendment   to  Credit
                   Agreement dated as of  December 31, 1998 by and among Company
                   and Existing Lenders.

                   "INITIAL PREPAYMENT AMOUNT"  means  the  first $35,000,000 of
                   the Net Cash Proceeds of the  Melbourne Asset Sale,  Lenders'
                   Share of which  amount shall  be applied  to prepay the Loans
                   pursuant  to  subsection 2.4B(ii)(b).

                   "INITIAL  RETAINED  AMOUNT"  has the meaning assigned to that
                   term in subsection 2.4B(ii)(b).

    3.2  AMENDMENTS TO SUBSECTION 2.4A:  SCHEDULED PAYMENTS OF LOANS.
         -----------------------------------------------------------

         Subsection 2.4A of the redit Agreement is hereby amended as follows:

               (i)  The table set forth in  subsection  2.4A is  deleted  in its
                    entirety and the following table is substituted therefor:

                         DATE                      SCHEDULED REPAYMENT OF LOANS
                         ----                      ----------------------------
                  December 31, 1998                          $627,500  
                  December 31, 1999                          $627,500  
                  December 31, 2000                          $627,500  
                  December 31, 2001                          $627,500  
                  June 30, 2002                           $60,240,000 
                ---------------------              ----------------------------
                      Total                               $62,750,000 
                                                           


               (ii) The  reference  to "June 30,  2003"  contained in the second
                    proviso of subsection 2.4A is deleted and "June 30, 2002" is
                    substituted therefor.


    3.3  AMENDMENTS TO SUBSECTION 2.4B: PREPAYMENTS.
         ------------------------------------------

         A.   MANDATORY  PREPAYMENT  EVENTS.  Subsection  2.4B(ii) of the Credit
         Agreement is hereby amended as follows:


                                       3
<PAGE>

                   (i)  Paragraph (a)   of  subsection  2.4B(ii)  of  the Credit
                        Agreement  is  amended  by  adding  the  phrase  "or the
                        Melbourne  Asset Sale"  immediately after  the    phrase
                        "Specified  Asset Sale/Financing".

                  (ii)  Paragraphs  (b),  (c),  (d),  (e), and (f) of subsection
                        2.4B(ii) of the Credit Agreement  are relettered as (c),
                        (d), (e), (f), and (g).

                 (iii)  A new paragraph (b) of subsection 2.4B(ii) of the Credit
                        Agreement is added as follows:

                             "(b)  PREPAYMENTS  FROM  THE  MELBOURNE ASSET SALE.
                        On  the  date  of  receipt  by  Company  or  any of  its
                        Subsidiaries  of any  Cash  Proceeds of  an  Asset  Sale
                        constituting the Melbourne  Asset  Sale,  Company  shall
                        prepay the Loans in an amount equal to Lenders' Share of
                        the  Net  Cash  Proceeds  of  the  Melbourne Asset Sale;
                        PROVIDED that, anything contained herein to the contrary
                        notwithstanding,  (1)  from and  after  such time as the
                        aggregate Net Cash Proceeds of the Melbourne  Asset Sale
                        equals or exceeds the Initial Prepayment Amount, Company
                        shall be entitled to retain  (without any  corresponding
                        prepayment  under  this subsection 2.4B(ii)(b)) the next
                        $20,000,000 in excess of the Initial  Prepayment  Amount
                        (the "INITIAL RETAINED AMOUNT") of the Net Cash Proceeds
                        of the Melbourne Asset Sale and (2) from and  after such
                        time as the aggregate Net Cash Proceeds of the Melbourne
                        Asset Sale equals or exceeds $55,000,000, Company  shall
                        prepay the Loans in an amount equal to Lenders' Share of
                        50% of the Net Cash Proceeds of the Melbourne Asset Sale
                        in excess of $55,000,000 (any Net Cash  Proceeds  of the
                        Melbourne Asset Sale being  retained by Company pursuant
                        to this clause (2) shall not be  subject  to  prepayment
                        under  this subsection   2.4B(ii)(b));   and   PROVIDED,
                        FURTHER  that,  to the extent  any  portion of  Existing
                        Lenders' Share of any Net Cash Proceeds of the Melbourne
                        Asset  Sale  are  not  applied  to prepay  the  Existing
                        Tranche  B  Term  Loans  as  required  under  subsection
                        2.4B(iii)(c)  of  the  Existing  Credit  Agreement as in
                        effect on  the  First Amendment  Effective  Date  (after
                        giving effect to the Fifth Amendment to  Existing Credit
                        Agreement),  Company shall  promptly make an  additional
                        prepayment  of  the  Loans in  an  amount  equal to such
                        portion not so applied to prepay the Existing  Tranche B
                        Term  Loans.  Any  prepayments  of the Loans pursuant to
                        this  subsection   2.4B(ii)(b) shall be  applied  to the
                        remaining  scheduled  installments  of  principal of the
                        Loans set forth in subsection 2.4A in  forward  order of
                        maturity."

