October 21, 1998




Mr. Joseph D. Skrzypczak
Chief Operating Officer
Dictaphone Corporation
3191 Broadbridge Avenue
Stratford, CT  06614

Dear Joe:

      Reference  is  made  to  the  employment   letter   agreement  (the  "1995
Agreement")  dated July 21, 1995 and the employment  letter agreement dated July
9,  1997 (the  "1997  Agreement")  both by and  between  Dictaphone  Corporation
("Dictaphone" or the "Company") and you.

      This letter will set forth our agreement  with respect to certain  aspects
of your  employment  relationship  with  Dictaphone and your new duties as Chief
Operating Officer.

      For good and  valuable  consideration,  including  but not  limited to the
agreements  set  forth  herein,  receipt  and  sufficiency  of which  is  hereby
acknowledged, the parties hereto agree as follows:

      1.    POSITION  AND  DUTIES.  You are appointed  to serve Chief  Operating
            Officer  of  the  Company,  reporting  to  the  Chairman  and  Chief
            Executive  Officer,  with  operating  responsibility  for  the  CRS,
            IHS/IVS,  Service  and  Information  Systems,  together   with  such
            additions  and/or  changes  as may be  determined  by  the  CEO  and
            Board of Directors of the Company.  You  understand and  agree  that
            the  Company  presently  intends  to  hire  a  new  Chief  Financial
            Officer (with  responsibility for  the Company's  financial  affairs
            and investor  relations) and  a  new Chief  Technical  Officer (with
            responsibility for  product  development  and engineering),  both of
            which  shall  report to  the CEO.  Until  the CFO and CTO  positions
            are  filled by  the  Company,  you  shall  continue  to  manage  the
            finance  and engineering  functions in  your organization  under the
            terms provided herein.


<PAGE>
Mr. Joseph D. Skrzypczak
October 21, 1998
Page 2


      2.    SALARY. Your annual base salary is increased to Three Hundred Thirty
            Five Thousand Dollars  ($335,000) per year,  effective  immediately;
            such  salary,  as may be increased  from time to time,  shall not be
            decreased.

      3.    BONUS ARRANGEMENTS; STOCK OPTIONS.

            3.1   BONUSES. With respect to calendar year 1998, you shall be paid
                  a minimum  guaranteed  bonus equal to fifty  percent  (50%) of
                  your base  salary  (pro-rated  for the  change in base  salary
                  provided  above),  payable  in  the  first  quarter  of  1999.
                  Subsequent to 1998,  you shall be eligible to  participate  in
                  the standard senior executive bonus plan, which provides for a
                  potential  bonus of up to 100% of base salary,  but which does
                  not provide for a minimum guaranteed bonus.

            3.2   ADDITIONAL  STOCK OPTIONS.  You shall be granted an additional
                  Twenty  Thousand   (20,000)  stock  options  pursuant  to  the
                  Company's 1995 Stock Option Plan, as amended.

      4.    PRIOR  AGREEMENTS  TERMINATED.  The  1995  Agreement  and  the  1997
            Agreement  are hereby  terminated  and are of no  further  force and
            effect.  In  consideration  of  your  agreement  to  terminate  such
            agreements,  Dictaphone  shall pay to you the sum of Two Hundred and
            Fifty Thousand ($250,000),  promptly following the execution of this
            Agreement.

      5.    SEVERANCE ARRANGEMENTS. As an "at will" employee, you or the Company
            have the right to terminate your  employment at will at any time. In
            the event that your  employment  with  Dictaphone  is  terminated by
            Dictaphone  without  "cause" ( as defined on Exhibit A hereto),  you
            shall  be  offered  an  "Executive  Severance  Arrangement"  by  the
            Company.

            Under  the  terms  of  the   aforementioned   "Executive   Severance
            Arrangement,"  you  will  be  offered  your  salary  at the  time of
            separation  for a period  of  twenty-four  (24)  months  payable  on
            regular pay days such.  Severance pay will be payable to you in full
            regardless  of your  employment  status with any other  company.  In
            addition,  you  will be  eligible  for  outplacement  services  at a
            nationally  recognized  outplacement firm of the Company's  choosing
            for the severance period or, in lieu of such services,  cash payment
            consistent  with past  Company  practice.  Medical,  dental and life
            insurances  will be  extended to you at the rate that you would have
            paid as an active  employee  under the terms and conditions of those
            plans  for up to  twelve  (12)  months  or until  you  have  secured
            employment elsewhere. You will be eligible for COBRA continuation of
            applicable  benefits  for an  additional  six (6) months for a total
            coverage period of eighteen (18) months.



<PAGE>
Mr. Joseph D. Skrzypczak
October 21, 1998
Page 3


            In any event, the "Executive Severance Arrangement" will require you
            to  sign,  as  a  condition  of  receiving  severance  hereunder,  a
            severance  agreement  including  a release of the  Company  from all
            liability for any acts or violations  relative to any administrative
            procedures  and/or  federal,  state or  local  law(s)  covering  the
            employment  relationship.  The release and severance  agreement will
            also  include  a  non-compete,  non-solicitation  of key  employees,
            non-disclosure  of  confidential  information  and an  agreement  to
            cooperate  with the  Company on any legal and  otherwise  reasonable
            business issues requiring your involvement for resolution.

      6.    MISCELLANEOUS.  This Agreement contains the entire agreement between
            the parties hereto with respect to those matters  addressed  herein.
            The  provisions of this  Agreement  shall be governed by the laws of
            the State of  Connecticut  and shall be  binding  upon  Dictaphone's
            successors and assigns.

      Please  indicate your acceptance of this Agreement by signing in the space
provided below.

                                    Sincerely,

                                    Dictaphone Corporation


                                    By: /s/ JOHN H. DUERDEN
                                       -----------------------------------------
                                          John H. Duerden
                                          Chairman and Chief Executive Officer

cc:   Executive Compensation Committee
      of the Board of Directors of Dictaphone


Agreed to and Accepted:


By:   /s/ JOSEPH D. SKRZYPCZAK
   --------------------------------------
      Joseph D. Skrzypczak

Dated:___________________________________


<PAGE>




                                     ANNEX A

                                   DEFINITIONS



1.    "Cause" is defined as

      (i)   a severe breach of business ethics;

      (ii)  a  violation  of stated  company  policy  which has been  previously
            characterized as a terminable offense;

      (iii) any  act by you  which  could  cause  harm or  embarrassment  to the
            Company were it to be made public; or

      (iv)  any,  willful  or  negligent  material  dereliction  or  substantial
            under-performance  of your job  duties  and  responsibilities  which
            dereliction or  under-performance  is either (a) not capable of cure
            or (b) if  capable  or cure are not so cured  within  10 days  after
            written notice from the Chief Executive Officer of the Company.