Exhibit 4.7

                             DICTAPHONE CORPORATION
                       LIMITED WAIVER AND FIFTH AMENDMENT
                               TO CREDIT AGREEMENT


          This  LIMITED  WAIVER AND FIFTH  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 August 7,  1995,  as  amended  to the date  hereof (as so
amended, the "CREDIT AGREEMENT"),  by and among Company,  Lenders,  NationsBank,
N.A. (Carolinas), as documentation 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
Tranche B Term Loans and the New 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>

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

                    "FIFTH AMENDMENT EFFECTIVE DATE" has the meaning assigned to
                    that term in the Fifth Amendment.

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

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

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

3.2  AMENDMENT TO SUBSECTION 2.2A(II): RATE OF INTEREST.
     --------------------------------------------------

          (i)  Subsection  2.2A(ii)(a) of the Credit Agreement is hereby amended
               by  deleting  the  reference  to "2.25%"  contained  therein  and
               substituting therefor "2.75%".

          (ii) Subsection  2.2A(ii)(b) of the Credit Agreement is hereby amended
               by  deleting  the  reference  to "3.25%"  contained  therein  and
               substituting therefor "3.75%".

3.3  AMENDMENTS TO SUBSECTION 2.4B: PREPAYMENTS AND REDUCTIONS IN COMMITMENTS.
     ------------------------------------------------------------------------

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

          (i)  Paragraphs  (c),  (d),  (e),  (f),  (g),  (h),  (i)  and  (j)  of
               subsection  2.4B(iii) of the Credit  Agreement are  relettered as
               (d), (e), (f), (g), (h), (i), (j) and (k).

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

                         "(c)  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 Tranche B Term Loans in
                    an amount equal to Existing  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


                                       3
<PAGE>

                    Initial  Prepayment  Amount,  Company  shall be  entitled to
                    retain  (without  any  corresponding  prepayment  under this
                    subsection  2.4B(iii)(c))  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 Tranche B Term Loans
                    in an amount equal to Existing  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(iii)(c)); and PROVIDED, FURTHER that, to the extent any
                    portion of New  Lenders'  Share of any Net Cash  Proceeds of
                    the  Melbourne  Asset Sale are not applied to prepay the New
                    Term Loans as required under  subsection  2.4B(ii)(b) of the
                    New  Credit  Agreement  as in effect on the Fifth  Amendment
                    Effective  Date (after giving effect to the First  Amendment
                    to New Credit  Agreement),  Company  shall  promptly make an
                    additional  prepayment  of the  Tranche  B Term  Loans in an
                    amount  equal to such  portion  not so applied to prepay the
                    New Term Loans.  Any prepayments of the Tranche B Term Loans
                    pursuant to this subsection 2.4B(iii)(c) shall be applied to
                    the  remaining  scheduled  installments  of principal of the
                    Tranche B Term  Loans set forth in  subsection  2.4A(ii)  in
                    forward order of maturity."

          (iii)Paragraph  (c) of  subsection  2.4B(iii) of the Credit  Agreement
               (before giving effect to the  relettering  of such  paragraph) is
               amended  by adding  the  phrase  "or the  Melbourne  Asset  Sale"
               immediately after the phrase "Specified Asset Sale/Financing".

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

               (a)  deleting  the  reference to  "subsections  2.4B(iii)(b)-(g)"
                    contained  therein and  substituting  therefor  "subsections
                    2.4B(iii)(b)-(h)"; and


                                       4
<PAGE>

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

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

          "(b)  APPLICATION OF CERTAIN  MANDATORY  PREPAYMENTS OF TRANCHE B TERM
          LOANS  TO  THE  SCHEDULED   INSTALLMENTS  OF  PRINCIPAL  THEREOF.  Any
          mandatory  prepayments  of  the  Tranche  B  Term  Loans  pursuant  to
          subsections   2.4B(iii)(d)-(h)   (and  any  related   such   mandatory
          prepayments  pursuant to subsection  2.4B(iii)(i)) shall be applied to
          reduce  the  remaining  scheduled  installments  of  principal  of the
          Tranche B Term Loans set forth in subsection 2.4A(ii) 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 by deleting  each
     reference to "subsection  2.4B(iii)(a)"  contained therein and substituting
     therefor "subsection 2.4B(iii)(d)".