                  (iv)  Paragraph (b)  of  subsection  2.4B(ii)  of  the  Credit
                        Agreement  (before  giving  effect to the relettering of
                        such paragraph) is amended by deleting "(other than Cash


                                       4
<PAGE>

                        proceeds of any Headquarters Financing  or   any   other
                        Indebtedness   permitted  under   subsection 7.1)"   and
                        substituting therefor the following:

                             "(other than  the  January  1999 Equity,  the  Cash
                             proceeds of any Headquarters Financing or any other
                             Indebtedness permitted under subsection 7.1)".

                   (v)  Paragraph  (f) of  subsection  2.4B(ii)  of  the  Credit
                        Agreement   (before  giving  effect  to  the relettering
                        of such  paragraph)  is amended by:

                        (a)  deleting    the     reference     to   "subsections
                        2.4B(ii)(a)-(e)"  contained  therein  and   substituting
                        therefor "subsections 2.4B(ii)(a)-(f)"; and

                        (b)  adding the phrase "(including,  without limitation,
                        the  Melbourne   Asset  Sale)"  immediately   after  the
                        phrase "Net Cash Proceeds of Asset Sale".

         B.   APPLICATION OF PREPAYMENTS.  Subsection 2.4B(iii)(b) of the Credit
         Agreement  is hereby amended by deleting it in its entirety and
         substituting therefor the following:

                   "(b) APPLICATION  OF  MANDATORY  PREPAYMENTS OF  LOANS TO THE
                        SCHEDULED  INSTALLMENTS OF PRINCIPAL THEREOF.  Except as
                        provided  in  subsection   2.4B(ii)(b),   any  mandatory
                        prepayment  of the Loans  shall be applied to reduce the
                        scheduled  installments  of  principal  of the Loans set
                        forth in subsection 2.4A in inverse order of maturity."

    3.4  AMENDMENTS TO SUBSECTION 6.4:  MAINTENANCE OF PROPERTIES; INSURANCE.
         -------------------------------------------------------------------

         Subsection  6.4 of the  Credit  Agreement  is  amended  (a) by deleting
    the phrase "subsection  2.4B(ii)(a) and" and (b) by adding the  phrase  "and
    subsection  2.4B(iii)(d)"   immediately   after   the   phrase   "subsection
    2.4B(iii)(c)".

    3.5  AMENDMENTS TO SUBSECTION 7.5:  RESTRICTED JUNIOR PAYMENTS.
         ---------------------------------------------------------

         Subsection  7.5 of the Credit  Agreement is hereby  amended by deleting
    it in its entirety and substituting therefor the following:

                   "7.5    RESTRICTED JUNIOR PAYMENTS.
                           --------------------------

                            Company  shall not,  and shall not permit any of its
                    Subsidiaries  to,  directly or indirectly,  declare,  order,
                    pay,  make or set  apart any sum for any  Restricted  Junior
                    Payment;  PROVIDED  that (i) on or  after  August  1,  1999,
                    Company may repurchase certain Subordinated Notes so long as
                    (a)  such  Subordinated  Notes  are  repurchased  only  with
                    proceeds of the Melbourne Asset Sale  constituting  all or a
                    portion of the Initial  Retained  Amount,  (b) Company shall
                    have made the regularly  scheduled  interest  payment due on
                    August 1, 1999 in respect of the Subordinated Notes (subject


