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                                                                    EXHIBIT 10.7


     KNOWLES.
     ELECTRONICS, INC.
     1151 MAPLEWOOD DRIVE - ITASCA, ILLINOIS 60143 - USA


                                                               November 9, 1999

Mr. John J. Zei
13 Old Farmstead Road
Chester, NJ 07930

Dear John:

     We are in receipt of your letter dated November 6, 1999, which responds to
our letter to you dated November 4, 1999. There are a few clarifications to
make to your letter, which upon confirmation will constitute the final
agreement between Knowles and you.

     The interest rate on the loans by Knowles to you will be LIBOR + 1.5%

     The loans by Knowles to you to purchase Common Stock will be recourse to
     you to the extent of 50% of the amount owed thereunder and will be payable
     in full upon the earlier of the sale of Knowles and the fifth anniversary
     of the date of purchase. In addition, the loan will be mandatorily
     prepayable in part on a pro rate basis to the extent that you sell any of
     the common stock, whether to the public or otherwise.

     The reference to your letter to "This loan" in paragraphs 3 and 4 thereof
     will be deleted and replaced with "The common stock purchased".

     Knowles will pay the reasonable interest on a bridge loan (not to exceed
     $750,000) that you may obtain for a period of six months commencing April
     30, 2000.

     We look forward very much to you joining Knowles.

                                        Regards,


                                        /s/ REG G. GARRATT

                                        Reg G. Garratt
                                        Chairman and CEO


TELEPHONES (630) 250-5100 -  FAX NO. (630) 250-0575
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                            RELOCATION ARRANGEMENTS

Interest on personal bridge loan, if necessary for up to six months beginning
April 2000 with gross up.

Homefinding Trips: Three for yourself and your wife.

Temporary Living: Up to 150 days pending selection of home or apartment. Trips
home prior to permanent relocation every two weeks. Meals and temporary lodging

Shipping Household Goods: Pack, unpack and ship household goods and personal
belongings, including the shipment of one automobile, full replacement
insurance, storage for up to six months, necessary appliance services

Homefinding and final Trip: Transportation, food and lodging

Sale of Current Residence: Normal and customary closing costs including legal
fees and broker's commission

New Home Purchase

Normal and Customary Closing Costs including legal fees, abstract or title
search, appraisal fees, escrow fees, title insurance fees, document preparation
fees, credit report fees, survey fee, home inspection fee, well and septic
inspection fee, express or courier fees.

Loan Origination up to 3% of mortgage amount to a maximum of $20,000

Tax Gross Up: To offset Federal, State or Local income taxes resulting from
payments made under this relocation policy will be compensated for through a
tax allowance ("gross up").

                                     OTHER

Direct payment of $500,000 whole life policy with Northwestern Mutual Life.
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                                  JOHN J. ZEI
                                ATTORNEY AT LAW
                             13 OLD FARMSTEAD ROAD
                           CHESTER, NEW JERSEY 07930

November 6, 1999


Reg G. Garratt
Knowles Electronics, Inc.
1151 Maplewood Drive
Itasca, IL 60143

Dear Reg:

I am very pleased to accept the position of President and Chief Operating
Office at Knowles and I am looking forward to the opportunity you have provided.

As we have discussed over the past few days, there are several items that have
been adjusted from your letter of November 4, 1999. Your confirmation of these
changes will finalize my acceptance. These items include:

     -    The effective date of my employment will be January 1, 2000. It will
          be necessary for me be available to provide transitional assistance on
          a limited basis to Siemens through February 2000. The scope and timing
          of this assistance will be subject to agreement with you.

     -    Appointment to the position of CEO will take place no later than
          August 1, 2000.

     -    I will immediately purchase $100,000 in common stock with a direct
          payment. In place of the proposed non-qualified options Knowles will
          provide me with a loan at the LIBOR rate in the amount of $300,000 to
          immediately acquire an additional $300,000 in common stock at the time
          I commence my employment. This loan will be subject to the provisions
          of the Executive Stock Purchase Agreement. I may pre-pay the loan at
          any time.

     -    Knowles will provide me with a loan at the LIBOR rate in the amount
          of $100,000 to immediately acquire the remaining $100,000 in common
          stock available at the time I become Chief Executive Officer. This
          loan will be subject to the provisions of the Executive Stock Purchase
          Agreement. I may pre-pay the loan at any time.
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Reg. G Garratt
November 3, 1999
Page 2



     -    Relocation arrangements are as agreed in the attached "Relocation
          Arrangements."

     -    Further clarifying the last sentence on the first page of your letter
          to make it consistent with the Executive Stock Purchase Agreement,
          vesting of the common stock will also accelerate upon a no fault
          termination as defined in he Executive Stock Purchase Agreement.

Based on your confirmation I intend to inform Siemens of my resignation on
November 10, 1999. I will

Thank you again f0or this opportunity. I am looking forward to a long and
prosperous relationship with Knowles and you personally.