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 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


                                       5
<PAGE>

               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

         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


                                       6
<PAGE>

         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

           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


                                       7
<PAGE>

         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
               PERIOD           (BEFORE THE MELBOURNE     (AFTER THE MELBOURNE
                                     ASSET SALE)               ASSET SALE)
         ------------------     ----------------------    ---------------------

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

         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


                                       8
<PAGE>

         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:

          "(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(iii)(b),
          (c) or (d),  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."


                                       9
<PAGE>

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(iii)(b)"  contained therein and substituting
     therefor "subsection 2.4B(iii)(d)".

3.9  AMENDMENTS TO SECTION 8: EVENTS OF DEFAULT.
     ------------------------------------------
          Section 8 of the Credit Agreement is hereby amended by deleting ":" at
     the end of subsection 8.14 and substituting "; or" therefor,  and by adding
     a new subsection 8.15 thereto as follows:

          "8.15  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 "FIFTH AMENDMENT
EFFECTIVE DATE"):

     A. COMPANY  DOCUMENTS.  On or before the Fifth  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 Fifth 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  Fifth  Amendment  Effective  Date  by  its
               corporate  secretary or an  assistant  secretary as being in full
               force and effect without modification or amendment;

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

         (iii) Executed  copies of this  Amendment.

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


                                       10
<PAGE>

     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  Fifth   Amendment   Effective  Date.

     D. OTHER PROCEEDINGS.  On or before the Fifth 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  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.


                                       11
<PAGE>

     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 Fifth 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 Fifth  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 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.


                                       12
<PAGE>

     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,  by Requisite Lenders and by Requisite Class Lenders of Lenders
     having  Tranche  B Term Loan  Exposure  and upon  receipt  by  Company  and
     Administrative  Agent  of  written  or  telephonic   notification  of  such
     execution  and  authorization  of  delivery  thereof.


                  [Remainder of page intentionally left blank]


























                                       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. SKRYZYPCZAK
                                           -------------------------------------
                                           Name:  Joseph D. Skryzypczak
                                           Title: Chief Operating Officer











































                                       S-1
<PAGE>

               LENDERS:

                                        BANKERS TRUST COMPANY


                                        By: /s/ ROBERT R. TELESCA
                                           -------------------------------------
                                           Name:  Robert R. Telesca
                                           Title: Assistant Vice President



                                        NATIONSBANK, N.A. (CAROLINAS)


                                        By: /s/ CHRIS BARTON
                                           -------------------------------------
                                           Name:  Chris Barton
                                           Title: Vice President



                                        DK  ACQUISITION  PARTNERS,  L.P.
                                        by M.H. Davidson & Co., 
                                        its General Partner


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


























                                       S-2
<PAGE>

                                        THE CHASE MANHATTAN BANK, N.A.


                                        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:



                                        BEAR STEARNS INVESTMENT PRODUCTS, INC.


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













                                       S-3
<PAGE>

                                     MERRILL LYNCH SENIOR
                                     FLOATING RATE FUND, INC.


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



                                     MERRILL LYNCH PRIME RATE PORTFOLIO


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



                                     MERRILL LYNCH DEBT STRATEGIES PORTFOLIO,
                                     INC.


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



                                     ML CBO IV (CAYMAN) LTD.

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


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
















                                       S-4
<PAGE>

                                     PAMCO CAPITAL

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


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



                                     PAMCO CAYMAN LTD.

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


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



                                     MORGAN STANLEY SENIOR FUNDING, INC.


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



                                     FRANKLIN MUTUAL ADVISORS, INC.


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















                                       S-5

<PAGE>

                                        MERRILL LYNCH PIERCE,
                                        FENNER & SMITH INCORPORATED


                                        By: /s/ NEIL BRISSON
                                           -------------------------------------
                                           Name:  Neil Brisson
                                           Title: Director



                                        KZH-PAMCO LLC


                                        By: /s/ VIRGINIA CONWAY
                                           -------------------------------------
                                           Name:  Virginia Conway
                                           Title: Authorized Agent



                                        PPM AMERICA, INC.



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



                                        TD SECURITIES (USA), INC.


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



















                                       S-6