                                       5
<PAGE>

                    to  clause  (ii)  hereof),  and (c) no Event of  Default  or
                    Potential  Event  of  Default  shall  have  occurred  and be
                    continuing or shall be caused thereby; (ii) Company may make
                    regularly  scheduled  payments of interest in respect of the
                    Subordinated  Indebtedness  in accordance with the terms of,
                    and only to the  extent  required  by,  and  subject  to the
                    subordination  provisions  contained  in, the  indenture  or
                    other   agreement   pursuant  to  which  such   Subordinated
                    Indebtedness   was  issued,   as  such  indenture  or  other
                    agreement  may be  amended  from time to time to the  extent
                    permitted under  subsection  7.15B;  and (iii) so long as no
                    Event of Default or  Potential  Event of Default  shall have
                    occurred  and be  continuing  or  shall be  caused  thereby,
                    Company may make  Restricted  Junior  Payments to repurchase
                    shares of Company  Common  Stock (or  options or warrants to
                    acquire Company Common Stock) from  Management  Investors in
                    accordance with the terms of the Stockholders Agreement."

    3.6  AMENDMENTS TO SUBSECTION 7.6: FINANCIAL COVENANTS.
         -------------------------------------------------

          Subsections  7.6A, B, and D of the Credit Agreement are hereby amended
     by deleting them in their entirety and substituting therefor the following:

          "A. MAXIMUM LEVERAGE RATIO.  Company shall not permit the ratio of (i)
     Consolidated  Total  Debt as of the  last  day of any  four-Fiscal  Quarter
     period  ending during any of the periods set forth below (or as of the last
     day of any of the one, two or three Fiscal Quarter periods, as the case may
     be,  occurring after January 1, 1999 and ending on or before  September 30,
     1999) to (ii)  Consolidated  EBITDA for such one, two, three or four-Fiscal
     Quarter  period,  as the case may be, to exceed the applicable  correlative
     ratio indicated in the relevant  column below  (depending on whether or not
     the Melbourne Asset Sale has been  consummated on or before the last day of
     the applicable one, two, three or four-Fiscal Quarter period):


                               MAXIMUM LEVERAGE RATIO   MAXIMUM LEVERAGE RATIO
                               (BEFORE THE MELBOURNE     (AFTER THE MELBOURNE
              PERIOD                ASSET SALE)               ASSET SALE)
        --------------------- ----------------------- ------------------------
        
        January 1, 1999 -            13.30:1.00               15.10:1.00
          March 31, 1999
        
         April 1, 1999 -             13.40:1.00               15.70:1.00
          June 30, 1999
        
          July 1, 1999 -             10.60:1.00               13.00:1.00
        September 30, 1999
        
          October 1, 1999 -           6.20:1.00                6.80:1.00
        December 31, 1999


                                       6
<PAGE>
        
        January 1, 2000 -             6.20:1.00                6.60:1.00
          March 31, 2000          
                                  
         April 1, 2000 -              5.80:1.00                6.20:1.00
          June 30, 2000           
                                  
          July 1, 2000 -              5.50:1.00                5.90:1.00
        September 30, 2000        
                                  
         October 1, 2000 -            5.20:1.00                5.70:1.00
        December 31, 2000         
                                  
        January 1, 2001 -             5.00:1.00                5.50:1.00
          March 31, 2001          
                                  
         April 1, 2001 -              4.80:1.00                5.20:1.00
          June 30, 2001           
                                  
          July 1, 2001 -              4.60:1.00                4.90:1.00
        September 30, 2001        
                                  
         October 1, 2001 -            4.40:1.00                4.70:1.00
        December 31, 2001         
                                  
        January 1, 2002 -             4.20:1.00                4.50:1.00
          March 31, 2002          
                                 

          B. MINIMUM CONSOLIDATED EBITDA.  Company shall not permit Consolidated
     EBITDA for any four Fiscal  Quarter  period  ending on any of the dates set
     forth below (or for any of the one, two or three consecutive Fiscal Quarter
     periods,  as the case may be, occurring after January 1, 1999 and ending on
     or before  September 30, 1999) to be less than the  applicable  correlative
     amount  indicated in the relevant column below (depending on whether or not
     the Melbourne Asset Sale has been  consummated on or before the last day of
     the applicable one, two, three or four-Fiscal Quarter period):