Sincerely,

/s/ JOHN J. ZEI

John J. Zei
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                            RELOCATION ARRANGEMENTS

Interest free on bridge loan, if necessary for up to six months beginning
April 2000 with gross up.

Homefinding Trips: Three for yourself and your wife.

Temporary Living: Up to 150 days pending selection of home or apartment. Trips
home prior to permanent relocation every two weeks. Meals and temporary lodging

Shipping Household Goods: Pack, unpack and ship household goods and personal
belongings, including the shipment of one automobile, full replacement
insurance, storage for up to six months, necessary appliance services

Homefinding and final Trip: Transportation, food and lodging

Sale of Current Residence: Normal and customary closing costs including legal
fees and broker's commission

New Home Purchase

Normal and Customary Closing Costs including legal fees, abstract or title
search, appraisal fees, escrow fees, title insurance fees, document preparation
fees, credit report fees, survey fee, home inspection fee, well and septic
inspection fee, express or courier fees.

Loan Origination up to 3% of mortgage amount to a maximum of $20,000

Tax Gross Up: To offset Federal, State or Local income taxes resulting from
payments made under this relocation policy will be compensated for through a
tax allowance ("gross up").

                                     OTHER

Direct payment of $500,000 whole life policy with Northwestern Mutual Life.
<PAGE>   6
     KNOWLES.
     ELECTRONICS, INC.
     1151 MAPLEWOOD DRIVE - ITASCA, ILLINOIS 60143 - USA

                                                                November 4, 1999

Mr. John J. Zei
13 Old Farmstead Road
Chester, NJ 07930

Dear John:

     I am very pleased to offer you the position of President and Chief
Operations Officer (COO) of Knowles Electronics, Inc. (the "Company"), reporting
to the board of directors (the "Board"). In this position, your annual salary
would be $325,000 and future salary increases would be based upon your
performance and the Company's compensation guidelines. You will also be entitled
to receive a signing bonus of $25,000, payable upon commencement of employment.

     In addition, beginning January 1, 2000, you will be eligible for
participation in our Management Incentive Plan (MIP), with a target annual
payout of 30% of your annual base salary, based on successful attainment of
certain financial objectives. Furthermore, beginning January 1, 2000 through
December 31, 2003, you will be eligible for participation in our Long Term
Incentive Plan (LTIP), a multi year incentive program designed for our key
executives. Your calendar year 2000 expected target payout is $150,000, based
on successful attainment of certain financial objectives. We are presently
recommending an addendum to the LTIP that will provide a deferral of cash
payments. Our attorney is drafting this addendum for Board's approval, and I
will notify you once a decision is reached.

     John, as we have discussed, you will have an opportunity to purchase
$400,000 of common stock of the Company at fair market value. We anticipate
that the Board will determine the market value per share of common stock to be
equal to the valuation given the Company at the time of the Doughty Hanson
acquisition on June 30, 1999. Based on the capitalization of the Company today,
you would acquire approximately 1.3% of the common equity of the Company for
this $400,000 investment. Your $400,000 investment will be in the form of an
initial investment of $100,000 in common stock pursuant to the terms of the
attached Executive Stock Purchase Agreement and non-qualified options to
purchase common stock at its then fair market value for an exercise price of
$300,000, subject to the terms and conditions of the option plan to be
developed by the Company. The vesting on the common stock purchased pursuant to
the Executive Stock Purchase Agreement and the option to purchase common stock
would accelerate upon a sale of the Company or an initial public offering.


TELEPHONES (630) 250-5100 - FAX NO. (630) 250-0576
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JOHN J. ZEI
NOVEMBER 4, 1999
PAGE TWO




        We have also discussed our Company's succession plan whereby you would
be appointed to the position of Chief Executive Officer of Knowles Electronics,
Inc., contingent upon your performance as President and COO. Upon this
appointment, which will take place after a transition period to be discussed,
your annual salary would increase to $400,000 and you would be granted
additional options to purchase common stock at its then fair market value for
an exercise price of $100,000.

        As an Executive of the Company, you will be eligible for participation
in our Executive Benefits Plan, as outlined in the attached Summary of
Benefits. For the vacation year beginning July 1, 2000, you will be eligible for
four weeks vacation through June 30, 2001. In addition to our benefits
package, Knowles is prepared to assist you with the actual and reasonable
expenses associated with your relocation to Illinois.

        As with all new employees, you will be required to take a Company
physical exam, although your employment is not contingent upon your passing the
physical. You will also be required to complete an I-9 Form which deals with
your eligibility to work in the United States.

        John, I look forward to you joining the Knowles team. If the foregoing
is acceptable to you, please let me have your confirmation.


                                        Sincerely,

                                        /s/ REG G. GARRATT

                                        Reg G. Garratt
                                        Chairman and CEO

cc:   K. Luzak
      K. Terry
      P. Quinn (K&E)

Attachments:    Executive Stock Purchase Agreement
                Summary of Benefits