                            MINIMUM CONSOLIDATED        MINIMUM CONSOLIDATED
                             EBITDA (BEFORE THE          EBITDA (AFTER THE
            DATE            MELBOURNE ASSET SALE)       MELBOURNE ASSET SALE)
      ------------------  -------------------------  ---------------------------
      
        March 30, 1999            8,700,000                  7,400,000


                                       7
<PAGE>

        June 30, 1999            19,500,000                 16,600,000

      September 30, 1999         34,900,000                 29,900,000

      December 31, 1999          52,100,000                 44,800,000

        March 30, 2000           55,900,000                 47,500,000

        June 30, 2000            58,300,000                 49,300,000

      September 30, 2000         60,700,000                 51,300,000

      December 31, 2000          61,800,000                 52,000,000

        March 30, 2001           62,500,000                 53,000,000

        June 30, 2001            63,500,000                 54,100,000

      September 30, 2001         65,500,000                 55,700,000

      December 31, 2001          69,200,000                 59,100,000

        March 31, 2002           70,300,000                 60,000,000


          D. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio
     of (i) Consolidated EBITDA MINUS Consolidated  Capital Expenditures to (ii)
     Consolidated  Interest  Expense for any  four-Fiscal  Quarter period ending
     during any of the periods  set forth  below (or for any of the one,  two or
     three  consecutive  Fiscal Quarter  periods,  as the case may be, occurring
     after  January 1, 1999 and ending on or before  September  30,  1999) to be
     less than the applicable correlative ratio indicated in the relevant column
     below  (depending  on  whether  or not the  Melbourne  Asset  Sale has been
     consummated on or before the last day of the applicable  one, two, three or
     four-Fiscal Quarter period):

                                     MINIMUM INTEREST         MINIMUM INTEREST
                                      COVERAGE RATIO           COVERAGE RATIO
                                  (BEFORE THE MELBOURNE     (AFTER THE MELBOURNE
              PERIOD                   ASSET SALE)               ASSET SALE)
      ---------------------       ---------------------     --------------------

         January 1, 1999 -              0.00:1.00                0.00:1.00
           March 31, 1999


                                       8
<PAGE>

          April 1, 1999 -               0.00:1.00                0.00:1.00
           June 30, 1999

           July 1, 1999-                0.20:1.00                0.15:1.00
         September 30, 1999

          October 1, 1999 -             0.70:1.00                0.65:1.00
         December 31, 1999

         January 1, 2000 -              0.70:1.00                0.60:1.00
           March 31, 2000

          April 1, 2000 -               0.80:1.00                0.60:1.00
           June 30, 2000

           July 1, 2000 -               0.80:1.00                0.70:1.00
         September 30, 2000

          October 1, 2000 -             0.90:1.00                0.70:1.00
         December 31, 2000

         January 1, 2001 -              0.95:1.00                0.70:1.00
           March 31, 2001

          April 1, 2001 -               1.00:1.00                0.80:1.00
           June 30, 2001

           July 1, 2001 -               1.05:1.00                0.85:1.00
         September 30, 2001

          October 1, 2001 -             1.10:1.00                0.90:1.00
         December 31, 2001

         January 1, 2002 -              1.20:1.00                1.00:1.00
           March 31, 2002


     3.7  AMENDMENTS TO SUBSECTION 7.7: RESTRICTION ON FUNDAMENTAL CHANGES;
          -----------------------------------------------------------------
          ASSET SALES AND ACQUISITIONS.
          ----------------------------

          Subsection  7.7(vii)  of the  Credit  Agreement  is hereby  amended by
     deleting it in its entirety and substituting therefor the following:


                                       9
<PAGE>

     "(vii) subject to subsection  7.13,  Company and its  Subsidiaries  (a) may
     make  Asset  Sales  constituting  Specified  Asset  Sale/Financings  or the
     Melbourne  Asset Sale and (b) may make other Asset Sales of assets having a
     fair market value not in excess of $2,000,000  in the aggregate  during the
     term of this Agreement;  PROVIDED that (x) the  consideration  received for
     the assets  that are the  subject of any such Asset Sale  described  in the
     foregoing  clause  (a) or (b) shall be in an  amount at least  equal to the
     fair  market  value  thereof;  (y) at least 80% (or 100% in the case of the
     Melbourne Asset Sale) of the consideration  received shall be cash; and (z)
     the proceeds of such Asset Sales shall be applied as required by subsection
     2.4B(ii)(a)  or (b), as the case may be; and PROVIDED,  FURTHER  that,  the
     Melbourne  Asset Sale shall  occur on or before  December  31, 1999 and the
     consideration  received  therefor shall be in a net aggregate amount of not
     less than $37,500,000."

     3.8  AMENDMENT TO SUBSECTION 7.17: RECEIVABLES PROGRAM.
          -------------------------------------------------

          Subsection  7.17 of the Credit  Agreement  is amended by deleting  the
     reference to "subsection  2.4B(ii)(c)"  contained  therein and substituting
     therefor "subsection 2.4B(ii)(d)".

     3.9  AMENDMENTS TO SECTION 8: EVENTS OF DEFAULT.
          ------------------------------------------

          Section 8 of the Credit Agreement is hereby amended (a) by adding "or"
     at the end of  subsection  8.13,  and (b) by adding a new  subsection  8.14
     thereto as follows:

          "8.14  STONINGTON FUND'S FAILURE TO MAKE THE JANUARY 1999
                 --------------------------------------------------
                 EQUITY CONTRIBUTION.
                 -------------------

                  Stonington  Fund shall not have  contributed  the January 1999
                  Equity to Company on or before January 28, 1999, in cash in an
                  aggregate amount of at least $20,000,000:"

SECTION 4.  CONDITIONS TO EFFECTIVENESS


         Sections 1, 2 and 3 of this Amendment shall become effective only upon
the prior or concurrent  satisfaction  of all of the following  conditions  (the
date of satisfaction  of such conditions  being referred to herein as the "FIRST
AMENDMENT EFFECTIVE DATE"):

          A. COMPANY DOCUMENTS. On or before the First Amendment Effective Date,
          Company  shall  deliver to  Lenders  (or to  Administrative  Agent for
          Lenders with sufficient originally executed copies, where appropriate,
          for each Lender and its counsel) the following, each, unless otherwise
          noted, dated the First Amendment Effective Date:

               (i)  Resolutions   of  its  Board  of  Directors   approving  and
                    authorizing the execution, delivery, and performance of this
                    Amendment,  certified  as of the First  Amendment  Effective
                    Date by its corporate secretary or an assistant secretary as
                    being in full  force  and  effect  without  modification  or
                    amendment;


                                       10
<PAGE>

               (ii) Signature  and  incumbency   certificates  of  its  officers
                    executing this Amendment; and

               (iii) Executed copies of this Amendment.

          B. FIFTH  AMENDMENT TO EXISTING CREDIT  AGREEMENT.  All conditions set
          forth in  subsection 4 of that  certain  Fifth  Amendment  and Limited
          Waiver to Credit  Agreement dated as of December 31, 1998 by and among
          Company and Existing  Lenders (the "FIFTH AMENDMENT TO EXISTING CREDIT
          AGREEMENT")  shall  have been  satisfied  and the Fifth  Amendment  to
          Existing Credit Agreement shall have become effective.

          C.  OPINION  OF  COMPANY'S   COUNSEL.   Lenders  shall  have  received
          originally executed copies of a favorable written opinion of Dan Hart,
          Esq.,  counsel for  Company,  in form and  substance  satisfactory  to
          Administrative  Agent  and its  counsel,  dated  the  First  Amendment
          Effective Date.

          D. OTHER PROCEEDINGS. On or before the First Amendment Effective Date,
          all corporate and other proceedings taken or to be taken in connection
          with the transactions contemplated hereby and all documents incidental
          thereto not  previously  found  acceptable  by  Administrative  Agent,
          acting on behalf of Lenders,  and its counsel shall be satisfactory in
          form and  substance  to  Administrative  Agent and such  counsel,  and
          Administrative  Agent and such  counsel  shall have  received all such
          counterpart  originals  or  certified  copies  of  such  documents  as
          Administrative Agent may reasonably request.

SECTION 5.  COMPANY'S REPRESENTATIONS AND WARRANTIES

          In order to induce  Lenders to enter into this  Amendment and to amend
the Credit  Agreement in the manner  provided  herein,  Company  represents  and
warrants to each  Lender that the  following  statements  are true,  correct and
complete:

          A. CORPORATE POWER AND AUTHORITY.  Company has all requisite corporate
          power and authority to enter into this  Amendment and to carry out the
          transactions  contemplated by, and perform its obligations  under, the
          Credit   Agreement  as  amended  by  this   Agreement   (the  "AMENDED
          AGREEMENT").

          B.  AUTHORIZATION  OF  AGREEMENTS.  The execution and delivery of this
          Amendment and the performance of the Amended  Agreement have been duly
          authorized by all necessary corporate action on the part of Company.

          C.  NO  CONFLICT.  The  execution  and  delivery  by  Company  of this
          Amendment and the  performance by Company of the Amended  Agreement do
          not  and  will  not  (i)  violate  any  provision  of  any  law or any
          governmental  rule or  regulation  applicable to Company or any of its
          Subsidiaries,  the Certificate or Articles of  Incorporation or Bylaws
          of Company or any of its Subsidiaries or any order, judgment or decree
          of any court or other agency of  government  binding on Company or any
          of its  Subsidiaries,  (ii)  conflict  with,  result in a breach of or
          constitute  (with due notice or lapse of time or both) a default under


                                       11
<PAGE>

          any  Contractual  Obligation  of Company  or any of its  Subsidiaries,
          (iii) result in or require the creation or imposition of any Lien upon
          any of the properties or assets of Company or any of its  Subsidiaries
          (other than Liens created under any of the Loan  Documents in favor of
          Agents  on  behalf  of  Lenders),  or (iv)  require  any  approval  of
          stockholders  or any  approval  or  consent  of any  Person  under any
          Contractual Obligation of Company or any of its Subsidiaries.

          D.  GOVERNMENTAL  CONSENTS.  The  execution and delivery by Company of
          this Amendment and the performance by Company of the Amended Agreement
          do not and will not require any registration with, consent or approval
          of, or notice to, or other action to, with or by, any  federal,  state
          or other governmental authority or regulatory body.

          E.  BINDING  OBLIGATION.  This  Amendment  has been duly  executed and
          delivered by Company, and this Amendment and the Amended Agreement are
          the legally  valid and  binding  obligations  of Company,  enforceable
          against Company in accordance with their respective  terms,  except as
          may be limited by bankruptcy, insolvency,  reorganization,  moratorium
          or similar laws relating to or limiting creditors' rights generally or
          by equitable principles  (regardless of whether such enforceability is
          considered in a proceeding at law or in equity).

          F.  INCORPORATION  OF  REPRESENTATIONS   AND  WARRANTIES  FROM  CREDIT
          AGREEMENT.  The representations and warranties  contained in Section 5
          of the Credit Agreement are and will be true,  correct and complete in
          all material respects on and as of the First Amendment  Effective Date
          to the same  extent as though  made on and as of that date,  except to
          the extent such representations and warranties  specifically relate to
          an earlier date, in which case they were true, correct and complete in
          all material respects on and as of such earlier date.

          G. ABSENCE OF DEFAULT.  (i) After giving effect to this Amendment,  no
          event has occurred and is continuing that would constitute an Event of
          Default or a  Potential  Event of Default and (ii) no Event of Default
          or Potential Event of Default will result from the consummation of the
          transactions contemplated by this Amendment.

SECTION 6.  MISCELLANEOUS

          A. Reference to and Effect on the Credit  Agreement and the Other Loan
          Documents.

                 (i)  On and after  the  First  Amendment  Effective  Date, each
                      reference  in the Credit  Agreement  to "this  Agreement",
                      "hereunder",  "hereof",  "herein"  or words of like import
                      referring to the Credit  Agreement,  and each reference in
                      the  other  Loan  Documents  to  the  "Credit  Agreement",
                      "thereunder", "thereof" or words of like import referring
                     


                                       12

<PAGE>

                      to the Credit  Agreement  shall mean and be a reference to
                      the Amended Agreement.

                (ii)  Except  as   specifically   amended   or  waived  by  this
                      Amendment,   the  Credit  Agreement  and  the  other  Loan
                      Documents  shall  remain in full  force and effect and are
                      hereby ratified and confirmed.

                (iii) The execution, delivery and performance  of this Amendment
                      shall not, except as expressly provided herein, constitute
                      a waiver of any  provision  of, or  operate as a waiver of
                      any right,  power or remedy of Agent or any Lender  under,
                      the Credit Agreement or any of the other Loan Documents.

          B. FEES AND EXPENSES.  Company  acknowledges  that all costs, fees and
          expenses  as  described  in  subsection  10.2 of the Credit  Agreement
          incurred by Administrative  Agent and its counsel with respect to this
          Amendment and the documents and transactions contemplated hereby shall
          be for the account of Company.

          C.  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.

          D.  APPLICABLE  LAW. THIS AMENDMENT AND THE RIGHTS AND  OBLIGATIONS OF
          THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
          ENFORCED IN  ACCORDANCE  WITH,  THE INTERNAL  LAWS OF THE STATE OF NEW
          YORK  (INCLUDING  WITHOUT  LIMITATION  SECTION  5-1401 OF THE  GENERAL
          OBLIGATIONS LAW OF THE STATE OF NEW YORK).

          E. 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 (whether in
          original  form or by telecopy)  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  (other  than the  provisions  of Section  1-3  hereof,  the
          effectiveness  of which is governed by Section 4 hereof)  shall become
          effective upon the execution of a counterpart hereof by Company and by
          Requisite Lenders and upon receipt by Company and Administrative Agent
          of  written  or  telephonic   notification   of  such   execution  and
          authorization of delivery thereof.


                                       13
<PAGE>

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

          COMPANY:

                             DICTAPHONE CORPORATION


                             By: /s/ JOSEPH D. SKRZYPCZAK
                                ------------------------------------------------
                                Name:  Joseph D. Skrzypczak
                                Title: Chief Operating Officer





































                                      S-1

<PAGE>


          LENDERS:

                             MORGAN STANLEY SENIOR FUNDING, INC.


                             By: /s/ C. PUCILLO
                                ------------------------------------------------
                                Name:  C. Pucillo
                                Title: Vice President



                             MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.


                             By: 
                                ------------------------------------------------
                                Name:  
                                Title: 



                             CAPTIVA FINANCE LTD.


                             By: /s/ DAVID EGGLISHAW
                                ------------------------------------------------
                                Name:  David Egglishaw
                                Title:



                             CAPTIVA II FINANCE LTD.


                             By: /s/ DAVID EGGLISHAW
                                ------------------------------------------------
                                Name:  David Egglishaw
                                Title:



                             CERES FINANCE LTD.


                             By: /s/ DAVID EGGLISHAW
                                ------------------------------------------------
                                Name:  David Egglishaw
                                Title:



                                      S-2

<PAGE>


                             GOLDMAN, SACHS & CO.


                             By:
                                ------------------------------------------------
                                Name:
                                Title:



                             KZH-PAMCO CORPORATION


                             By:
                                ------------------------------------------------
                                Name:
                                Title:



                             ML CBO IV (CAYMAN) LTD.


                             Highland Capital Management, L.P.
                             as Collateral Manager


                             By: /s/ JAMES DONDERO
                                ------------------------------------------------
                                Name:  James Dondero
                                Title: President
                                       Highland Capital Management, L.P.



                             PAMCO CAYMAN LTD

                             By Highland Capital Management, L.P.
                             as Collateral Manager


                             By:/s/ JAMES DONDERO
                                ------------------------------------------------
                                Name:  James Dondero
                                Title: President
                                       Highland Capital Management, L.P.






                                      S-3

<PAGE>

                             PAMCO CAPITAL FUNDING, L.P.

                             By Highland Capital Management, L.P.
                             as Collateral Manager


                             By:/s/ JAMES DONDERO
                                ------------------------------------------------
                                Name:  James Dondero
                                Title: President
                                       Highland Capital Management, L.P.






































                                      S-4